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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">As filed
with the Securities and Exchange Commission on January 16, 2013</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Registration
No. 333-</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>UNITED STATES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>SECURITIES
AND EXCHANGE COMMISSION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Washington,&nbsp;D.C.
20549</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Form S-1</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: Maroon"><FONT STYLE="color: Black"><B>LabStyle
Innovations Corp.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><I>(Exact Name
of Registrant as Specified in its Charter)</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 33%; padding-right: 2.35pt; padding-left: 2.35pt; font-size: 10pt; font-weight: bold; text-align: center"><FONT STYLE="color: Black">Delaware</FONT></TD>
    <TD STYLE="width: 34%; padding-right: 2.35pt; padding-left: 2.35pt; font-size: 10pt; font-weight: bold; text-align: center"><FONT STYLE="color: Black">3841</FONT></TD>
    <TD STYLE="width: 33%; padding-right: 2.35pt; padding-left: 2.35pt; font-size: 10pt; font-weight: bold; text-align: center"><FONT STYLE="color: Black">45-2973162</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">(State
        or other jurisdiction of</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">incorporation
        or organization)</FONT></P></TD>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Primary
        Standard Industrial</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Classification
        Code Number)</FONT></P></TD>
    <TD STYLE="padding-right: 2.35pt; padding-left: 2.35pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">(I.R.S.
        Employer</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Identification
        No.)</FONT></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>40 E. Main
Street, Suite 759</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Newark, DE
19711</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Telephone:
(646) 259-3321</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Fax Number:
(646) 349-3180</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><I>(Address,
including zip code, and telephone number,</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><I>including
area code, of principal executive offices)</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Oren Fuerst,
Ph.D.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Chief Executive
Officer</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>LabStyle
Innovations Corp.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>40 E. Main
Street, Suite 759</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Newark, DE&nbsp;
19711</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Telephone:
(646) 259-3321</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Fax Number:
(646) 349-3180</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><I>(Address,
including zip code, and telephone number,</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in"><FONT STYLE="color: Black"><I>including
area code, of agent for service)</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Copies to:</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Lawrence
A. Rosenbloom, Esq.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Ellenoff
Grossman &amp; Schole LLP</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>150 East
42nd Street, 11th Floor</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>New York,
New York 10017</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Telephone:
(212) 370-1300</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Fax Number:
(212) 370-7889</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">Approximate
date of proposed sale to public:&nbsp;As soon as practicable on or after the effective date of this registration statement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">If any of the
securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933 check the following box. <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">If this Form
is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">If this Form
is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">If this Form
is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer,&rdquo; and &ldquo;smaller reporting
company&rdquo; in Rule 12b-2 of the Exchange Act. (Check one):</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 65%; padding-left: 0.5in; font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt; color: Black">Large
    accelerated filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></TD>
    <TD STYLE="width: 35%; font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt; color: Black">Accelerated filer
    <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0.5in; font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt; color: Black">Non-accelerated
    filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt; color: Black">Smaller reporting company <FONT STYLE="font-family: Wingdings">x</FONT></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: left; vertical-align: middle; padding-left: 0.4in"><FONT STYLE="color: Black">(Do not check if a smaller reporting company)</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase; color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase; color: Black"><B>Calculation
of Registration Fee</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase; color: Black"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title of Each Class of <BR> Securities to Be Registered</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount to Be<BR> Registered</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed <BR> Maximum<BR> Offering Price<BR> per Share(1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed <BR> Maximum<BR> Aggregate<BR> Offering Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount of<BR> Registration<BR> Fee</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%; color: Black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt; color: Black">Shares of common stock sold in private placement <SUP>(2)</SUP></FONT></TD><TD STYLE="width: 1%; color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; padding-bottom: 1pt; color: Black; text-align: right">2,461,000</TD><TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; padding-bottom: 1pt; color: Black; text-align: right">1.50</TD><TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; padding-bottom: 1pt; color: Black; text-align: right">3,691,500</TD><TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="width: 10%; padding-bottom: 1pt; color: Black; text-align: right">503.52</TD><TD STYLE="width: 1%; padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt; color: Black">Shares of common stock underlying warrants sold in private placement<SUP> (3)</SUP> </FONT></TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">2,461,000</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1.50</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">3,691,500</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">503.52</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt; color: Black">Additional shares of common stock underlying warrants due to anti-dilution adjustment<SUP>(4)</SUP></FONT></TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">379,774</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1.50</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">569,661</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">77.70</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt; color: Black">Shares of common stock sold in private placement <SUP>(5)</SUP></FONT></TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1,500,036</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1.50</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">2,250,054</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">306.90</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt; color: Black">Shares of common stock underlying warrants sold in private placement<SUP> (6)</SUP> </FONT></TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1,500,036</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1.50</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">2,250,054</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">306.90</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt; color: Black">Shares of common stock sold in private placement <SUP>(7)</SUP></FONT></TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1,795,009</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">1.50</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">2,692,513</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: right">367.26</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt; color: Black">Shares of common stock issued or issuable pursuant to consulting agreement <SUP>(8)</SUP></FONT></TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">500,000</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">1.50</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">750,000</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; text-align: right">102.30</TD><TD STYLE="padding-bottom: 1pt; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">Total</TD><TD STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: right">10,596,855</TD><TD STYLE="padding-bottom: 1pt; color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: right">15,895,282</TD><TD STYLE="padding-bottom: 1pt; color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; color: Black; font-weight: bold; text-align: right">2,168.12</TD><TD STYLE="padding-bottom: 1pt; color: Black; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-transform: uppercase; color: Black"><B>&nbsp;</B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(1)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">No market
                                                             presently exists of our common stock. The selling stockholders will
                                                             be required to offer their shares at $1.50 per share until our common
                                                             stock is listed for quotation on the OTC Bulletin Board or OTCQB
                                                             Market. Assuming such listing is obtained, offers may be made at
                                                             prevailing market prices or at privately negotiated prices.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(2)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">Represents
                                                             shares of common stock purchased pursuant to our private placement
                                                             which had its final closing on March 30, 2012 (the &ldquo;2011-2012
                                                             Private Placement&rdquo;).</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(3)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">Represents
                                                             shares of common stock issuable upon the exercise of warrants issued
                                                             in the 2011-2012 Private Placement. Pursuant to Rule 416, there are
                                                             also being registered such indeterminable additional securities as
                                                             may be issued to prevent dilution as a result of stock splits, stock
                                                             dividends or similar transactions. Proposed maximum offering price
                                                             per share is based on the exercise price of the warrant in accordance
                                                             with Rule&nbsp;457(g).</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(4)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">Represents
                                                             (i) an additional 138,648 shares of common stock underlying the warrants
                                                             held by the selling stockholders from the 2011-2012 Private Placement
                                                             as a result of an adjustment of the warrant exercise price arising
                                                             out of the first closing of our private placement which closed on
                                                             August 29, 2012 (the &ldquo;August 2012 Private Placement&rdquo;)
                                                             and (ii) an additional 241,126, shares of common stock underlying
                                                             the warrants held by the selling stockholders from the 2011-2012
                                                             Private Placement as a result of a future adjustment of the warrant
                                                             exercise price arising out of the expected second and third closing
                                                             of the August 2012 Private Placement.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(5)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">Represents
                                                             shares of common stock purchased or to be purchased pursuant to the
                                                             August 2012 Private Placement.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(6)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">Represents
                                                             shares of common stock issuable upon the exercise of warrants at
                                                             exercise price per share of $1.00 held by the selling stockholders,
                                                             which warrants were issued or will be issued as part of the August
                                                             2012 Private Placement. Pursuant to Rule 416, there are also being
                                                             registered such indeterminable additional securities as may be issued
                                                             to prevent dilution as a result of stock splits, stock dividends
                                                             or similar transactions. Proposed maximum offering price per share
                                                             is based on the exercise price of the warrant in accordance with
                                                             Rule&nbsp;457(g).</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(7)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">Represents
                                                             shares of common stock purchased pursuant to our private placement
                                                             which had its final closing on October 17, 2012. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 27.35pt"><FONT STYLE="color: Black">(8)</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="color: Black">Represents
                                                             shares of common stock issued or to be issued pursuant to a consulting
                                                             agreement between our company and SLD Capital Corp.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -27pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; color: red"><FONT STYLE="color: Red"><B>The
information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange
Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale is not permitted.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Red">&nbsp;</FONT></P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; padding-left: 10pt; color: red; font-weight: bold; text-align: justify; text-indent: -10pt"><FONT STYLE="color: Red">Preliminary
    Prospectus</FONT></TD>
    <TD STYLE="width: 50%; color: red; font-weight: bold; text-align: right"><FONT STYLE="color: Red">Subject to Completion, dated
    January 16, 2013</FONT></TD></TR>
</TABLE>
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<P STYLE="font: small-caps 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: maroon"></P>

<P STYLE="font: small-caps 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: maroon"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: center; margin-bottom: 0pt"><FONT STYLE="font-size: 22pt"><B>Labstyle
Innovations Corp</B></FONT><B>.</B></P>



<P STYLE="font: small-caps 18pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; color: maroon"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>10,596,855
Shares</B></FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">This prospectus
relates to the offer for sale of an aggregate of up to an aggregate of 10,596,855 shares of common stock, par value $.0001 per
share, of LabStyle Innovations Corp. by the selling stockholders named herein. We are not offering any securities pursuant to
this prospectus. The shares of common stock offered by the selling stockholders includes: (i) 750,018 shares of common stock underlying
warrants with exercise price of $1.00 per share which expire on the first anniversary of the date that our company has received
a ticker symbol for our common stock and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board,
OTCQB Market or similar trading system (which we refer to as the Warrant Effective Date); (ii) 750,018 shares of common stock
underlying warrants with exercise price of $1.00 per share which expire on the second anniversary of the Warrant Effective Date;
and (iii) 2,840,774 shares of common stock underlying warrants which expire on October 27, 2016 and which have a current exercise
price of $1.42 per share (which is expected to be reduced to $1.30 following full funding of our August 2012 Private Placement
as described herein).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our common stock
is not presently traded on any market or securities exchange, and we have not applied for listing or quotation on any exchange.
We are seeking sponsorship for the trading of our common stock on the OTC Bulletin Board and/or OTCQB Market upon the effectiveness
of the registration statement of which this prospectus forms a part. The 10,596,855 shares&nbsp;of our common stock can be sold
by selling security holders at a fixed price of $1.50 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB
Market and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that&nbsp;a market
maker will agree to file the necessary documents with the Financial Industry Regulatory Authority (referred to herein as FINRA),
nor can we provide assurance that our shares will actually be quoted on the OTC Bulletin Board and/or OTCQB Market or, if quoted,
that a viable public market will materialize or be sustained.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Following the
effectiveness of the registration statement of which this prospectus forms a part, the sale and distribution of securities offered
hereby may be effected in one or more transactions that may take place on the OTC Bulletin Board and/or OTCQB Market, including
ordinary brokers&rsquo; transactions, privately negotiated transactions or through sales to one or more dealers for resale of
such securities as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices
or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling
stockholders. The selling stockholders and intermediaries through whom such securities are sold may be deemed &ldquo;underwriters&rdquo;
within the meaning of the Securities Act of 1933, as amended, with respect to the securities offered hereby, and any profits realized
or commissions received may be deemed underwriting compensation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B>We are an
&ldquo;emerging growth company&rdquo; under the federal securities laws and will be subject to reduced public company reporting
requirements. Investing in our common stock is highly speculative and involves a significant degree of risk. See &ldquo;Risk Factors&rdquo;
beginning on page 8 of this prospectus for a discussion of information that should be considered before making a decision to purchase
our common stock.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B>Neither the
Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>The date
of this prospectus is ________________, 2013.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>TABLE OF
CONTENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 90%; font-weight: bold; text-align: right"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 10%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: right; vertical-align: bottom"><FONT STYLE="color: Black">Page</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="color: Black">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Prospectus Summary</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">1<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Risk Factors</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">9</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Cautionary Note Regarding Forward-Looking Statements</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">33<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Use of Proceeds</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">34<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Dividend Policy</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">34<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">35<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Business</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">40<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Management</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">57<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Executive Compensation</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">63<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Principal Stockholders</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">69<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Certain Relationships and Related Party Transactions</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">71</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Description of Securities</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">73<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Selling Stockholders</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="color: Black">78</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Plan of Distribution</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="color: Black"></FONT>85</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Market For Common Equity and Related Stockholder Matters</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">88<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Legal Matters</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">88</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Experts</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="color: Black">88</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Disclosure of Commission Position of Indemnification for Securities Act Liabilities</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">88</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="color: Black">Where You Can Find Additional Information</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom">89<FONT STYLE="color: Black"></FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><FONT STYLE="color: Black">Index to Financial Statements</FONT></TD>
    <TD STYLE="text-align: right; vertical-align: bottom"><FONT STYLE="color: Black"></FONT>F-1</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B>You should
rely only on the information contained in this prospectus. We have not authorized any other person to provide you with information
different from or in addition to that contained in this prospectus. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not
permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover
of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B>For investors
outside the United States</B>: We have not done anything that would permit this offering or possession or distribution of this
prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to
inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In this prospectus,
we rely on and refer to information and statistics regarding our industry. We obtained this statistical, market and other industry
data and forecasts from publicly available information. While we believe that the statistical data, market data and other industry
data and forecasts are reliable, we have not independently verified the data.</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">PROSPECTUS
SUMMARY</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>This summary
highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information
that you should consider in making your investment decision. Before investing in our common stock, you should read the entire
prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the
information set forth under the headings &ldquo;Risk Factors&rdquo; and &ldquo;Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations.&rdquo; </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>When used
herein, unless the context requires otherwise, references to the &ldquo;Company,&rdquo; &ldquo;we,&rdquo; &ldquo;our&rdquo; and
&ldquo;us&rdquo; refer to LabStyle Innovations Corp., a Delaware corporation, collectively with its wholly-owned subsidiary, LabStyle
Innovation Ltd., an Israeli corporation, which we sometimes refer to herein as LabStyle Israel. </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Our Company</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We were formed
in August, 2011 as a Delaware corporation to exploit a new proprietary technology that is seeking to bring laboratory testing
capabilities to consumers in a distinctive, easy to use and affordable way through the use of smartphones such as iPhones.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are initially
applying our technology to address the diabetic self-monitoring of blood glucose, or SMBG, market. Diabetes is a disease where
insufficient levels, or a total absence, of the hormone insulin produce high levels of glucose in the bloodstream, which can lead
to long term adverse effects on a patient&rsquo;s blood vessels, which can lead to heart attack, stroke, high blood pressure,
blindness, kidney disease and nerve damage. As part of controlling blood sugar, many patients must self monitor their blood glucose
levels using home testing kits (called glucometers) and treat high and low blood sugar episodes accordingly to avoid the complications
from the disease.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our first
product, Dario<SUP>TM</SUP>, is a fully integrated, all-in-one SMBG device consisting of a lancet to obtain a blood sample,
disposable test strip cartridge and a glucose reader adaptor to hold the strip and interface with the smartphone, combined
with a smartphone application and internet-based data services. Roughly the size of a pack of gum, we believe that Dario has
the potential to replace stand alone glucose meters and their kits (lancing , lancets and strips vials) which are the
current market standard, most of which have the necessary testing components separated from one another in what we believe is
a cumbersome design. Moreover, all but a few glucometers lack an interface with a smartphone, and none will have the
software applications associated with Dario, each of which we believe will distinguish Dario as an alternative in
the marketplace.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We expect to
launch Dario in the SMBG market after obtaining all applicable regulatory approvals. We began the regulatory approval process
in Europe in 2012, and will commence such process in the United States in 2013. Such approvals will need to be obtained prior
to the anticipated commercial launch of Dario which is anticipated in 2013, first in Europe and subsequently in the United States.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 35.45pt"><FONT STYLE="color: Black">Our
proprietary technology (incorporated into Dario) provides a novel body-fluid testing apparatus for performing metered
measurement of samples utilizing: (i) a lancing device to obtain a test sample (blood in the case of Dario); and (ii) an<I> </I>adaptor
specifically designed to connect a strip<B> </B>designed to absorb the sample, which then produces an electric signal
indicating the level of the substance tested for in the sample. The adaptor is then connected to a smartphone via the
headphone jack, which allows the test signal to be transmitted to the smartphone, which will then utilize our software to
obtain and display the test result on the device. This is coupled with a set of software features available via a smartphone
application as well as internet-based services.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

</DIV>



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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Although
we are initially targeting only the large and growing SMBG market, we believe our invention has the potential to cover dozens
of laboratory tests (including blood, urine and saliva) that could potentially be undertaken using a smartphone, including
blood coagulation, cholesterol, HIV and others.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Our Financial
Condition</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">As of September
30, 2012, our assets, liabilities and cumulative deficit were, respectively, $2,063,752 (including $820,017 in cash or cash equivalents),
$3,795,488 and $4,879,617. We have not yet generated any revenues from our operations. We currently have no sources of recurring
revenue and are therefore dependent upon external sources for financing our operations. There can be no assurance that we will
generate revenues or that we will be able to obtain the necessary financing to continue our operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">As a result,
our independent registered public accounting firm has expressed in its auditors&rsquo; report on the financial statements included
as part of this prospectus a substantial doubt regarding our ability to continue as a going concern. If we do not commence revenue
generation or are unable to otherwise fund our business with outside capital, we likely would be unable to further our business
plan. If we cannot continue as a going concern, our stockholders would lose their entire investment in our company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">However, from
August through October 2012, we raised in an aggregate of $3,192,539 (before issuance costs) in private placement transactions
and received irrevocable commitments from investors for an additional funding of $1,000,022 which funding is required to occur
in two tranches: (i) on the 90<SUP>th</SUP> day following the date (which we refer to as the Funding Trigger Date) as of which
both: (A) a registration statement covering the shares of our common stock issued and underlying warrants issued in our August
2012 Private Placement has been declared effective by the Securities and Exchange Commission and (B) we have received a ticker
symbol for our common stock and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB
Market or similar trading system and (ii) on the 180<SUP>th</SUP> day following the Funding Trigger Date. In addition, we may
receive additional funding from the exercise of outstanding warrants. According to our management&rsquo;s estimates, based on
our budget and the assumption that initial commercial sales will commence during our anticipated timeframes, we believe that we
will have sufficient resources to continue our activity at least until the end of 2013. However, if we are not able to commercially
launch Dario or meeting our commercial sales targets, and if we are unable to obtain additional capital resources, we will not
be able to continue activities beyond the end of 2013.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Our Initial
Product &mdash; Dario<FONT STYLE="font-family: Times New Roman, Times, Serif"><SUP>TM</SUP></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Overview</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our first product,
Dario, will target the large and growing SMBG market. Dario is an all-in-one device that includes the glucose reader which
is connected to a smartphone via the phone jack, along with a lancing device (a reusable blood-sampling device, when loaded with
the disposable lancet) and an integrated, disposable cartridge for test strips. We believe Dario&rsquo;s design is novel and highly
distinctive and is both functional but also conveys what we believe will be the modern, technology-driven appeal of Dario. We
believe that Dario&rsquo;s design will offer features that are similar to or superior to the most advanced meters in the market
while having a smaller form factor than even the compact meters in the market.</FONT></P>

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</div>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Because of the
product&rsquo;s integration with the smartphone, Dario will allow test results to be sent and integrated with web-based medical
repositories through our Dario smartphone application and, we anticipate, also through web-based services. We believe that Dario&rsquo;s
ease of use will cause prospective users to adopt the product, which could lead to increased blood glucose monitoring by patients.
In short, Dario will epitomize our product motto &mdash; <B><I>&ldquo;Glucose Monitoring for the Mobile Age<SUP>TM</SUP></I></B>.&rdquo;
The Dario application for Apple has been accepted by Apple for inclusion in the AppStore.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have finalized
the commercial design for Dario, which will combine in one device the lancing mechanism, disposable strip cartridge and glucose
monitor and attached plug (which plug will have a small form factor for insertion into the smartphone audio jack). We have created
Dario prototypes based on this design and, in October 2012, used these to successfully conclude a 61 patient clinical usability
trial required for approvals for Dario in Europe and the United States. We have been advised by our regulatory consultants that
this study should be sufficient in order to obtain regulatory approvals in the EU and the U.S.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
we have developed both the critical software that will enable Dario to integrate with the iPhone platform, as well as the backend
test result data collection component of the Dario system, and these will be in place to support the anticipated commercial launch
of Dario, although we expect to refine and augment such software and systems over time. Also, we have agreements or work order
arrangements in place with commercial scale manufacturers for the both the Dario devices and the associated test strips in order
to support our anticipated launches for the product. Please see &ldquo;Business&mdash;Manufacturing.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>The SMBG
Market</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We will initially
be focusing on launching Dario during 2013, first in the European Union and subsequently in the United States. The diabetes and
SMBG markets worldwide and in these submarkets are substantial and growing.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The  World
Health Organization currently estimates that approximately 350 million patients have diabetes worldwide, and research firm
Frost &amp; Sullivan estimated in 2011 that the worldwide diabetic population is expected to rise to 438 million by 2030,
corresponding to 7.8 per cent of the adult population. In Europe, the diabetic population was approximately 52.6 million in
2011 according to Frost &amp; Sullivan, and there were approximately 25.8 million diabetics in the U.S. in 2011 according to
the American Diabetes Association.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Since blood
glucose self monitoring is a key part of managing diabetes, the market for SMBG products required to service these many patients
is also large. <FONT STYLE="background-color: white">According to research firm Visiongain, the global SMBG market was $9.7 billion
in 2011 and the global market for</FONT>&nbsp;diabetes monitoring devices&nbsp;<FONT STYLE="background-color: white">is expected
to be $27.42 billion by 2022. The </FONT>Enterprise Analysis Corporation has estimated that the global market for SMBG testing
supplies was $1.7 billion in 1994. By 2000, the market had reached approximately $3.8 billion, and by 2008, worldwide sales of
these products climbed to $8.8 billion. <FONT STYLE="background-color: white">It has been estimated that the U.S. accounts for
40% of the SMBG market, or approximately $3.9 billion, and Frost &amp; Sullivan estimate that Europe accounted for </FONT>$3.97
billion in this market in 2011<FONT STYLE="background-color: white">. </FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Key factors
driving market growth include an increasing diabetic population, growing patient awareness, technological advancements, and an
increasing number of patients adopting blood glucose self-monitoring. In addition, the affordable cost of blood glucose test strips,
together with the continuing evolution towards more frequent daily blood glucose monitoring, are also expected to contribute to
market growth. As such, SMBG represents a large market that has grown significantly over the past 30 years and is expected to
continue to grow.</FONT></P>

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</div>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our
initial market focus will be on younger, insulin-dependent diabetics (predominantly Type 1 patients), who are the heaviest
users of glucose test strips. Although these patients represent a small subset for the over diabetes market (as Type 1
diabetics only account for approximately 10% of all diabetic patients), we believe these patients will more readily adopt new
mobile phone-based technologies. We plan to gradually broaden our marketing efforts toward the older population, where
non-insulin dependent Type 2 diabetes is even more prevalent, and patients with &ldquo;pre-diabetes&rdquo; (a growing
healthcare problem whereby patients exhibit some, but not all, of the diagnostic criteria for diabetes). Although our plan
will initially focus on insulin-dependent (in particular, Type 1 patients), diabetes patients who test themselves up to 10 times a
day, we anticipate Dario&rsquo;s ease of use and the lack of need for a special glucometer and lancing device will be of
major appeal to the even larger Type 2 diabetes population, who typically check their blood glucose levels once or twice a
day. Following anticipated initial market launches in both the European and U.S. markets, we plan to explore launching Dario
in additional large markets such as Brazil and India, possibly through marketing collaborations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">While we expect
to collaborate with the medical community to showcase what we expect will be Dario&rsquo;s clinical equivalence and usability
superiority, Dario will mainly be marketed directly to the target users. Instead of using traditional retail channels to market
our products, we plan to primarily offer Dario devices, strips and related software directly to consumers over the Internet. We
plan to offer Dario at prices that are competitive to those of the current SMBG kits.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Dario Revenue
Model</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our revenues
are expected to be derived from sales of Dario devices (which will be priced similarly to blood glucose monitors in the marketplace)
and principally from the recurring sale of our test strips. Our customers will also receive access to our smartphone application,
which will incorporate tools to help diabetic patients manage their disease. Importantly, our revenue model will be driven by
the fact that only our test strips, purchased through us and our partners, will be able to be utilized with the Dario device and
software, so it is our expectation that we will be the sole source for Dario compatible test strips.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition
to device and test strip related revenue, we anticipate generating revenue in the future from our ability to offer Dario&rsquo;s
subscribers additional products and services based on personalized recommendations, such as location-based, low-sugar food recommendations
and the ability to send alerts to caregivers and family and friends.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black; background-color: white"><B>Prior
Financings and Key Relationships</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">To date, we
have raised an aggregate of $5,663,539 (before capital raising related expenses) through the sale of our common stock and warrants
to purchase common stock to investors pursuant to private placement transactions described below. We also have irrevocable commitments
arising out of one such private placement for an additional $1,000,022 in funding as described below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On August 11,
2011, in connection with our formation, we closed a private placement of 2,000,000 shares of our common stock to an aggregate
of 9 accredited investors for an aggregate purchase price of $10,000. Such shares are not being registered for public resale pursuant
to the registration statement of which this prospectus forms a part.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>
<DIV STYLE="padding: 3pt; border: Black 1pt solid">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Our 2011-2012 Private Placement</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On October 27,
2011, we conducted the initial closing of a private placement offering (which we refer to herein as our 2011-2012 Private Placement)
of an aggregate of 2,461,000 shares of our common stock at a purchase price of $1.00 per share and warrants to purchase an aggregate
of 2,461,000 shares of our common stock with an exercise price of $1.50 per share, which warrants are exercisable at any time
within five (5) years from October 27, 2011. The $1.50 exercise price was adjusted to $1.42 per share due to the August 2012 Private
Placement described below and the number of shares of common stock underlying such warrants was adjusted upward by 138,648 shares.
The exercise price of the such warrants as well as the number of shares subject to such warrants is expected to reduced to $1.30
and 379,774, respectively, accordingly following completing the second and third tranches of the August 2012 Private Placement
as described below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The final closing
of the 2011-2012 Private Placement occurred on March 30, 2012. There were a total of 45 accredited investors in the 2011-2012
Private Placement. Spencer Trask Ventures, Inc. (who we refer to herein as Spencer Trask), acted as the placement agent for the
2011-2012 Private Placement. The gross proceeds to us from the 2011-2012 Private Placement were $2.461 million. Pursuant to the
registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued in the 2011-2012 Private Placement for public resale by the selling stockholders named herein
and their assigns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As part of
its compensation for acting as placement agent for the 2011-2012 Private Placement, we issued two warrants to Spencer Trask,
each to purchase 482,200 shares of common stock with an exercise price of, respectively, $1.00 and $1.50 per share
(subsequently adjusted downward to $1.42 and expected to further reduced to $1.30). Such warrants contain a &ldquo;cashless
exercise&rdquo; feature and are exercisable at any time prior to the earlier of: (i) March 30, 2019 or (ii) three years
following the date that our common stock becomes publicly traded. We are not registering the shares of common stock
underlying the warrants issued to Spencer Trask for public resale. Due to the August 2012 Private Placement described below,
the shares underlying Spencer Trask&rsquo;s warrants were increased by 27,166 shares, and the exercise price is currently
$1.42.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Our August
2012 Private Placement</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On August 31,
2012, we consummated a private placement transaction (which we refer to as the August 2012 Private Placement) with 13 accredited
investors, including existing stockholders of our company. Pursuant to this financing, we issued an aggregate of 500,014 shares
of our common stock at a price equal to $1.00 per share (for gross proceeds of $500,014) and issued warrants to purchase an aggregate
of 500,014 shares of our common stock with an exercise price of $1.00 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
the investors in the August 2012 Private Placement irrevocably committed to purchase an additional 1,000,022 shares of common
stock in the aggregate at $1.00 per share and warrants to purchase an aggregate of 1,000,022 shares of our common stock with an
exercise price of $1.00 per share, for gross proceeds of $1,000,022. Such purchases shall take place in two tranches, the first
on the 90<SUP>th</SUP> day following the Funding Trigger Date (consisting of 500,011 shares and 500,011 warrants), and the second
the 180<SUP>th</SUP> day following the Funding Trigger Date (also consisting of 500,011 shares and 500,011 warrants). To evidence
this irrevocable commitment, each investor executed a promissory note in our favor to fund for their pro rata portion of the additional
investments as of the foregoing dates. We expect, therefore, that the total gross proceeds from the August 2012 Private Placement
will be $1,500,036, not including any potential warrant exercises. No placement agents were utilized in connection with the August
2012 Private Placement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">One-half of
the warrants issued in the August 2012 Private Placement have an exercise period ending on the first anniversary means the date
that our company has received a ticker symbol for our common stock and caused our common stock to be eligible for trading on the
Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (which we refer to as the Warrant Effective Date), and
the exercise period for the remaining one-half of the warrants ends on the second anniversary of the Warrant Effective Date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>
<DIV STYLE="padding: 3pt; border: Black 1pt solid">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued or to be issued in the August 2012 Private Placement for public resale by the selling stockholders
named herein and their assigns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Our October
2012 Private Placement</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On October 17,
2012, we consummated a final closing of a separate private placement transaction (which we refer to as the October 2012 Private
Placement) with 44 accredited investors, including existing stockholders of our company. Pursuant to this financing, we issued
an aggregate of 1,795,009 shares of our common stock at a price equal to $1.50 per share (for gross proceeds of $2,692,513). We
utilized the services of four FINRA member broker-dealers as finders for this private placement, including Spencer Trask, and
we paid commissions to such finders equal to 10% of the funds they each raised in cash and warrants to purchase an aggregate of
179,502 shares of our common stock. Such finder warrants contain a &ldquo;cashless exercise&rdquo; feature and are exercisable
at any time prior to October 16, 2015. We are not registering the shares of common stock underlying the finder warrants for public
resale.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock issued in the October
2012 Private Placement for public resale by the selling stockholders named herein and their assigns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Founders
Shares</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In connection
with our formation in August 2011 and the contribution of intellectual property to our company in October 2011, our founders (including
an affiliate of Dr. Oren Fuerst, Dr. David Weintraub and Shilo Ben Zeev, each of whom are executives and/or directors of our company)
received an aggregate of 7,500,000 shares of common stock for nominal consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal; color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal; color: Black"><I>Spencer
Trask Ventures, Inc. and its Related Parties</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">In
connection with the 2,000,000 share private placement which we undertook at our formation on August 11, 2011, Spencer Trask Investment
Partners, LLC, an affiliate of Spencer Trask, purchased 700,000 shares of our common stock, and Adam K. Stern, a former affiliate
of Spencer Trask and also now a director of our company, both individually and through two entities controlled by him, purchased
700,000 shares of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">Pursuant
to the terms of a placement agent agreement, dated September 8, 2011, between us and Spencer Trask entered into in connection
with our 2011-2012 Private Placement, Spencer Trask appointed Adam K. Stern as a member of our board of directors for a two-year
term from October 27, 2011. His successor during such two year period, if any, will be chosen by Spencer Trask, subject to our
reasonable approval.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We also entered
into a Right of First Refusal Agreement with Spencer Trask on October 27, 2011 which provides that, for a period of two (2) years
from March 30, 2012, Spencer Trask has the irrevocable preferential right of first refusal (i) to purchase for its own account
or to act as agent for any proposed private offering of securities (equity or debt) by us and (ii) to purchase or sell such securities
on terms no less favorable than we can obtain elsewhere. In addition, on October 27, 2011, we entered into a non-exclusive Finder&rsquo;s
Fee Agreement with Spencer Trask which provides that if we or any of our affiliates enter into any of certain transactions enumerated
in the Finder&rsquo;s Agreement (including financing transactions and business combinations or similar arrangements) with any
party introduced to us by Spencer Trask, directly or indirectly at any time prior to the date which is four (4) years after March
30, 2012, then we shall pay or cause to be paid to Spencer Trask certain cash finder&rsquo;s fees.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>
<DIV STYLE="padding: 3pt; border: Black 1pt solid">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
on August 20, 2012, we entered into another non-exclusive finder&rsquo;s agreement with Spencer Trask in connection with the October
2012 Private Placement under which we paid to Spencer Trask (i) a cash fee equal to 10% of the consideration actually paid to
us by its investors in such private placement and (ii) a warrant to purchase shares of common stock equal to 10% of the number
of shares of common stock purchased by its investors in such private placement. See &ldquo;Certain Relationships and Related Party
Transactions.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Corporate
Information</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black; background-color: white">We
were incorporated under the laws of the State of Delaware on August 11, 2011. We maintain an address at </FONT>40 E. Main Street,
Suite 759,<B> </B>Newark, Delaware 19711 and our telephone number is (646) 259-3321. <FONT STYLE="background-color: white">We
have one wholly-owned subsidiary, LabStyle Innovation Ltd., that was incorporated in Israel on September 14, 2011, with its offices
at Menachem Begin 7, Ramat Gan (29<SUP>th</SUP> Floor).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="background-color: white">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="background-color: white"></FONT></P>
</div>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<DIV STYLE="padding: 3pt; border: Black 1pt solid">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>The Offering</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 98%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%; padding-left: 10pt; font-weight: bold; text-indent: -10pt"><FONT STYLE="color: Black">Common Stock
    Outstanding</FONT></TD>
    <TD STYLE="width: 2%; padding-left: 0.05in"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="width: 63%; padding-left: 0.05in"><FONT STYLE="color: Black">14,583,522 shares (1)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 10pt; font-weight: bold; text-indent: -10pt">&nbsp;</TD>
    <TD STYLE="padding-left: 0.05in">&nbsp;</TD>
    <TD STYLE="padding-left: 0.05in">&nbsp;</TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold"><FONT STYLE="color: Black">Common Stock Offered by Selling Stockholders</FONT></TD>
    <TD STYLE="vertical-align: top; padding-left: 0.05in"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 0.05in"><FONT STYLE="color: Black">10,596,855 shares (2)</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; font-weight: bold">&nbsp;</TD>
    <TD STYLE="vertical-align: top; padding-left: 0.05in">&nbsp;</TD>
    <TD STYLE="padding-left: 0.05in">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 10pt; font-weight: bold; text-indent: -10pt"><FONT STYLE="color: Black">Use of Proceeds</FONT></TD>
    <TD STYLE="padding-left: 0.05in"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 0.05in"><FONT STYLE="color: Black">We will not receive any proceeds from the sale of the common stock
    by the selling stockholders.&nbsp; We would, however, receive proceeds upon the exercise of the warrants held by the selling
    stockholders which, if such warrants are exercised in full, would be approximately $5,193,042.&nbsp; Proceeds, if any, received
    from the exercise of such warrants will be used for working capital and general corporate purposes.&nbsp; No assurances can
    be given that any of such warrants will be exercised.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 10pt; font-weight: bold; text-indent: -10pt">&nbsp;</TD>
    <TD STYLE="padding-left: 0.05in">&nbsp;</TD>
    <TD STYLE="padding-left: 0.05in">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 10pt; font-weight: bold; text-indent: -10pt"><FONT STYLE="color: Black">Quotation of Common Stock:</FONT></TD>
    <TD STYLE="padding-left: 0.05in"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 0.05in"><FONT STYLE="color: Black">Our common stock is not presently traded on any market or securities
    exchange, and we have not applied for listing or quotation on any exchange.&nbsp; We are seeking sponsorship for the trading
    of our common stock on the OTC Bulletin Board and/or OTCQB Market upon the effectiveness of the registration statement of
    which this prospectus forms a part.&nbsp; The 10,596,855 shares of our common stock can be sold by selling security holders
    at a fixed price of $1.50 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB Market and thereafter
    at prevailing market prices or privately negotiated prices.&nbsp; There can be no assurance that&nbsp;a market maker will
    agree to file the necessary documents with FINRA, nor can we provide any assurance that our shares will actually be quoted
    on the OTC Bulletin Board and/or OTCQB Market or, if quoted, that a viable public market will materialize.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 10pt; font-weight: bold; text-indent: -10pt">&nbsp;</TD>
    <TD STYLE="padding-left: 0.05in">&nbsp;</TD>
    <TD STYLE="padding-left: 0.05in">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 10pt; font-weight: bold; text-align: justify; text-indent: -10pt"><FONT STYLE="color: Black">Risk
    Factors</FONT></TD>
    <TD STYLE="padding-left: 0.05in"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="padding-left: 0.05in"><FONT STYLE="color: Black">An investment in our company is highly speculative and involves
    a significant degree of risk. See     &ldquo;Risk     Factors&rdquo;     and     other     information included     in this
    prospectus     for a     discussion     of     factors     you should     carefully consider     before     deciding to
    invest in shares     of our     common     stock.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">(1)&#9;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Excludes: (i) shares underlying
warrants to purchase an aggregate of 2,840,774 of shares of our common stock (taking into account an anti-dilution adjustment)
issued in our 2011-2012 Private Placement, (ii) shares underlying warrants to purchase an aggregate of 1,500,036 of shares of
our common stock issued in our August 2012 Private Placement and (iii) shares underlying warrants an aggregate of 1,218,314 shares
of our common stock held by Spencer Trask and certain FINRA member selling agents that participated in our 2011-2012 Private Placement
and October 2012 Private Placement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">(2)&#9;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Includes: (i) shares underlying
warrants to purchase an aggregate of 2,840,774 of shares of our common stock (taking into account an anti-dilution adjustment)
issued in our 2011-2012 Private Placement, (ii) shares underlying warrants to purchase an aggregate of 1,500,036 shares of our
common stock issued in our August 2012 Private Placement, (iii) 1,000,022 shares of as yet unissued common stock in connection
with our August 2012 Private Placement, and (iv) 500,000 shares of common stock issued or to be issued to a consultant.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

</DIV>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;<FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">RISK FACTORS</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Investing
in our common stock is highly speculative and involves a significant degree of risk. You should carefully consider the following
factors and other information in this prospectus before making a decision to invest in our common stock. Additional risks
and uncertainties that we are unaware of may become important factors that affect us. If any of the following events occur,
our business, financial conditions and operating results may be materially and adversely affected. In that event, the
trading price of our common stock may decline, and you could lose all or part of your investment.</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Risks Related
to our Company and our Business</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><I>We
were formed in August 2011 and are thus subject to the risks associated with new businesses.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">We
were formed in August 2011. As such, we are a development stage, &ldquo;start-up&rdquo; company with no history of
revenue-generating operations, and our only assets consist of cash raised in our previous private placements and the
intellectual property contributed to us by our founders on October 27, 2011 and subsequently developed by us. We have only
a short operating history by which you can assess our company and our prospects. We are, and expect for the foreseeable
future to be, subject to all the risks and uncertainties inherent in a new business and the development and sale of new
medical devices. As a result, we still must establish many functions necessary to operate a business, including finalizing
our managerial and administrative structure, continuing product and technology development, assessing and commencing
our marketing activities, implementing financial systems and controls and personnel recruitment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">Accordingly,
you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies
in their pre-revenue generating stages, particularly those in the medical device field. Potential investors should carefully consider
the risks and uncertainties that a new company with a no operating history will face. In particular, potential investors should
consider that there is a significant risk that we will not be able to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black"></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">implement or execute our current business plan, or that our business plan is sound;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">maintain our anticipated management and advisory team;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">raise sufficient funds in the capital markets to effectuate our business plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">determine that the processes and technologies that we have developed<B> </B>are commercially viable;
and/or</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">attract, enter into or maintain contracts with, and retain customers.</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">If
we cannot execute any one of the foregoing, our business may fail, in which case you would lose the entire amount of your investment
in our company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B><I>Given
our lack of revenue and cash flow, we will need to raise additional capital, which may be unavailable to us or, even if consummated,
may cause dilution or place significant restrictions on our ability to operate.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">As of September
30, 2012, we had cash and cash equivalents of $820,017. According to our management&rsquo;s estimates, based on these funds plus
additional funds raised during October 2012, and further based on our budget and the assumption that initial commercial sales
will commence during our anticipated timeframes, we believe that we will have sufficient resources to continue our activity at
least until the end of 2013. However, if we are not able to commercially launch Dario or meeting our commercial sales targets,
and if we are unable to obtain additional capital resources, we will not be able to continue activities beyond the end of 2013.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">Since we might
be unable to generate sufficient, if any, revenue or cash flow to fund our operations for the foreseeable future, we will likely
need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations. We may
also need additional funding for developing products and services, increasing our sales and marketing capabilities, promoting
brand identity, and acquiring complementary companies, technologies and assets, as well as for working capital requirements and
other operating and general corporate purposes. Moreover, the registration of the common stock issued in this offering for resale
and regulatory compliance arising out of being a publicly registered company will dramatically increase our costs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Other than the
irrevocable commitment of investor in our August 2012 Private Placement to fund an additional $1,000,000 to our company following
effectiveness of the registration statement of which this prospectus is a part, we do not currently have any arrangements or credit
facilities in place as a source of funds, and there can be no assurance that we will be able to raise sufficient additional capital
on acceptable terms, or at all. If such financing is not available on satisfactory terms, or is not available at all, we may be
required to delay, scale back or eliminate the development of business opportunities and our operations and financial condition
may be materially adversely affected.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If we raise
additional capital by issuing equity securities, the percentage ownership of our existing stockholders may be reduced, and accordingly
these stockholders may experience substantial dilution. We may also issue equity securities that provide for rights, preferences
and privileges senior to those of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Debt financing,
if obtained, may involve agreements that include liens on our assets, covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, could increase our expenses and require that our assets be provided as a security
for such debt. Debt financing would also be required to be repaid regardless of our operating results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: Black">If
we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our
technologies or candidate products, or to grant licenses on terms that are not favorable to us.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: Black">Funding
from any source may be unavailable to us on acceptable terms, or at all. If we do not have sufficient capital to fund our operations
and expenses, we may not be able to achieve or maintain competitiveness, which could lead to the failure of our business and the
loss of your investment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><FONT STYLE="color: Black"><B><I>We
have not generated revenue and may not generate revenue in the manner in which we anticipate. Further, we expect to incur losses
for the foreseeable future.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">To date, we
have not generated revenue since our initial product, Dario, has not received regulatory approvals and is thus not ready for commercial
sale. Although we expect to launch Dario in 2013, no assurances can be given that we will be able to do so in accordance with
such time frame or at all. Because of the various risks and uncertainties associated with developing, obtaining regulatory approvals
and marketing Dario, we are unable to predict with any certainty the extent of any future revenues, cash flows, profits or losses
or when we will generate positive cash flow or become profitable, if at all. We expect that we will continue to incur significant
and increasing operating losses for the foreseeable future as we attempt to initiate and then expand our sales. These losses,
among other things, will have an adverse effect on our stockholders&rsquo; equity and working capital. Failure to generate revenue
or achieve profitability would materially adversely affect the value of our company and our ability to establish and grow our
business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B><I>We can
not accurately predict the volume or timing of any future sales, making the timing of any revenues difficult to predict.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We may be faced
with lengthy customer evaluation and approval processes associated with our products. Consequently, we may incur substantial expenses
and devote significant management effort and expense in developing customer adoption of our products, which may not result in
revenue generation. As such, we can not accurately predict the volume or timing of any future sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B><I>Our independent
registered public accounting firm has expressed in its report to our audited financial statements a substantial doubt about our
ability to continue as a going concern</I></B>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are an early
stage company, and the development and commercialization of our product is uncertain and expected to require substantial expenditures.
We have not yet generated any revenues from our operations to fund our activities, and are therefore dependent upon external sources
for financing our operations. There is a risk that we will be unable to obtain necessary financing to continue our operations
on terms acceptable to us or at all. As a result, our independent registered public accounting firm has expressed in its auditors&rsquo;
report on the financial statements included as part of this prospectus a substantial doubt regarding our ability to continue as
a going concern. Our financial statements do not include any adjustments that might result from the outcome of the uncertainty
regarding our ability to continue as a going concern. If we cannot continue as a going concern, our stockholders may lose their
entire investment in the common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We expect to derive substantially
all of our revenues from our principal technology, which leaves us subject to the risk of reliance on such technology.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We expect to
derive substantially all of our revenues from sales of products derived from our principal technology. Our initial product utilizing
this technology is Dario. As such, any factor adversely affecting sales of Dario, including the product release cycles, regulatory
issues, market acceptance, product competition, performance and reliability, reputation, price competition and economic and market
conditions, would likely harm our operating results. We may be unable to develop other products utilizing our technology, which
would likely lead to the failure of our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Moreover, if
patent protection is not available for our principal technology, the viability of Dario and any other products that may be derived
from such technology would likely be adversely impacted to a significant degree, which would materially impair our prospects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B><I>Certain
of our executive officers and directors may become subject to conflicts of interests given their association with other biotechnology
or medical device businesses.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Certain of our
directors and officers, including Dr. Fuerst and Mr. Stern, are, or may become, in their individual capacities, officers, directors,
controlling shareholders and/or partners of or advisors to other entities engaged in a variety of businesses, including in the
biotechnology or medical device sector. Thus, there is a risk that these individuals may become subject to conflicts of interest
relating to our business given their participation with such other businesses, including, among other things, conflicts relating
to time, effort and corporate opportunities. We do not presently have a formal policy for resolving such conflicts of interest
should they arise, and the inability to resolve such conflicts should they arise could have an adverse effect on our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><I>Our
future performance will depend on the continued engagement of key members of our management team, some of whom are rendering service
on a part-time basis.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our future performance
depends to a large extent on the continued services of members of our current management and other key personnel including, in
particular, Dr. Oren Fuerst, our Chairman of the board of directors and Chief Executive Officer, Shilo Ben Zeev, our President
and Chief Operating Officer and Mordechi (Motty) Hershkowitz, our Chief Financial Officer. In the event that we lose the continued
services of such key personnel for any reason, this could have a material adverse affect on our business, operations and prospects.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Moreover, Dr.
Fuerst is not contractually required to spend a minimum amount of his business time on our company&rsquo;s affairs. There is therefore
a risk that other obligations could distract Dr. Fuerst and any of our other part time employees from our business, which could
have a negative impact on our ability to effectuate our business plans.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>If we
are not able to attract and retain highly skilled managerial, scientific and technical personnel, we may not be able to implement
our business model successfully.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We believe that
our management team must be able to act decisively to apply and adapt our business model in the rapidly changing markets in which
we will compete. In addition, we will rely upon technical and scientific employees or third party contractors to effectively establish,
manage and grow our business. Consequently, we believe that our future viability will depend largely on our ability to attract
and retain highly skilled managerial, sales, scientific and technical personnel. In order to do so, we may need to pay higher
compensation or fees to our employees or consultants than we currently expect and such higher compensation payments would have
a negative effect on our operating results. Competition for experienced, high-quality personnel is intense and we cannot assure
that we will be able to recruit and retain such personnel. We may not be able to hire or retain the necessary personnel to implement
our business strategy. Our failure to hire and retain such personnel could impair our ability to develop new products and manage
our business effectively.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">We will be subject to
the risk of reliance on third parties to conduct our clinical trial work.</FONT></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; font-style: normal; color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We depend on
independent clinical investigators to conduct our clinical trials. Contract research organizations may also assist us in the collection
and analysis of data. These investigators and contract research organizations will not be our employees and we will not be able
to control, other than by contract, the amount of resources, including time that they devote to products that we develop. If independent
investigators fail to devote sufficient resources to or clinical trials, or if their performance is substandard, it will delay
the approval or clearance and commercialization of any products that we develop. Further, the U.S. Food and Drug Administration
(or FDA) and other regulatory bodies around the world require that we comply with standards, commonly referred to as good clinical
practice, for conducting, recording and reporting clinical trials to assure that data and reported results are credible and accurate
and that the rights, integrity and confidentiality of trial subjects are protected. If our independent clinical investigators
and contract research organizations fail to comply with good clinical practice, the results of our clinical trials could be called
into question and the clinical development of our product candidates could be delayed. Failure of clinical investigators or contract
research organizations to meet their obligations to us or comply with federal regulations could adversely affect the clinical
development of our product candidates and harm our business.</FONT></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; font-style: normal; color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We will rely on third parties
to manufacture and supply our product candidates.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We do not own
or operate manufacturing facilities for clinical or commercial production of Dario. We lack the resources and the capability to
manufacture Dario on a commercial scale. If our future manufacturing partners are unable to produce our products in the amounts
that we require, we may not be able to establish a contract and obtain a sufficient alternative supply from another supplier on
a timely basis and in the quantities we require. We expect to depend on third-party contract manufacturers for the foreseeable
future.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Dario requires,
and our future product candidates, if any, likely will require precise, high quality manufacturing. Any of our contract manufacturers
will be subject to ongoing periodic unannounced inspection by the FDA and other non-U.S. regulatory authorities to ensure strict
compliance with quality system regulations, including current good manufacturing practices and other applicable government regulations
and corresponding standards. If our contract manufacturers fail to achieve and maintain high manufacturing standards in compliance
with quality system regulations, we may experience manufacturing errors resulting in patient injury or death, product recalls
or withdrawals, delays or interruptions of production or failures in product testing or delivery, delay or prevention of filing
or approval of marketing applications for our products, cost overruns or other problems that could seriously harm our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Any performance
failure on the part of our contract manufacturers could delay clinical development or regulatory clearance or approval of our
product candidates or commercialization of our future product candidates, depriving us of potential product revenue and resulting
in additional losses. In addition, our dependence on a third-party for manufacturing may adversely affect our future profit margins.
Our ability to replace an existing manufacturer may be difficult because the number of potential manufacturers is limited and
the FDA must approve any replacement manufacturer before it can begin manufacturing our product candidates. Such approval would
require additional non-clinical testing and compliance inspections. It may be difficult or impossible for us to identify and engage
a replacement manufacturer on acceptable terms in a timely manner, or at all.</FONT></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-weight: normal; font-style: normal; color: Black">&nbsp;</FONT></P>

<P STYLE="font: italic bold 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">Supply problems could
harm our business<FONT STYLE="font-style: normal">.</FONT></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our initial
product, Dario, will primarily be marketed via the Internet, directly to consumers. Our ability to generate sales of Dario will
depend on our ability to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">procure
                                                                                                             components such as
                                                                                                             strips and adaptors
                                                                                                             on a timely basis
                                                                                                             from a limited number
                                                                                                             of suppliers and
                                                                                                             manufactures;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">assemble
                                                                                                             and ship products
                                                                                                             to consumers on a
                                                                                                             timely basis with
                                                                                                             appropriate quality
                                                                                                             control;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">develop
                                                                                                             online distribution
                                                                                                             and shipment processes;
                                                                                                             and</FONT></TD></TR></TABLE>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">manage
                                                                                                             inventory and develop
                                                                                                             processes to deliver
                                                                                                             customer support.</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our inability
to achieve any of the foregoing could significantly impair our ability to operate our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We anticipate
that in the future we will generally commit to purchase component parts from suppliers based on sales forecasts of our products.
If we cannot change or be released from these non-cancelable purchase commitments, and if orders for our products do not materialize,
we could incur significant costs related to the purchase of excess components which could become obsolete before we can use them.
Additionally, a delay in production of the components or inaccuracy in our sales forecast could materially adversely impact our
operating results if we are unable to timely ship ordered products or provide replacement parts under warranty or maintenance
contracts.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>If Dario
fails to satisfy current or future customer requirements, we may be required to make significant expenditures to redesign the
product, and we may have insufficient resources to do so.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Dario is being
designed to address an evolving marketplace and must comply with current and evolving customer requirements in order to gain market
acceptance. There is a risk that Dario will not meet anticipated customer requirements or desires. If we are required to redesign
our products to address customer demands or otherwise modify our business model, we may incur significant unanticipated expenses
and losses, and we may be left with insufficient resources to engage in such activities. If we are unable to redesign our products,
develop new products or modify our business model to meet customer desires or any other customer requirements that may emerge,
our operating results would be materially adversely affected and our business might fail.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Failure in our online marketing
efforts could significantly impact our ability to generate sales.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In many of our
principal target markets, we plan to primarily utilize online marketing in order to create awareness to Dario. Our management
believes using online advertisement through affiliate networks and a variety of other pay-for-performance methods will be superior
for marketing and generating sales of Dario versus utilizing traditional, expensive retail channels. However, there is a risk
that our marketing strategy could fail. Because we don&rsquo;t plan to use a traditional retail sales force or to substantially
rely on diabetic&rsquo;s healthcare providers to educate our customers about Dario, we cannot predict the level of success, if
any, that we may achieve by marketing Dario via Internet. The failure of our online marketing efforts would significantly and
negatively impact our ability to generate sales.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We expect that our Dario smartphone
application, which is key to our business model, will be available via Apple&rsquo;s iOS and subsequently Google&rsquo;s Android
platforms. If we are unable to achieve or maintain a good relationship with each of Apple and Google or if the Apple App Store
or the Google Play Store were unavailable for any prolonged period of time, our business will suffer. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">A key component
of the Dario offering will be an iPhone or Android application which will incorporate tools to help diabetic patients manage their
disease. We expect that this application will be available via Apple&rsquo;s iOS and subsequently Google&rsquo;s Android platforms.
If we are unable to make our Dario application available through these platforms, or if there is any deterioration in our relationship
with either Apple or Google after our application is available, our business would be materially harmed.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We will be subject
to each of Apple&rsquo;s and Google&rsquo;s standard terms and conditions for application developers, which govern the promotion,
distribution and operation of games and other applications on their respective storefronts. Each of Apple and Google has broad
discretion to change its standard terms and conditions, including changes which could require us to pay to have our Dario application
available for downloading. In addition, these standard terms and conditions can be vague and subject to changing interpretations
by Apple or Google. We may not receive any advance warning of such changes. In addition, each of Apple and Google have the right
to prohibit a developer from distributing its applications on its storefront if the developer violates its standard terms and
conditions. In the event that either Apple or Google ever determines that we are in violation of its standard terms and conditions,
including by a new interpretation, and prohibits us from distributing our Dario application on its storefront, it would materially
harm our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Additionally,
we will rely on the continued function of the Apple App Store and the Google Play Store as digital storefronts where our Dario
application may be obtained. There have been occasions in the past when these digital storefronts were unavailable for short periods
of time or where there have been issues with the in-app purchasing functionality within the storefront. In the event that either
the Apple App Store or the Google Play Store is unavailable or if in-app purchasing functionality within the storefront is non-operational
for a prolonged period of time, it would have a material adverse effect on the ability of our customers to secure the Dario application,
which would materially harm our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>As we
plan to conduct business internationally, we will be susceptible to risks associated with international relationships.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We intend to
operate our business internationally in addition to in the United States, initially in Europe and subsequently in markets including,
but not limited to, Brazil and India. The international operation of our business will require significant management attention,
which could negatively affect our business if it diverts their attention from their other responsibilities. In the event that
we are unable to manage the complications associated with international operations, our business prospects could be materially
and adversely affected. In addition, doing business with foreign customers subjects us to additional risks that we do not generally
face in the United States. These risks and uncertainties include:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">management, communication and integration problems resulting from cultural differences and geographic
dispersion;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">localization of products and services, including translation of foreign languages;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">longer accounts receivable payment cycles and difficulties in collecting accounts receivable;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">difficulties supporting international operations;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">changes in economic and political conditions;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">impact of trade protection measures;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">complying with import or export licensing requirements;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">exchange rate fluctuations;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">competition from companies with international operations, including large international competitors
and entrenched local companies;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">potentially adverse tax consequences, including foreign tax systems and restrictions on the repatriation
of earnings;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">maintaining and servicing computer hardware in distant locations;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">keeping current and complying with a wide variety of foreign laws and legal standards, including local
labor laws;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">securing or maintaining protection for our intellectual property; and</TD></TR></TABLE>



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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">reduced or varied protection for intellectual property rights, including the ability to transfer such
rights to third parties, in some countries.</TD></TR></TABLE>



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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The occurrence
of any or all of these risks could adversely affect our international business and, consequently, our results of operations and
financial condition.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We expect to be exposed to
fluctuations in currency exchange rates, which could adversely affect our results. </I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Because we expect
to conduct a material portion of our business outside of the United States but report our financial results in U.S. Dollars, we
face exposure to adverse movements in currency exchange rates. Our foreign operations will be exposed to foreign exchange rate
fluctuations as the financial results are translated from the local currency into U.S. Dollars upon consolidation. If the U.S.
Dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions will result in increased
revenue, operating expenses and net income. Similarly, if the U.S. Dollar strengthens against foreign currencies, the translation
of these foreign currency denominated transactions will result in decreased revenue, operating expenses and net income. As exchange
rates vary, sales and other operating results, when translated, may differ materially from our or the capital market&rsquo;s expectations.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Non-U.S. governments often
impose strict price controls, which may adversely affect our future profitability.</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We intend to
seek approval to market Dario and our future product candidates, if any, in both the U.S. and in non-U.S. jurisdictions. If we
obtain approval in one or more non-U.S. jurisdictions, we will be subject to rules and regulations in those jurisdictions relating
to our products. In some countries, particularly countries of the European Union, each of which has developed its own rules and
regulations, pricing may be subject to governmental control under certain circumstances. In these countries, pricing negotiations
with governmental authorities can take considerable time after the receipt of marketing approval for a medical device candidate.
To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the
cost-effectiveness of our product to other available products.<B> </B>If reimbursement of our product candidates is unavailable
or limited in scope or amount, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability.</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>Our device,
software and associated business processes may contain undetected errors, which could limit our ability to provide our services
and diminish the attractiveness of our service offerings.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our device,
software or our business processes may contain undetected errors, defects or bugs. As a result, our customers or end users may
discover errors or defects in our devices, software or the systems we design, or the products or systems incorporating our designs
and intellectual property may not operate as expected. We may discover significant errors or defects in the future that we may
not be able to fix. Our inability to fix any of those errors could limit our ability to provide our products, impair the reputation
of our brand and diminish the attractiveness of our product offerings to our customers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
we may utilize third party technology or components in our products and we rely on those third parties to provide support services
to us. Failure of those third parties to provide necessary support services could materially adversely impact our business.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>As our operating subsidiary
is in Israel, we will be faced with the risks associated with doing business in that country.</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our operating
subsidiary, along with its management team and our research and development facilities, is located in Israel. Although substantially
all of our sales will be made to consumers outside Israel and the manufacturing of Dario will be based primarily on parts made
in other countries, we are and will nonetheless be directly influenced by the political, economic and military conditions affecting
Israel. For example, <FONT STYLE="background-color: white">major hostilities involving Israel (such as the November 2012 hostilities
between Israel and Hamas in the Gaza Strip) or the interruption or curtailment of trade between Israel and its present trading
partners could have a material adverse effect on our existing business relationships and on our operating results and financial
condition. Furthermore, several countries restrict business with Israeli companies, which may impair our ability to create new
business relationships or to be, or become, profitable.</FONT></FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Risks Related
to Our Intellectual Property</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>The failure
to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete
effectively.</I></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal; color: Black">In
order for our business to be viable and to compete effectively, we need to develop and maintain, and we will heavily rely on,
a proprietary position with respect to our technologies and intellectual property. We filed a Patent Cooperation Treaty (or
PCT) application for a &ldquo;smartphone based glucose and other body fluids content monitor&rdquo; in May
2011 (PCT/IL2012/000369) which incorporates two U.S. provisional applications submitted in the preceding year. The PCT covers
the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of body
fluids and has subsequently been converted into several national phase patent applications. We also plan to obtain numerous Web domains.
With respect to PCT/IL2011/000369 for two U.S. provisional patent applications, we claimed the patent priority dates of
September 5, 2010 for patent application no. 61/332,778 and November 1, 2011 for patent application no.
61/431,449).</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal; color: Black">However,
our patents have not been granted by a patent office. In addition, there are significant risks associated with our actual or proposed
intellectual property. The risks and uncertainties that we face with respect to our pending patent and other proprietary rights
principally include the following:</FONT></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">pending patent applications we have filed or will file may not result in issued patents or may take
longer than we expect to result in issued patents;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">we may be subject to interference proceedings;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">we may be subject to opposition proceedings in foreign countries;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">any patents that are issued to us may not provide meaningful protection;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">we may not be able to develop additional proprietary technologies that are patentable;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">other companies may challenge patents licensed or issued to us;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">other companies may have independently developed and/or patented (or may in the future independently
develop and patent) similar or alternative technologies, or duplicate our technologies;</TD></TR></TABLE>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">other companies may design around technologies we have licensed or developed; and</TD></TR></TABLE>



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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal; color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">enforcement of patents is complex, uncertain and very expensive.</TD></TR></TABLE>



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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We cannot be
certain that patents will be issued as a result of any of our pending or future applications, or that any of our patents, once
issued, will provide us with adequate protection from competing products. For example, issued patents may be circumvented or challenged,
declared invalid or unenforceable, or narrowed in scope. In addition, since publication of discoveries in scientific or patent
literature often lags behind actual discoveries, we cannot be certain that we were the first to make our inventions or to file
patent applications covering those inventions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">It is also possible
that others may have or may obtain issued patents that could prevent us from commercializing our products or require us to obtain
licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. As to those patents
that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement,
and we may be unable to do so.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition
to patents and patent applications, we depend upon trade secrets and proprietary know-how to protect our proprietary technology.
We require our employees, consultants, advisors and collaborators to enter into confidentiality agreements that prohibit the disclosure
of our confidential information to any other parties. We will also require our employees and consultants to disclose and assign
to us their ideas, developments, discoveries and inventions. These agreements may not, however, provide adequate protection for
our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure in violation of
these agreements.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>Costly
litigation may be necessary to protect our intellectual property rights and we may be subject to claims alleging the violation
of the intellectual property rights of others.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We may face
significant expense and liability as a result of litigation or other proceedings relating to patents and intellectual property
rights of others. In the event that another party has also filed a patent application or been issued a patent relating to an invention
or technology claimed by us in pending applications, we may be required to participate in an interference proceeding declared
by the United States Patent and Trademark Office to determine priority of invention, which could result in substantial uncertainties
and costs for us, even if the eventual outcome was favorable to us. We, or our licensors, also could be required to participate
in interference proceedings involving issued patents and pending applications of another entity. An adverse outcome in an interference
proceeding could require us to cease using the technology, substantially modify it or to license rights from prevailing third
parties.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The cost to
us of any patent litigation or other proceeding relating to our licensed patents or patent applications, even if resolved in our
favor, could be substantial, especially given our early stage of development. Our ability to enforce our patent protection could
be limited by our financial resources, and may be subject to lengthy delays. A third party may claim that we are using inventions
claimed by their patents and may go to court to stop us from engaging in our normal operations and activities, such as research,
development and the sale of any future products. Such lawsuits are expensive and would consume significant time and other resources.
There is a risk that a court will decide that we are infringing the third party&rsquo;s patents and will order us to stop the
activities claimed by the patents. In addition, there is a risk that a court will order us to pay the other party damages for
having infringed their patents.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Moreover, there
is no guarantee that any prevailing patent owner would offer us a license so that we could continue to engage in activities claimed
by the patent, or that such a license, if made available to us, could be acquired on commercially acceptable terms. In addition,
third parties may, in the future, assert other intellectual property infringement claims against us with respect to our services,
technologies or other matters.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>International patent protection
is particularly uncertain, and if we are involved in opposition proceedings in foreign countries we may have to expend substantial
sums and management resources. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Patent and other
intellectual property law outside the United States is even more uncertain than in the United States and is continually undergoing
review and revisions in many countries. Further, the laws of some foreign countries may not protect our intellectual property
rights to the same extent as the laws of the United States. For example, certain countries do not grant patent claims that are
directed to business methods and processes. In addition, we may have to participate in opposition proceedings to determine the
validity of our foreign patents or our competitors&rsquo; foreign patents, which could result in substantial costs and diversion
of our efforts.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">Risks Related
to Our Industry</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>We face
intense competition in the self monitoring blood glucose markets and we may not be able to compete in our industry.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">With our first
product, Dario, we expect compete directly and primarily with large pharmaceutical and medical device companies: Abbott Laboratories,
Bayer Healthcare Division, Johnson &amp; Johnson LifeScan, Roche Diagnostics and Sanofi. The first four of these companies have
more than 90% combined market shares of the SMBG business and strong research and development capacity for next generation products.
Their dominant market position since the late 1990s and significant control over the market could significantly limit our ability
to introduce Dario or effectively market and generate sales of the product. We will also compete with numerous second-tier and
third-tier competitors.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are a &ldquo;start-up&rdquo;
company with no meaningful history of operations, and most of our competitors have long histories and strong reputations within
the industry. They have significantly greater financial and human resources than we do. They also have more experience and capabilities
in researching and developing testing products, obtaining regulatory approvals, manufacturing and marketing those products than
we do. There is a significant risk that we may be unable to overcome the advantages held by our competition, and our inability
to do so could lead to the failure of our business and the loss of your investment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Competition
in the SMBG markets is extremely intense, which can lead to, among other things, price reductions, longer selling cycles, lower
product margins, loss of market share and additional working capital requirements. To succeed, we must, among other critical matters,
gain consumer acceptance for Dario and potential future products incorporating our principal technology and offer better strategic
concepts, technical solutions, prices and response time, or a combination of these factors, than those of other competitors. If
our competitors offer significant discounts on certain products, we may need to lower our prices or offer other favorable terms
in order to compete successfully. Moreover, any broad-based changes to our prices and pricing policies could make it difficult
to generate revenues or cause our revenues, if established, to decline. Some of our competitors may bundle certain software products
at low prices for promotional purposes or as a long-term pricing strategy. These practices could significantly reduce demand for
Dario or potential future products or constrain prices we can charge. Moreover, if our competitors develop and commercialize products
that are more effective or desirable than Dario or the other products that we may develop, we may not convince our customers to
use our products. Any such changes would likely reduce our commercial opportunity and revenue potential and could materially adversely
impact our operating results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>It may be difficult for us
to establish market acceptance of Dario, which would significantly impair our viability.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are faced
with the risk that the marketplace will not be receptive to Dario over competing products and that we will be unable to compete
effectively. Failure of our products to achieve market acceptance could have a material adverse effect on our business, financial
condition and results of operations. Factors that could affect our ability to establish Dario or any potential future products
include:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">the development of products or platforms and design and methodology services, which could result in
a shift of customer preferences away from our products and services and significantly decrease revenue;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">the increase use of improved diabetes drugs that could encourage certain diabetics to test less often,
resulting in less usage of self-monitoring test device for certain types of diabetics;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">the challenges of developing (or acquiring externally-developed) technology solutions that are adequate
and competitive in meeting the requirements of next-generation design challenges;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">the significant number of current competitors in SMBG market who have significantly greater name recognition
and more recognizable trademarks and who have established relationships with diabetics healthcare providers and payors; and</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">intense competition to attract acquisition targets, which may make it more difficult for us to acquire
companies or technologies at an acceptable price or at all.</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">If we are unable to establish market
acceptance of Dario, our business would likely fail and you would lose your investment in our company.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>If we
fail to respond quickly to technological developments our products may become uncompetitive and obsolete.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The SMBG market
and other markets in which we plan to compete experience rapid technology developments, changes in industry standards, changes
in customer requirements and frequent new product introductions and improvements. If we are unable to respond quickly to these
developments, we may lose competitive position, and our products or technologies may become uncompetitive or obsolete, causing
revenues and operating results to suffer. To compete, we must develop or acquire new products and improve our existing products
and processes on a schedule that keeps pace with technological developments and the requirements for products addressing a broad
spectrum and designers and designer expertise in our industries. We must also be able to support a range of changing customer
preferences. For instance, as non-invasive technologies become more readily available in the market, we may be required to adopt
our platform to accommodate the use of non-invasive or continuous blood glucose sensors. We cannot guarantee that we will be successful
in any manner in these efforts.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>The regulatory approval process
is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of Dario</I></B>
<B><I>or our future product candidates, if any.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The research,
testing, manufacturing, labeling, approval, selling, marketing and distribution of medical devices are subject to extensive regulation
by the FDA and non-U.S. regulatory authorities, which regulations differ from country to country. See &ldquo;Business &ndash;
Government Regulation.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are not permitted
to market our product candidates in the United States until we receive a clearance letter under the 510(k) premarket notification
process, or approval of a Section 515 premarket approval (or PMA) from the FDA, depending on the nature of the device. We have
not submitted an application or premarket notification for or received marketing clearance or approval for any of our product
candidates. Obtaining approval of any premarket approval can be a lengthy, expensive and uncertain process. While the FDA normally
reviews and clears a premarket notification in three months, there is no guarantee that our products will qualify for this more
expeditious regulatory process, which is reserved for Class I and II devices, nor is there any assurance that, even if a device
is reviewed under the 510(k) premarket notification process, the FDA will review it expeditiously or determine that the device
is substantially equivalent to a lawfully marketed non-premarket approval device. If the FDA fails to make this finding, then
we cannot market the device. In lieu of acting on a premarket notification, the FDA may seek additional information or additional
data which would further delay our ability to market the product. In addition, failure to comply with FDA, non-U.S. regulatory
authorities or other applicable U.S. and non-U.S. regulatory requirements may, either before or after product clearance or approval,
if any, subject us to administrative or judicially imposed sanctions, including:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">restrictions on the products, manufacturers or manufacturing process;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">adverse inspectional observations (Form 483), warning letters or non-warning letters incorporating
inspectional observations;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">civil and criminal penalties;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">injunctions;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">suspension or withdrawal of regulatory clearances or approvals;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">product seizures, detentions or import bans;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">voluntary or mandatory product recalls and publicity requirements;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">total or partial suspension of production;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">imposition of restrictions on operations, including costly new manufacturing requirements; and</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">refusal to clear or approve pending applications or premarket notifications.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The FDA can
delay, limit or deny clearance or approval of a medical device candidate for many reasons, including:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">a medical device candidate may not be deemed safe or effective, in the case of a premarket approval
application;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">a medical device candidate may not be deemed to be substantially equivalent to a lawfully marketed
non-premarket approval device in the case of a 510(k) premarket notification;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">FDA officials may not find the data from pre-clinical studies and our Dario clinical trial (or any
future trials) sufficient;</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">the FDA might not approve our third-party manufacturer&rsquo;s processes or facilities; or</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">the FDA may change its clearance or approval policies or adopt new regulations.</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may be unable to complete
required clinical trials, or we may experience significant delays in completing such clinical trials, which could significantly
delay our targeted product launch timeframe and impair our viability and business plan. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The completion
of any future clinical trials for Dario or other trials that we may be required to undertake in the future could be delayed, suspended
or terminated for several reasons, including:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">our failure or inability to conduct the clinical trial in accordance with regulatory requirements;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">sites participating in the trial may drop out of the trial, which may require us to engage new sites
for an expansion of the number of sites that are permitted to be involved in the trial;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">patients may not enroll in, remain in or complete, the clinical trial at the rates we expect; and</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-align: left; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: left">clinical investigators may not perform our clinical trial on our anticipated schedule or consistent
with the clinical trial protocol and good clinical practices.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If our clinical
trial is delayed it will take us longer to ultimately commercialize Dario and generate revenues. Moreover, our development costs
will increase if we have material delays in our clinical trial or if we need to perform more or larger clinical trials than planned.
We may be faced with similar risks in connection with future trials we conduct.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our failure to meet or maintain
necessary or potential regulatory requirements, in relevant target markets, could hurt our ability to distribute and market our
products. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Dario or our
potential future products may fall under the regulatory purview of various centers at the FDA as described above and similar health
authorities in foreign regions or countries where we intend to do business, such as in the European Union. The FDA&rsquo;s 510(k)
clearance process may take from three to twelve months, or longer, and may or may not require human clinical data. The premarket
approval process may take from eleven months to three years, or even longer, and will likely require significant supporting human
clinical data.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
on July 21, 2011, the FDA issued a draft guideline for comment related to mobile medical applications (which we refer to herein
as the Guideline). Under the Guideline, the FDA plans to apply its regulatory oversights to certain types of mobile medical devices.
We anticipate that Dario will be subject to the FDA&rsquo;s regulatory oversights and enforcement actions. Delays in obtaining
the regulatory clearance or approval from the FDA or its equivalents in foreign market could adversely affect our revenues and
profitability. We cannot predict whether or when we will be permitted to commercialize Dario.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We may also
become subject to numerous post-marketing regulatory requirements, which include labeling regulations and medical device reporting
regulations, which may require us to report to different regulatory agencies if our devices cause or contribute to a death or
serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury. In addition, these
regulatory requirements may change in the future in a way that adversely affects us. If we fail to comply with present or future
regulatory requirements that are applicable to us, we may be subject to enforcement action by regulatory agencies, which may include,
among others, any of the following sanctions:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>customer notification, or orders for repair, replacement or refunds;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>voluntary or mandatory recall or seizure of our current or future products;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>imposing operating restrictions, suspension or shutdown of production;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>refusing our requests for 510(k) clearance or pre-market approval of new products, new intended uses or modifications to Dario
or future products;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>rescinding 510(k) clearance or suspending or withdrawing pre-market approvals that have already been granted;&nbsp;and</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>criminal prosecution.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt">&nbsp;<FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24.5pt"><FONT STYLE="color: Black">The occurrence
of any of these events may have a material adverse effect on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>If we or our manufacturers
fail to comply with the FDA&rsquo;s Quality System Regulation or any applicable state equivalent, our operations could be interrupted
and our operating results could suffer.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Under the Guideline,
the FDA strongly recommends that manufacturers of mobile medical applications follow the FDA&rsquo;s Quality System Regulation.
We, our manufacturers and suppliers are also subject to the regulations of foreign jurisdictions regarding the manufacturing process
if we market our products overseas. If our affiliates, our manufacturers or suppliers are found to be in significant non-compliance
or fail to take satisfactory corrective action in response to adverse QSR inspectional findings, the FDA could take enforcement
actions against us and our manufacturers which could impair our ability to produce our products in a cost-effective and timely
manner in order to meet our customers&rsquo; demands. Accordingly, our operating results could suffer.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Healthcare policy changes,
including ongoing efforts to reform the U.S. healthcare system, may have a material adverse effect on us.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Dario utilizes
a standard electrochemical glucose testing method and is expected to benefit from existing regulatory approvals worldwide for
traditional, non-disposable monitors, test-strips and lancets, in order to have a more rapid pathway to market. However, the SMBG
markets have experienced downward pressure on product pricing because the Federal and state governments have made various cost
containment efforts on health care expenditures. Furthermore, the industry faces uncertainty brought by the Patient Protection
and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 and of any potential healthcare reform that
could impact tax and reimbursement rates. The implementation of these laws or the adoption of healthcare reform proposals in the
future could thus impose limitations on the prices we will be able to charge for our products, or the amounts of reimbursement
available for our products from governmental agencies or third-party payors. These limitations could have a material adverse effect
on our financial position and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We anticipate
that legislation could change access to health care products, increase rebates, reduce prices or the rate of price increases,
or cap reimbursement rates for medical devices. We also anticipate that legislation could impose sales or excise tax on the medical
device manufacturing sector. Any change on medical device taxation and downward trending reimbursement rates would directly impact
all aspects of our industry, including our operations and the demand for our products. To the extent such cost containment efforts
are not offset by the growth of diabetics population, greater patient access to healthcare and other factors, our future revenues
and operating income would be reduced.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may be subject to federal,
state and foreign healthcare fraud and abuse laws and regulations.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Many federal,
state and foreign healthcare laws and regulations apply to the SMBG business and medical devices. We may be subject to certain
federal and state regulations, including the federal healthcare programs&rsquo; Anti-Kickback Law, the federal Health Insurance
Portability and Accountability Act of 1996, and other federal and state false claims laws. The medical device industry has been
under heightened scrutiny as the subject of government investigations and enforcement actions involving manufacturers who allegedly
offered unlawful inducements to potential or existing customers in an attempt to procure their business, including arrangements
with physician consultants. If our operations or arrangements are found to be in violation of such governmental regulations, we
may be subject to civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs and the curtailment
of our operations. All of these penalties could adversely affect our ability to operate our business and our financial results.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Product liability suits, whether
or not meritorious, could be brought against us due to an alleged defective product or for the misuse of Dario or our potential
future products. These suits could result in expensive and time-consuming litigation, payment of substantial damages, and an increase
in our insurance rates.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If Dario or
any of our future products are defectively designed or manufactured, contain defective components or are misused, or if someone
claims any of the foregoing, whether or not meritorious, we may become subject to substantial and costly litigation. Misusing
our devices or failing to adhere to the operating guidelines or the device producing inaccurate meter readings could cause significant
harm to patients, including death. In addition, if our operating guidelines are found to be inadequate, we may be subject to liability.
Product liability claims could divert management&rsquo;s attention from our core business, be expensive to defend and result in
sizable damage awards against us. We presently have no insurance against such claims, and even if we are able to obtain such insurance
(of which no assurances can be given), we may not have sufficient insurance coverage for all future claims. Any product liability
claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing
continuing coverage, could harm our reputation in the industry and could reduce revenue. Product liability claims in excess of
our insurance coverage would be paid out of cash reserves harming our financial condition and adversely affecting our results
of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>If we are found to have violated
laws protecting the confidentiality of patient health information, we could be subject to civil or criminal penalties, which could
increase our liabilities and harm our reputation or our business.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Part of our
business plan includes the storage and potential monetization of medical data of users of Dario. There are a number of federal
and state laws protecting the confidentiality of certain patient health information, including patient records, and restricting
the use and disclosure of that protected information. In particular, the U.S.&nbsp;Department of Health and Human Services promulgated
patient privacy rules under the Health Insurance Portability and Accountability Act of 1996 (which we refer to herein as HIPAA).
These privacy rules protect medical records and other personal health information by limiting their use and disclosure, giving
individuals the right to access, amend and seek accounting of their own health information and limiting most use and disclosures
of health information to the minimum amount reasonably necessary to accomplish the intended purpose. We may face difficulties
in holding such information in compliance with applicable law. If we are found to be in violation of the privacy rules under HIPAA,
we could be subject to civil or criminal penalties, which could increase our liabilities, harm our reputation and have a material
adverse effect on our business, financial condition and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>Risks Related
to the Ownership of Our Common Stock</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our majority stockholders
will control our company for the foreseeable future, including the outcome of matters requiring shareholder approval.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our founders,
officers and directors collectively have an approximately 61.56% beneficial ownership of our company. As a result, such individuals
will have the ability, acting together, to control the election of our directors and the outcome of corporate actions requiring
shareholder approval, such as: (i) a merger or a sale of our Company, (ii) a sale of all or substantially all of our assets, and
(iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant
effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other shareholders and be disadvantageous
to our shareholders with interests different from those individuals. Certain of these individuals also have significant control
over our business, policies and affairs as officers or directors of our company. Therefore, you should not invest in reliance
on your ability to have any control over our company. See &ldquo;Principal Stockholders.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>An investment in our company
should be considered illiquid.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">An investment
in our company requires a long-term commitment, with no certainty of return. Because we do not plan to become an SEC reporting
company by the traditional means of conducting an initial public offering of our common stock, we may be unable to establish a
liquid market for our common stock. Moreover, we do not expect security analysts of brokerage firms to provide coverage of our
company in the near future. In addition, investment banks may be less likely to agree to underwrite primary or secondary offerings
on behalf of our company or its stockholders in the future than they would if we were to become a public reporting company by
means of an initial public offering of common stock. If all or any of the foregoing risks occur, it would have a material adverse
effect on our company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>No public market for our common
stock currently exists, and an active trading market may not develop or be sustained following this offering.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As we are in
our early stages, an investment in our company will likely require a long-term commitment, with no certainty of return. There
is no public market for our common stock, and even if we become a publicly-listed company, of which no assurances can be given,
we cannot predict whether an active market for our common stock will ever develop in the future.&nbsp; In the absence of an active
trading market:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Investors
                                                                                                             may have difficulty
                                                                                                             buying and selling
                                                                                                             or obtaining market
                                                                                                             quotations;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">Market
                                                                                                             visibility for shares
                                                                                                             of our common stock
                                                                                                             may be limited; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">A
                                                                                                             lack of visibility
                                                                                                             for shares of our
                                                                                                             common stock may
                                                                                                             have a depressive
                                                                                                             effect on the market
                                                                                                             price for shares
                                                                                                             of our common stock.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Assuming we
can find market makers to establish quotations for our common stock, we expect that our common stock will be quoted on the OTC
Bulletin Board (known as the OTCBB) or OTCQB market operated by OTC Markets Group, Inc.&nbsp; These markets are relatively unorganized,
inter-dealer, over-the-counter markets that provide significantly less liquidity than NASDAQ or the NYSE MKT (formerly known as
the NYSE AMEX).&nbsp; No assurances can be given that our common stock, even if quoted on such markets, will ever trade on such
markets, much less a senior market like NASDAQ or NYSE MKT. In this event, there would be a highly illiquid market for our common
stock and you may be unable to dispose of your common stock at desirable prices or at all. Moreover, there is a risk that our
common stock could be delisted from the OTCBB/OTCQB, in which case it might be listed on the so called &ldquo;Pink Sheets&rdquo;,
which is even more illiquid than the OTC Bulletin Board.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The lack of
an active market impairs your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.
The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability
to raise capital to continue to fund operations by selling shares and may impair our ability to acquire additional intellectual
property assets by using our shares as consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may not qualify for OTC
Bulletin Board inclusion, and therefore you may be unable to sell your shares. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We believe that,
at sometime following the effectiveness of this registration statement of which this prospectus forms a part, our common stock
will become eligible for quotation on the OTC Bulletin Board and/or OTCQB Market, which we refer to herein as the OTCBB/OTCQB.
No assurances can be given, however, that this eligibility will be granted. OTCBB/OTCQB eligible securities include securities
not listed on a registered national securities exchange in the U.S. and that are also required to file reports pursuant to Section
13 or 15(d) of the Securities Act of 1933, as amended (which we refer to herein as the Securities Act), and require that we be
current in its periodic securities reporting obligations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Among other
matters, in order for our common stock to become OTCBB/OTCQB eligible, a broker/dealer member of FINRA, must file a Form 211 with
FINRA and commit to make a market in our securities once the Form 211 is approved by FINRA. As of the date of this prospectus,
a Form 211 has not been filed with FINRA by any broker/dealer. If for any reason our common stock does not become eligible for
quotation on the OTCBB/OTCQB or a public trading market does not develop, purchasers of shares of our common stock may have difficulty
selling their shares should they desire to do so. If we are unable to satisfy the requirements for quotation on the OTCBB/OTCQB,
any quotation of in our common stock would be conducted in the &ldquo;pink&rdquo; sheets market. As a result, a purchaser of our
common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the price of their shares. The above-described
rules may materially adversely affect the liquidity of our securities. See &ldquo;Plan of Distribution.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Even if our common stock becomes
publicly-traded and an active trading market develops, the market price our common stock may be significantly volatile.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Even if our
securities become publicly-traded and even if an active market for our common stock develops, of which no assurances can be given,
the market price for our common stock may be volatile and subject to wide fluctuations in response to factors including the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">actual
                                                                                                             or anticipated fluctuations
                                                                                                             in our quarterly
                                                                                                             or annual operating
                                                                                                             results;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">changes
                                                                                                             in financial or operational
                                                                                                             estimates or projections;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>conditions in markets generally;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in the economic performance or market valuations of companies similar to ours; and</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>general economic or political conditions in the United States or elsewhere.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42.85pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42.85pt"><FONT STYLE="color: Black">In particular,
the market prices of technology companies like ours have been highly volatile due to factors, including, but not limited to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42.85pt"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 42.85pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any delay or failure to conduct a clinical trial for our product or receive approval from the FDA and other regulatory agents;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>developments or disputes concerning our product&rsquo;s intellectual property rights;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>our or our competitors&rsquo; technological innovations;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>changes in market valuations of similar companies;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital
commitments, new technologies, or patents;&nbsp;and</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>failure to complete significant transactions or collaborate with vendors in manufacturing our product.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The securities
market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance
of particular companies.&nbsp; These market fluctuations may also materially and adversely affect the market price of shares of
our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our common stock may be considered
a &ldquo;penny stock,&rdquo; and thereby be subject to additional sale and trading regulations that may make it more difficult
to sell.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our common stock,
which we expect will be quoted for trading on OTCBB/OTCQB, may be considered to be a &ldquo;penny stock&rdquo; if it does not
qualify for one of the exemptions from the definition of &ldquo;penny stock&rdquo; under Section 3a51-1 of the Securities Exchange
Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;). Our common stock may be a &ldquo;penny stock&rdquo; if it meets one
or more of the following conditions: (i) the stock trades at a price less than $5 per share; (ii) it is not traded on a &ldquo;recognized&rdquo;
national exchange; (iii) it has a price less than $5 per share; or (iv) is issued by a company that has been in business less
than three years with net tangible assets less than $5 million.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The principal
result or effect of being designated a &ldquo;penny stock&rdquo; is that securities broker-dealers participating in sales of our
common stock will be subject to the &ldquo;penny stock&rdquo; regulations set forth in Rules 15g-2 through 15g-9 promulgated under
the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with
a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least
two business days before effecting any transaction in a penny stock for the investor&rsquo;s account. Moreover, Rule 15g-9 requires
broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny
stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning his
or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience
as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy
of such statement from the investor, confirming that it accurately reflects the investor&rsquo;s financial situation, investment
experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders
of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>FINRA sales practice requirements
may also limit your ability to buy and sell our common stock, which could depress the price of our shares. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">FINRA rules
require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending
that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers,
broker-dealers must make reasonable efforts to obtain information about the customer&rsquo;s financial status, tax status and
investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability
such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell
our shares, have an adverse effect on the market for our shares, and thereby depress our share price.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>You may face significant restrictions
on the resale of your shares due to state &ldquo;blue sky&rdquo; laws. </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Each state has
its own securities laws, often called &ldquo;blue sky&rdquo; laws, which (1) limit sales of securities to a state&rsquo;s residents
unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting
requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there
must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer
must also be registered in that state.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We do not know
whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration
will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock. We have not yet applied
to have our securities registered in any state and will not do so until we receive expressions of interest from investors resident
in specific states after they have viewed this prospectus. There may be significant state blue sky law restrictions on the ability
of investors to sell, and on purchasers to buy, our securities. You should therefore consider the resale market for our common
stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Because certain of our executive
officers and directors reside outside of the United States, it may be difficult for you to enforce your rights based on the United
States federal securities laws or otherwise against such officers and directors in the United States or to enforce judgments of
United States courts against them in Israel.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Certain of our
executive officers and directors reside outside of the United States in Israel. It may therefore be difficult for investors in
the United States to enforce their legal rights based on the civil liability provisions of the United States federal securities
laws or otherwise against such persons in the courts of either the United States or Israel, and even if civil judgments are obtained
in courts of the United States, to enforce such judgments in Israeli courts.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Our compliance with complicated
U.S. regulations concerning corporate governance and public disclosure will result in additional expenses. Moreover, our ability
to comply with all applicable laws, rules and regulations is uncertain given our management&rsquo;s relative inexperience with
operating U.S. public companies.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Assuming we
become a regularly reporting company, we will be faced with expensive and complicated and evolving disclosure, governance and
compliance laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley
Act and the Dodd-Frank Act. New or changing laws, regulations and standards are subject to varying interpretations in many cases
due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided
by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts to comply with evolving laws,
regulations and standards of a U.S. public company are likely to continue to result in increased general and administrative expenses
and a diversion of management time and attention from revenue-generating activities to compliance activities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Moreover, our
executive officers have little experience in operating a U.S. public company, which makes our ability to comply with applicable
laws, rules and regulations uncertain. Our failure to company with all laws, rules and regulations applicable to U.S. public companies
could subject us or our management to regulatory scrutiny or sanction, which could harm our reputation and stock price.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>As an &ldquo;emerging growth
company&rdquo; under applicable law, we will be subject to lessened disclosure requirements, which could leave our stockholders
without information or rights available to stockholders of more mature companies.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">For as long
as we remain an &ldquo;emerging growth company&rdquo; as defined in the Jumpstart Our Business Startups Act of 2012 (which we
refer to herein as the JOBS Act), we have elected to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not &ldquo;emerging growth companies&rdquo; including, but not limited
to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">not
                                                                                                             being required to
                                                                                                             comply with the auditor
                                                                                                             attestation requirements
                                                                                                             of Section 404 of
                                                                                                             the Sarbanes-Oxley
                                                                                                             Act;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">taking
                                                                                                             advantage of an extension
                                                                                                             of time to comply
                                                                                                             with new or revised
                                                                                                             financial accounting
                                                                                                             standards.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">reduced
                                                                                                             disclosure obligations
                                                                                                             regarding executive
                                                                                                             compensation in our
                                                                                                             periodic reports
                                                                                                             and proxy statements;
                                                                                                             and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">exemptions
                                                                                                             from the requirements
                                                                                                             of holding a nonbinding
                                                                                                             advisory vote on
                                                                                                             executive compensation
                                                                                                             and shareholder approval
                                                                                                             of any golden parachute
                                                                                                             payments not previously
                                                                                                             approved;.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We expect to
take advantage of these reporting exemptions until we are no longer an &ldquo;emerging growth company.&rdquo; Because of these
lessened regulatory requirements, our stockholders would be left without information or rights available to stockholders of more
mature companies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Because we have elected to
use the extended transition period for complying with new or revised accounting standards for an &ldquo;emerging growth company&rdquo;
our financial statements may not be comparable to companies that comply with public company effective dates.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have
elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1)
of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As a result of this
election, our financial statements may not be comparable to companies that comply with public company effective dates.
Consequently, our financial statements may not be comparable to companies that comply with public company effective dates.
Because our financial statements may not be comparable to companies that comply with public company effective dates,
investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public
companies, which may have a negative impact on the value and liquidity of our common stock.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>There
may be limitations on the effectiveness of our internal controls, and a failure of our control systems to prevent error or fraud
may materially harm our company.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Proper systems
of internal controls over financial accounting and disclosure are critical to the operation of a public company. As we are a start-up
company, we are at the very early stages of establishing, and we may be unable to effectively establish such systems, especially
in light of the fact that we expect to operate as a publicly reporting company. This would leave us without the ability to reliably
assimilate and compile financial information about our company and significantly impair our ability to prevent error and detect
fraud, all of which would have a negative impact on our company from many perspectives.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Moreover, we
do not expect that disclosure controls or internal control over financial reporting, even if established, will prevent all error
and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance
that the control system&rsquo;s objectives will be met. Further, the design of a control system must reflect the fact that there
are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud,
if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely impact us.</FONT></P>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal; font-style: normal; color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We may be unable to complete
our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined
to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We may be required,
pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by our management on, among other things, the effectiveness
of our internal control over financial reporting for the first fiscal year beginning after the effective date of the registration
statement of which this prospectus is a part. This assessment will need to include disclosure of any material weaknesses identified
by our management in our internal control over financial reporting, as well as a statement that our independent registered public
accounting firm has issued an opinion on our internal control over financial reporting.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are in the
very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform
the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation
in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal
control over financial reporting, we will be unable to assert that our internal controls are effective.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">If we are unable
to assert that our internal control over financial reporting is effective, or if our independent registered public accounting
firm is unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy
and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to
investigation or sanctions by the SEC.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We will also
be required to disclose changes made in our internal control and procedures on a quarterly basis. However, our independent registered
public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting
pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC, or the
date we are no longer an &ldquo;emerging growth company&rdquo; as defined in the recently enacted JOBS Act, if we take advantage
(as we expect to do) of the exemptions contained in the JOBS Act. We will remain an &ldquo;emerging growth company&rdquo; for
up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any
June 30 before that time, we would cease to be an &ldquo;emerging growth company&rdquo; as of the following December 30.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our independent
registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial
reporting until the later of the year following our first annual report required to be filed with the SEC, or the date we are
no longer an &ldquo;emerging growth company.&rdquo; At such time, our independent registered public accounting firm may issue
a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
Our remediation efforts may not enable us to avoid a material weakness in the future. Any of the foregoing occurrences, should
they come to pass, could negatively impact the public perception of our company, which could have a negative impact on our stock
price.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Anti-takeover provisions in
our charter documents and Delaware law could discourage, delay or prevent a change in control of our Company and may affect the
trading price of our common stock.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are a Delaware
corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change
in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years
after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders.
In addition, our certificate of incorporation and bylaws may discourage, delay or prevent a change in our management or control
over us that stockholders may consider favorable. Our certificate of incorporation and bylaws:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">authorize
                                                                                                             the issuance of &ldquo;blank
                                                                                                             check&rdquo; preferred
                                                                                                             stock that could
                                                                                                             be issued by our
                                                                                                             board of directors
                                                                                                             to thwart a takeover
                                                                                                             attempt;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">provide
                                                                                                             that vacancies on
                                                                                                             our board of directors,
                                                                                                             including newly created
                                                                                                             directorships, may
                                                                                                             be filled only by
                                                                                                             a majority vote of
                                                                                                             directors then in
                                                                                                             office;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">provide
                                                                                                             that special meetings
                                                                                                             of stockholders may
                                                                                                             only be called by
                                                                                                             our Chairman and/or
                                                                                                             President, our board
                                                                                                             of directors or a
                                                                                                             super-majority (66
                                                                                                             2/3%) of our stockholders;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">place
                                                                                                             restrictive requirements
                                                                                                             (including advance
                                                                                                             notification of stockholder
                                                                                                             nominations and proposals)
                                                                                                             on how special meetings
                                                                                                             of stockholders may
                                                                                                             be called by our
                                                                                                             stockholders;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">do
                                                                                                             not provide stockholders
                                                                                                             with the ability
                                                                                                             to cumulate their
                                                                                                             votes; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">provide
                                                                                                             that only a super-majority
                                                                                                             of our stockholders
                                                                                                             (66 2/3%) may amend
                                                                                                             our bylaws.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>We do not currently intend
to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achieve a return on your investment
will depend on appreciation in the price of our common stock.</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have never
declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends to holders of our common stock
in the foreseeable future. Consequently, investors must rely on sales of their common stock after price appreciation, which may
never occur, as the only way to realize any future gains on their investments. There is no guarantee that shares of our common
stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black"><I>Upon dissolution
of our company, you may not recoup all or any portion of your investment.</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In the event
of a liquidation, dissolution or winding-up of our company, whether voluntary or involuntary, the proceeds and/or assets of our
company remaining after giving effect to such transaction, and the payment of all of our debts and liabilities will be distributed
to the stockholders of common stock on a pro rata basis. There can be no assurance that we will have available assets to pay to
the holders of common stock, or any amounts, upon such a liquidation, dissolution or winding-up of our Company. In this event,
you could lose some or all of your investment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">This prospectus
contains &ldquo;forward-looking statements,&rdquo; which include information relating to future events, future financial performance,
financial projections, strategies, expectations, competitive environment and regulation. Words such as &ldquo;may,&rdquo; &ldquo;should,&rdquo;
&ldquo;could,&rdquo; &ldquo;would,&rdquo; &ldquo;predicts,&rdquo; &ldquo;potential,&rdquo; &ldquo;continue,&rdquo; &ldquo;expects,&rdquo;
&ldquo;anticipates,&rdquo; &ldquo;future,&rdquo; &ldquo;intends,&rdquo; &ldquo;plans,&rdquo; &ldquo;believes,&rdquo; &ldquo;estimates,&rdquo;
and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements
should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance
or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management&rsquo;s
good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important
factors that could cause such differences include, but are not limited to:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                             lack of operating
                                                                                                             history;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                             current and future
                                                                                                             capital requirements
                                                                                                             and our ability to
                                                                                                             satisfy our capital
                                                                                                             needs;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                             ability to manufacture,
                                                                                                             market and sell Dario;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                             ability to complete
                                                                                                             required clinical
                                                                                                             trials of our product
                                                                                                             and obtain approval
                                                                                                             from the FDA or other
                                                                                                             regulatory agents
                                                                                                             in different jurisdictions;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                             ability to maintain
                                                                                                             or protect the validity
                                                                                                             of our patents and
                                                                                                             other intellectual
                                                                                                             property;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                             ability to retain
                                                                                                             key executive members;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">our
                                                                                                             ability to internally
                                                                                                             develop new inventions
                                                                                                             and intellectual
                                                                                                             property;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">interpretations
                                                                                                             of current laws and
                                                                                                             the passages of future
                                                                                                             laws; and</FONT></TD></TR>                                                                                                                                       <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">acceptance
                                                                                                             of our business model
                                                                                                             by investors.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The foregoing
does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk
factors that we are faced with that may cause our actual results to differ from those anticipate in our forward-looking statements.
Please see &ldquo;Risk Factors&rdquo; for additional risks which could adversely impact our business and financial performance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Moreover, new
risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess
the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to
differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are
based on information available to us on the date of this prospectus. Except to the extent required by applicable laws or rules,
we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">USE OF
PROCEEDS</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We will not
receive any of the proceeds from the sale of the common stock by the selling stockholders named in this prospectus. All proceeds
from the sale of the common stock will be paid directly to the selling stockholders.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We would, however,
receive proceeds upon the exercise of the warrants held by the selling stockholders which, if such warrants are exercised in full
(and assuming no &ldquo;cashless&rdquo; exercise features are utilized and assuming that the second and third tranches of our
August 2012 Private Placement are completed), would be approximately $5,193,042. Proceeds, if any, received from the exercise
of such warrants will be used for working capital and general corporate purposes. No assurances can be given that any of such
warrants will be exercised.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">DIVIDEND
POLICY</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have never
paid any cash dividends on our common stock. We anticipate that we will retain funds and future earnings to support operations
and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable
future following this offering. Any future determination to pay dividends will be at the discretion of our board of directors
and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors
deems relevant. In addition, the terms of any future debt or credit financings may preclude us from paying dividends.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">MANAGEMENT&rsquo;S
DISCUSSION AND ANALYSIS OF<BR>
FINANCIAL CONDITION AND RESULTS OF OPERATIONS</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Prospective
investors should read the following discussion and analysis of our financial condition and results of operations together with
our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus.
Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information
with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
See &ldquo;Cautionary Note Regarding Forward-Looking Statements.&rdquo; You should review the &ldquo;Risk Factors&rdquo; section
of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results
described in or implied by the forward-looking statements contained in the following discussion and analysis</I>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Overview</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We were formed
in August 2011 as a Delaware corporation to exploit a new proprietary technology that is seeking to bring laboratory testing capabilities
to consumers in a distinctive, easy to use and affordable way through the use of smartphones.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The first market
we expect to address utilizing the technology is the diabetic self-monitoring of blood glucose, or SMBG, market. Our first product,
Dario<SUP>TM</SUP>, is a fully integrated, disposable strip/adaptor/lancing device that with a smartphone such as an iPhone,
which we believe has the potential to replace the need for separate self-powered glucose meters, lancing devices and test strips
vials, which are the current standard kits used by diabetes patients. Because of the product&rsquo;s integration with the smartphone,
Dario will allow test results to be sent and integrated with web-based medical repositories through our Dario smartphone application.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Critical Accounting Policies</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">Our
financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted
in the United States (or GAAP). Our fiscal year ends December 31.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">This
Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations discuss our financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation
of these financial statements requires making estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues
and expenses for the reporting periods. On an ongoing basis, we evaluate such estimates and judgments. We base our estimates on
historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">While all the
accounting policies impact the financial statements, certain policies may be viewed to be critical. Our management believes that
the accounting policies which involve more significant judgments and estimates used in the preparation of our consolidated financial
statement include warrants liability and stock-based compensation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Warrant liability</I>.
The fair value of the liability for warrants issued in connection with our financings to date was calculated using the Binomial
model. We accounted for these warrants according to the provisions of ASC 815, &ldquo;Derivatives and Hedging - Contracts in Entity&rsquo;s
Own Equity&rdquo; and, based on the anti-dilution protections contained in the warrants, we classified them as liabilities, measured
at fair value each reporting period until they will be exercised or expired, with changes in the fair values being recognized
in our statement of operations as financial income or expense.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Stock-Based
Compensation.</I> We account for stock-based compensation in accordance with ASC 718 &ldquo;Compensation- stock compensation&rdquo;.
ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing
model.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The value of
the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in
our consolidated income statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We recognize
compensation expenses for the value of awards granted based on the straight line method over the requisite service period of each
of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates. The term &ldquo;forfeitures&rdquo; is distinct
from &ldquo;cancellations&rdquo; or &ldquo;expirations&rdquo; and represents only the unvested portion of the surrendered option.
Ultimately, the actual expenses recognized over the vesting period will only be for those shares that vest.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We selected
the Black-Scholes option pricing model as the most appropriate fair value method for stock-option awards and value restricted
stock based on the market value of the underlying shares at the date of grant. The option-pricing model requires a number of assumptions,
of which the most significant are the expected stock price volatility and the expected option term. The computation of expected
volatility is based upon historical volatilities of similar entities in the related sector index. The risk-free interest rate
assumption is the implied yield currently available on United States treasury zero-coupon issues with a remaining term equal to
the expected life term of our options. We determined the expected life of the options according to the simplified method, average
of vesting and the contractual term of the options.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our net loss
includes stock-based compensation costs in the amount of $0 and $481,048&nbsp;during inception and period ended December 31, 2011
and the nine months ended September 30, 2012, respectively. As of September&nbsp;30, 2012, the total amount of unrecognized stock-based
compensation expense was $624,005, which will be recognized over a weighted average period of 1.71&nbsp;years.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We apply ASC
718 and ASC 505-50 &ldquo;Equity-Based Payments to Non-Employees&rdquo;, with respect to options and warrants issued to non-employees.
ASC 718 requires the use of option valuation models to measure the fair value of the options and warrants at the measurement date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In connection
with options granted to non-employees for services during inception and period ended December 31, 2011 and the nine months ended
September 30, 2012, respectively, and our determination of the fair value of our common shares, we have recorded stock-based compensation
expense of approximately $0 and $108,225, respectively, which represents the fair value of non-employee options grant. At the
end of each financial reporting period prior to vesting, the value of these options, as calculated using the Black-Scholes option
pricing model, was re-measured using the then current fair value of our common shares.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Extended
Transition Period for &ldquo;Emerging Growth Companies.&rdquo; </I>We have elected to use the extended transition period for complying
with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Act of 2012 (known as the JOBS
Act). This election allows us to delay the adoption of new or revised accounting standards that have different effective dates
for public and private companies until those standards apply to private companies. As a result of this election, our financial
statements may not be comparable to companies that comply with public company effective dates. Consequently, our financial statements
may not be comparable to companies that comply with public company effective dates. Because our financial statements may not be
comparable to companies that comply with public company effective dates, investors may have difficulty evaluating or comparing
our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value
and liquidity of our common stock.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Results of Operations </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B><I>Period ended December 31,
2011 and Nine Months Ended September 30, 2012 </I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Revenues</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">For the period
from our inception on August 11, 2011 to September 30, 2012, we did not generate any revenues from operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Cost of Revenues</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">For the period
from our inception on August 11, 2011 to September 30, 2012, we did not generate any cost of revenues from operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Research
and Development Expenses</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our research
and development expenses during inception and period ended December 31, 2011 and the nine months ended September 30, 2012 were
$77,895 and $1,012,087, respectively, which include mainly payroll and payroll related expenses, travels and product development.
There were no comparable expenses during the prior year and quarter ended December 31, 2010 and September 30, 2011, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Marketing
and pre-production costs</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our marketing
and pre-production costs incurred during inception and period ended December 31, 2011 and the nine months ended September 30,
2012 were $0 and $128,171, respectively, which include mainly payment to our Production Manager and related travels and payment
for several marketing matters, include, among others, our website and branding activities. There were no comparable expenses during
the prior year and quarter ended December 31, 2010 and September 30, 2011, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>General and
Administrative Expenses</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our general
and administrative expenses during inception and period ended December 31, 2011 and the nine months ended September 30, 2012 were
$156,818 and $1,244,053 respectively, which include mainly payroll and payroll related expenses and professional, legal and accounting
fees. There were no comparable expenses during the prior year and quarter ended December 31, 2010 and September 30, 2011, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Finance Expenses,
net</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our finance
expenses during inception and period ended December 31, 2011 and the nine months ended September 30, 2012 were $150,636 and $2,109,957
respectively, which include mainly Revaluation of warrants to investors and service provider and Issuance cost related to warrants
to investors and service provider. There were no comparable expenses during the prior year and quarter ended December 31, 2010
and September 30, 2011, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Net loss</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Net loss from
inception and period ended December 31, 2011 was $385,349, and our net loss for the nine months ended September 30, 2012 was $4,494,268,
resulting in an aggregate net loss since inception of $4,879,617.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Plan of Operation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We expect generate
revenues within the next 12 months which reflect our goal to launch our product in 2013. Through our Israeli subsidiary, LabStyle
Innovation Ltd., our plan of operations is to continue the development of our product and technology.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We expect to
incur a minimum of approximately $3.5 million in expenses in order to effectuate our business for the next 12 months. During such
period, we expect (subject to obtaining regulatory approvals) to commercially launch Dario, first in Europe and then in the United
States. In support of this goal, we estimate that such $3.5 million in expenses will be utilized to fund the following activities:</FONT></P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">continued
                                                                                                             product development
                                                                                                             and related activities
                                                                                                             (including costs
                                                                                                             associated with our
                                                                                                             now completed clinical
                                                                                                             trial and costs of
                                                                                                             application development
                                                                                                             and data storage
                                                                                                             capabilities as well
                                                                                                             as any necessary
                                                                                                             design modifications);</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">continued
                                                                                                             work on registration
                                                                                                             of our patents;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">initial
                                                                                                             production, marketing
                                                                                                             and sales of Dario
                                                                                                             and test strips;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">regulatory
                                                                                                             matters;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">professional
                                                                                                             fees associated with
                                                                                                             being a publicly
                                                                                                             reporting company;
                                                                                                             and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">general
                                                                                                             and administrative
                                                                                                             matters.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Liquidity and Capital Resources</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Since our inception,
we have generated significant losses and expect to continue to generate losses for the foreseeable future. There are no assurances
that we will be able to obtain an adequate level of financing needed for our near term requirements or the long-term development
and commercialization of our products. These conditions raise substantial doubt about our ability to continue as a &ldquo;going
concern&rdquo;.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As of September
30, 2012 we had approximately $820,000 in cash and cash equivalents. During the fourth quarter of 2012, we raised in an aggregate
of approximately $2.4 million net in private placement transactions. In addition, as part of our August 2012 Private Placement
we received irrevocable commitments from investors for an additional $1 million in funding, which funding will occur half during
the 90 day period following the declaration of effectiveness of the registration statement of which this prospectus is a part
and half during the 180 day period following the declaration of effectiveness of the registration statement of which this prospectus
is a part. Excluded in these calculations is any funds we may receive from the exercise of outstanding warrants.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">According to
our management&rsquo;s estimates, based on our budget and the assumption that initial commercial sales will commence during our
anticipated timeframes, we believe that we will have sufficient resources to continue our activity at least until the end of 2013.
However, if we are not able to commercially launch Dario or meeting our commercial sales targets, and if we are unable to obtain
additional capital resources, we will not be able to continue activities beyond the end of 2013.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Readers are
advised that available resources may be consumed more rapidly than currently anticipated, resulting in the need for additional
funding sooner than expected. Should this occur during 2013, we will need to seek additional capital to fund (i) further development
and, if needed, testing of our initial product and its related application and data storage components, (ii) our efforts to obtain
regulatory approvals necessary to be able to commercially launch such product, (iii) expenses which will be required in order
to start production of our product, (iv) sales and marketing efforts and (v) general working capital. Such funding may be unavailable
to us on acceptable terms, or at all.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Off-Balance Sheet Arrangements</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As of September
30, 2012, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">BUSINESS</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Overview</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We were formed
in August, 2011 as a Delaware corporation to exploit a new technology that is seeking to bring laboratory testing capabilities
to consumers in user friendly way through the use of smartphones.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are
initially applying our technology to address the diabetic self-monitoring of blood glucose, or SMBG, market. Our first
product, Dario<SUP>TM</SUP>, is a fully integrated, disposable strip/adaptor device combined with a smartphone such as an
iPhone, which we believe has the potential to replace the need for stand alone, self-powered glucose meters, which are the
current standard of care. Dario also comes with a related smartphone application and offers web-based services for diabetic patients.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have finalized
the commercial design for Dario, which will combine in one device the lancing mechanism, disposable strip cartridge and glucose
monitor and attached plug (which plug will have a small form factor for insertion into the smartphone audio jack). We have created
Dario prototypes based on this design and successfully concluded a clinical trial (with more than 60 patients) required for approvals
for Dario in Europe and the United States in 2012. We began the regulatory approval process in Europe in 2012, and will commence
such process in the United States in 2013. Such approvals will need to be obtained prior to the anticipated commercial launch
of Dario, which launch is anticipated in 2013, first in Europe and subsequently in the United States.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
we have developed both the critical software that will enable Dario to integrate with the iPhone platform, as well as the backend
test result data collection component of the Dario system, and these will be in place to support the anticipated commercial launch
of Dario, although we expect to refine and augment such software and systems over time. The Dario application for Apple has been
accepted by Apple for inclusion in the AppStore. Also, we have an agreement in place with the manufacturer of our test strips
and are presently negotiating agreements with third parties to undertake commercial scale manufacturing of Dario devices in order
to support our anticipated launches for the product.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Our Technology </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our founders
have worked since the first half of 2010 to develop our principal technology, for which broad patent protection, with a combination
of two U.S. provisional patent application and International PCT patent application, was applied for in 2011. We are converting
the PCT into national phase applications in the jurisdictions in which we are targeting the commercial launch of Dario.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">By using smartphones
(which are used by millions of people around the world) as the heart of the test device, we believe that patients will more readily
perform on-the-go testing, leading to increased usage and better healthcare management. In addition, the integration with the
smartphone enables the data to be seamlessly integrated into a comprehensive data management program which incorporates features
such as a results and trends log, community and alerts features and personalized lifestyle change recommendations. In short, Dario
will epitomize our product motto &mdash; <B><I>&ldquo;Glucose Monitoring for the Mobile Age<SUP>TM</SUP></I></B>.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Although we
are initially targeting the SMBG market with our first product Dario, we believe our invention has the potential to cover dozens
of laboratory tests (including blood, urine and saliva tests) that could potentially be undertaken using a smartphone, including,
among others, blood coagulation, cholesterol and HIV tests.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Our Initial Product &ndash; Dario</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We believe that
the diabetic SMBG market presents the most attractive initial application for our proprietary technology as there are millions
of potential diabetic users of a smartphone-enabled glucose monitoring technology. As such, our first product, Dario, will seek
to revolutionize the way diabetic patients around the world manage their disease.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Roughly
the size of a pack of gum, Dario is an all-in-one device that includes the glucose reader which is connected to a smartphone
via the phone jack, along with a lancing device (a reusable blood-sampling device, when loaded with the disposable lancet)
and an integrated, disposable cartridge for test strips. We believe that Dario<SUP>TM</SUP> has the potential to replace
stand alone glucose meters which are the current market standard, most of which have the necessary testing components
separated from one another in what we believe is a cumbersome design. Moreover, all but a few glucometers lack an interface
with a smartphone, and none will have the software applications and web-based services associated with Dario, each of which
we believe will distinguish Dario as an alternative in the marketplace.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our revenues
are expected to be derived from sales of Dario devices (which will be priced similarly to blood glucose monitors in the marketplace)
and principally from the recurring sale of our test strips. Our customers will also receive access to our Dario smartphone application,
which will incorporate tools to help diabetic patients manage their disease. Importantly, our revenue model will be driven by
the fact that only our test strips, purchased through us, will be able to be utilized with the Dario adaptor and software, so
it is our expectation that we will be the sole source for Dario compatible test strips.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition
to test strip related revenue, we anticipate generating revenue in the future from our ability to offer Dario&rsquo;s subscribers
additional products and services based on personalized recommendations, such as location-based, low-sugar food recommendations
and the ability to send alerts to caregivers and family and friends.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We believe the
following features of our Dario product and the manner in which we plan to market and distribute our product will help position
Dario to gain users and drive revenue growth:</FONT></P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>Look
                                                                                                             and Feel</I>. While
                                                                                                             utilizing the same
                                                                                                             state of the art
                                                                                                             electro-chemical,
                                                                                                             blood-based measurement
                                                                                                             techniques as standard
                                                                                                             glucose monitors
                                                                                                             and offers familiar
                                                                                                             usability, Dario
                                                                                                             is easily integrated
                                                                                                             with the patient&rsquo;s
                                                                                                             own smartphone and
                                                                                                             offers a distinctive
                                                                                                             look and feel. Furthermore,
                                                                                                             unlike the market
                                                                                                             standards, Dario
                                                                                                             has an integrated
                                                                                                             lancing device and
                                                                                                             disposable strip
                                                                                                             cartridge. This eliminates
                                                                                                             the need for a separate
                                                                                                             glucose monitor,
                                                                                                             lancing device and
                                                                                                             strip bottle and,
                                                                                                             we believe, will
                                                                                                             make Dario the glucose
                                                                                                             device with among
                                                                                                             the smallest footprint
                                                                                                             in the market. Furthermore,
                                                                                                             Dario will have smartphone
                                                                                                             applications incorporating
                                                                                                             software tools to
                                                                                                             help diabetic patients
                                                                                                             manage their disease.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>Large
                                                                                                             Market of Potential
                                                                                                             Users</I>. Our reliance
                                                                                                             on diabetics within
                                                                                                             the massive smartphone
                                                                                                             market gives us an
                                                                                                             established potential
                                                                                                             user-base. In the
                                                                                                             U.S., Nielsen reports
                                                                                                             that 55 percent of
                                                                                                             new cell phone buyers
                                                                                                             purchased a smartphone
                                                                                                             as their new handset,
                                                                                                             an increase from
                                                                                                             34 percent one year
                                                                                                             ago. Of all U.S.
                                                                                                             mobile users, 38
                                                                                                             percent now own a
                                                                                                             smartphone, and smartphones
                                                                                                             are increasingly
                                                                                                             becoming the choice
                                                                                                             of the typical phone
                                                                                                             user. In many countries
                                                                                                             (including the U.S.),
                                                                                                             smartphones are also
                                                                                                             typically heavily
                                                                                                             subsidized by the
                                                                                                             cellular providers
                                                                                                             through discounted
                                                                                                             pricing associated
                                                                                                             with related plan
                                                                                                             subscriptions, enabling
                                                                                                             Dario to benefit
                                                                                                             from the extensive
                                                                                                             marketing by cellular
                                                                                                             companies of these
                                                                                                             devices. We believe
                                                                                                             that it is reasonable
                                                                                                             to assume that the
                                                                                                             percentage of smartphone
                                                                                                             users with diabetes
                                                                                                             mirrors that of the
                                                                                                             general population.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>Marketing
                                                                                                             and Distribution</I>.
                                                                                                             Our planned Internet-based,
                                                                                                             direct-to-consumer
                                                                                                             marketing and distribution
                                                                                                             will seek to reduce
                                                                                                             the reliance on traditional
                                                                                                             retail channels.
                                                                                                             We believe that our
                                                                                                             direct to consumer,
                                                                                                             online distribution
                                                                                                             plan, coupled with
                                                                                                             the fact that our
                                                                                                             Dario adapter is
                                                                                                             integrated in one
                                                                                                             unit with a lancing
                                                                                                             device and strip
                                                                                                             cartridge (which
                                                                                                             we believe will be
                                                                                                             viewed as favorable
                                                                                                             by customers) may
                                                                                                             enable a rapid ramp
                                                                                                             up of our revenue.
                                                                                                             This approach is
                                                                                                             also designed to
                                                                                                             effectively create
                                                                                                             brand awareness with
                                                                                                             a significantly reduced
                                                                                                             use of our capital
                                                                                                             resources versus
                                                                                                             the amounts required
                                                                                                             via the traditional,
                                                                                                             offline retail channels.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>&ldquo;Expanding
                                                                                                             the Pie&rdquo;</I>.
                                                                                                             Our goal is to obtain
                                                                                                             significant market
                                                                                                             share using technological
                                                                                                             innovations and by
                                                                                                             expanding the total
                                                                                                             SMBG market size
                                                                                                             &ldquo;pie&rdquo;
                                                                                                             through offering
                                                                                                             a user-friendly device
                                                                                                             that utilizes an
                                                                                                             existing platform
                                                                                                             and installed potential
                                                                                                             user base (smartphones
                                                                                                             and smartphone users,
                                                                                                             respectively). We
                                                                                                             will endeavor to
                                                                                                             use the user friendly
                                                                                                             nature of Dario to
                                                                                                             expand the total
                                                                                                             SMBG market size
                                                                                                             by convincing existing
                                                                                                             diabetes patients
                                                                                                             to test their glucose
                                                                                                             levels more frequently
                                                                                                             and by convincing
                                                                                                             the &ldquo;nontesting&rdquo;
                                                                                                             population to adopt
                                                                                                             glucose monitoring.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>Competitive
                                                                                                             Cost of Good Sold.
                                                                                                             </I>Based on our
                                                                                                             market research and
                                                                                                             discussions with
                                                                                                             our test strip manufacturer,
                                                                                                             we believe that our
                                                                                                             anticipated outsourced
                                                                                                             manufacturing cost
                                                                                                             of the test strips
                                                                                                             will be similar to
                                                                                                             our estimate of our
                                                                                                             competitors&rdquo;
                                                                                                             cost for existing
                                                                                                             single-use disposable
                                                                                                             strips. We believe
                                                                                                             the manufacturing
                                                                                                             costs of our Dario
                                                                                                             device will be competitive
                                                                                                             or lower than those
                                                                                                             of the leading glucometers.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font: 10pt Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="font-size: 10pt; color: Black"><I>Opportunities
                                                                                                           for Commercialization
                                                                                                           Partnerships.</I> Recent
                                                                                                           pharmaceutical company
                                                                                                           entrants into the SMBG
                                                                                                           market (such as Perigo
                                                                                                           and Sanofi) are licensing
                                                                                                           and/or acquiring technologies,
                                                                                                           seeking differentiation,
                                                                                                           thereby providing us
                                                                                                           with opportunities
                                                                                                           for more rapid commercialization
                                                                                                           through partnerships.
                                                                                                           Therefore, we will
                                                                                                           explore the possibility
                                                                                                           of entering into commercialization
                                                                                                           agreements, including
                                                                                                           an upfront payment,
                                                                                                           supply agreement and
                                                                                                           royalty payments, with
                                                                                                           strategic partners.
                                                                                                           </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">Currently
there are a few new market entrants in the SMBG space that are attempting to utilize computer or smartphone connectivity, including
the Bayer Contour and the recently introduced Sanofi IBGStar and GlucoDock (which is currently only available outside of the U.S.).
Both devices, however, are traditional, free-standing glucose monitors that require connection to a computer or smartphone via
the USB Port (the Contour) or the dock connecting port (IBGstar and GlucoDock). Furthermore, none of these devices offer the integration
of an all-in-one unit that includes a lancing device and strip cartridge.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">Thus,
we believe Dario will bring an entirely new dynamic to the SMBG device market. We believe that our business model for Dario is
clean and simple &mdash; sales of proprietary glucose test strips (the disposable component) directly to consumers, leveraging
an installed base of mobile phones. The entire mechanism consists of a small and simple adaptor combined with a strip which is
connected to the smartphone&rsquo;s headphone jack, with the strip test results being read by the smartphone.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><FONT STYLE="color: Black"><B>Background
on Diabetes</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">Diabetes is a chronic disease that arises when
the pancreas does not produce enough (or ceases to produce) insulin, or when the body cannot effectively use the insulin it produces.
Insulin is a hormone made by the pancreas that enables cells to take in glucose from the blood and use it for energy. Failure
to produce insulin, or of insulin to act properly, or both, leads to raised glucose (sugar) levels in the blood (hyperglycemia),
which can be detected with a blood test. Excess glucose in the blood has been shown to cause damage to blood vessels and is thus
associated with long-term damage to the body and failure of various organs and tissues, including the retina and the kidneys.
There are three main types of diabetes:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-weight: normal; color: Black"><I>Type
1 diabetes</I></FONT> is sometimes called insulin-dependent, or juvenile, diabetes. It is caused by an auto-immune reaction where
the body&rsquo;s defense system attacks the insulin-producing cells located in a person&rsquo;s pancreas. The reason why this
occurs is not fully understood. People with Type 1 diabetes produce very little or no insulin. The disease can affect people of
any age, but usually occurs in children or young adults. People with this form of diabetes need injections of insulin every day
in order to control the levels of glucose in their blood. Type 1 diabetes patients constitute approximately 10% of the overall
number of patients, but are much more extensive users of SMBG, as these diabetics need to measure their glucose levels 4-10 times
day (versus the typical once or twice a day for Type 2 diabetic patient). The vast majority of Type 1 diabetes patients are insulin
dependent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-weight: normal; color: Black"><I>Type
2 diabetes </I></FONT>is sometimes called adult-onset diabetes and accounts for at least 90% of all cases of diabetes. It is characterized
by insulin resistance and relative insulin deficiency, either of which may be present at the time that diabetes becomes clinically
manifest. The diagnosis of Type 2 diabetes usually occurs after the age of 40 but can occur earlier, especially in populations
with high diabetes prevalence. Type 2 diabetes can remain undetected for many years and the diagnosis is often made from associated
complications or incidentally through an abnormal blood or urine glucose test. It is often, but not always, associated with obesity,
which itself can cause insulin resistance and lead to elevated blood glucose levels, which can cause the same long-term damage
as occurs in Type 1 diabetes. A growing portion of the Type 2 diabetes patients are insulin dependent or use insulin as part of
their treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-weight: normal; color: Black"><I>Gestational
diabetes (GDM)</I></FONT><B>&nbsp;</B>is a form of diabetes consisting of high blood glucose levels during pregnancy. It develops
in one in 25 pregnancies worldwide and is associated with complications in the time period immediately before and after birth.
GDM usually disappears after pregnancy but women with GDM and their offspring are at an increased risk of developing Type 2 diabetes
later in life. Approximately half of women with a history of GDM go on to develop Type 2 diabetes within five to ten years after
delivery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white"><FONT STYLE="color: Black">We
also believe we will be able to target patients with <I>pre-diabetes</I>,<B> </B>also called metabolic syndrome. Metabolic syndrome
is a combination of medical disorders that increase the risk of developing cardiovascular disease and diabetes. Studies have shown
that pre-diabetes affects more than 20% of the population in the Western world, and its prevalence increases with age. This population
is typically prescribed with periodic lab-based glucose level testing (which requires a doctor visit, significantly reducing the
compliance level) and typically does not involve the utilization of self monitoring glucose devices.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>The Diabetic and SMBG Markets
and the Dario Solution</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Diabetes is
a growing epidemic for which no cure exists, but for which treatments (including a regimen of frequent blood glucose testing)
are available. The World Health Organization estimates that there are approximately 350 million people with diabetes worldwide
(mostly Type 2 diabetes). In Europe, the diabetic population was approximately 52.6 million in 2011 according to Frost &amp; Sullivan,
and there were approximately 25.8 million diabetics in the U.S. in 2011 according to the American Diabetes Association. The medical
Journal Lancet has reported that number of worldwide diabetics has doubled over the past thirty years. While about 70% of the
increase has been attributed to population growth and aging, the balance was linked to changing diets, rising obesity levels and
less physical activity. In the U.S., one in four adults has diabetes. An additional 79 million U.S. adults have pre-diabetes, which puts them at high risk for developing Type 2 diabetes.
About 138 million adult diabetics live in China and India and another 10 million in Russia. Many public health experts consider
the rise in diabetes to be more alarming than the rise in high blood pressure rates and cholesterol levels.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">It is also estimated
that the costs of diabetes complications account for between 5% and 10% of total healthcare spending in the world. Early diagnosis
of warning signs and ongoing monitoring of diabetes are the keys to the prevention and treatment of the disease, with blood glucose
monitoring being the primary method of diagnosis and disease management, coupled with matching blood glucose readings with food
(i.e., carbohydrate) and insulin or other medication intake.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Since blood
glucose self monitoring is a key part of managing diabetes, the market for SMBG products required to service these many patients
is also large. <FONT STYLE="background-color: white">According to research firm Visiongain, the global SMBG market was $9.7 billion
in 2011 and the global market for</FONT>&nbsp;diabetes monitoring devices <FONT STYLE="background-color: white">is expected to
be $27.42 billion by 2022. The </FONT>Enterprise Analysis Corporation has estimated that the global market for SMBG testing supplies
was $1.7 billion in 1994. By 2000, the market had reached approximately $3.8 billion, and by 2008, worldwide sales of these products
climbed to $8.8 billion. <FONT STYLE="background-color: white">It has been estimated that the U.S. accounts for 40% of the SMBG
market, or approximately $3.9 billion, and Frost &amp; Sullivan estimates that Europe accounted for </FONT>$3.97 billion in this
market in 2011<FONT STYLE="background-color: white">. </FONT>In fact, the SMBG testing market, which barely existed in 1980, now
accounts for approximately a quarter of the entire in vitro diagnostics industry.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Key factors
driving market growth include increasing diabetic population, growing patient awareness, technological advancements and increasing
number of patients adopting blood glucose self-monitoring. In addition, the affordable cost of blood glucose test strips, and
increase in daily monitoring, are also expected to contribute to market growth. As such, self-monitoring of blood glucose (SMBG)
represents a large market that has grown significantly over the past 30 years and is expected to continue to grow.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have specifically
designed Dario to compete in this vast market. As described above, Dario is a fully integrated disposable strip/adaptor device,
combined with a lancet that, combined with the common smartphone, could replace the need for self-powered glucose meters and the
associated kit which are the current standard of care.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Industry Background and the Dario
Opportunity</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">From a competition
perspective, four companies currently dominate the SMBG business, controlling approximately 90% of the market: Roche Diagnostics
(part of Hoffman-LaRoche), LifeScan (a Johnson &amp; Johnson company), Bayer Healthcare Division, and Abbott Laboratories. These
&ldquo;big four&rdquo; offer a wide variety of SMBG products and have led the market since the late 1990s. Numerous second-tier
and third-tier competitors, including several in Asia, hold the remaining 10% of the market. We believe that the SMBG offerings
by all vendors are pretty much the same, with very mild differentiation of the main feature sets of the devices. This is akin
to the differentiation among personal computers (PCs) during the 1990s and 2000s, where most of them had the same key feature
set of Microsoft Windows and Intel Processors.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We believe that
now is the time to change the SMBG market. Dario is offering a fresh look at SMBG &mdash; no more separate glucose monitors or
carb-calculators and no more awkward and cumbersome connectivity to computer-based results diaries. Our intention is for Dario
to bring glucose monitoring to the mobile age and we will seek to secure significant market share through Dario&rsquo;s novel
approach to SMBG.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">With respect
to the U.S. SMBG market, the principal barriers to entry (all of which we believe the features of Dario can overcome) can be summarized
as follows:</FONT></P>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>Achieving
                                                                                                             significant product
                                                                                                             differentiation in
                                                                                                             the eyes of diabetes
                                                                                                             patients or insurance
                                                                                                             payers</I>. We believe
                                                                                                             that Dario offers
                                                                                                             a novel design that
                                                                                                             is compatible with
                                                                                                             the usability of
                                                                                                             the current devices,
                                                                                                             yet offers a modern
                                                                                                             look and feel when
                                                                                                             compared to products
                                                                                                             in the marketplace.
                                                                                                             Marketing of the
                                                                                                             product directly
                                                                                                             to consumers will
                                                                                                             emphasize the product&rsquo;s
                                                                                                             distinguishing attributes,
                                                                                                             without incurring
                                                                                                             the significant product
                                                                                                             introduction expenses
                                                                                                             typically incurred
                                                                                                             for the marketing
                                                                                                             of a standard glucometer
                                                                                                             via traditional retail
                                                                                                             channels.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>Costs.
                                                                                                             </I> We anticipate
                                                                                                             that low manufacturing
                                                                                                             costs for the Dario
                                                                                                             adaptor and the similarity
                                                                                                             to our competitors&rsquo;
                                                                                                             estimated cost of
                                                                                                             manufacturing the
                                                                                                             strips, when coupled
                                                                                                             with the direct-to-consumer
                                                                                                             marketing, creates
                                                                                                             the potential for
                                                                                                             providing us with
                                                                                                             a meaningful cost
                                                                                                             advantage versus
                                                                                                             most vendors of traditional
                                                                                                             glucometers.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>Difficulty
                                                                                                             obtaining shelf space
                                                                                                             at the pharmacy</I>.
                                                                                                             With many products
                                                                                                             on the market, a
                                                                                                             new entrant has to
                                                                                                             battle for visibility
                                                                                                             on the shelf. Dario
                                                                                                             will avoid this obstacle
                                                                                                             by primarily relying
                                                                                                             on Internet based
                                                                                                             direct-to-consumer
                                                                                                             marketing and sales.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black"><I>The
                                                                                                             challenge of influencing
                                                                                                             diabetes specialists
                                                                                                             to recommend another
                                                                                                             SMBG product to patients</I>.
                                                                                                             We will seek to introduce
                                                                                                             and present Dario
                                                                                                             to the medical community
                                                                                                             through our participation
                                                                                                             in academic and professional
                                                                                                             conferences. Dario
                                                                                                             will mainly be marketed
                                                                                                             directly to our target
                                                                                                             users, who are increasingly
                                                                                                             becoming the primary
                                                                                                             decision makers in
                                                                                                             choosing their glucose
                                                                                                             monitoring equipment.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We thus believe
that Dario&rsquo;s specific features and trends in the marketplace create a significant opportunity to penetrate the market and
effectively compete with and gain market share against the established players.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Utilization of Mobile Health
Applications</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Smartphone applications
are becoming the &ldquo;killer apps&rdquo; for mobile health solutions (so called mHealth). Although the potential benefits of
mHealth solutions have been widely discussed for over a decade, the market is now starting to emerge from the trial phase. According
to a publicly available 2010 study by research2guidance, smartphone applications will enable the mHealth industry to reach 500
million of a total 1.4 billion worldwide smartphone users in 2015. We believe that Dario is designed to play directly into this
trend.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Currently more
than 70% of the mHealth applications in major &ldquo;app stores&rdquo; are adhering to the paid business model according to research2guidance.
With more and more traditional healthcare providers joining the mobile applications market, we expect the business models will
broaden to include healthcare services, advertising and drug sales revenues. According to research2guidance, with the growing
sophistication level of mHealth applications, only 14% of the total market revenue in the next 5 years will come from application
download, advertisement and transaction revenue, whereas 76% of total mHealth application market revenue will come from related
services and products. We believe that Dario will be well-positioned to benefit from that trend.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Dario will be
accompanied by its own smartphone and web-based application that will allow users to easily record, transmit and store key data points
such as glucose level, insulin and carbohydrate intake. The app will also incorporate community-based social networking components
aimed at making use of Dario more attractive to users. Potential examples include games with rewards and online competition for
compliance in testing and consistency of glucose readings.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Sales and Marketing </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Dario will primarily
be an Internet-driven product. Dario was designed for the mobile age and will be powered by the Internet as an effective route
of launching and marketing new consumer products. We plan to primarily sell directly to consumers and collaborate with distributors
and online marketing in select jurisdictions. It is estimated that a typical Type 1 diabetes patient, who is testing his or her
blood sugar 4 to 10 times a day, uses 120 to 300 strips each month, which, at an expected selling price of up to $1 per strip,
creates the potential for a substantial and predictable revenue stream.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On the marketing
side, we plan to primarily utilize online marketing in order to create awareness to Dario. Rather than solely rely on online advertisement,
we will also consider revenue sharing with affiliate networks and a variety of other pay-for-performance methods commonly used
in online commerce.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">While our initial
marketing will be focused on the younger population of diabetics, we expect to gradually broaden our marketing efforts toward
the older population, where diabetes is even more prevalent. We plan to initially focus on insulin dependent (mainly Type I) diabetes
patients. While this population constitutes about 10%<B> </B>of the diabetic patient population, we estimate it to be responsible
for over 40% of the revenue from blood glucose monitoring. Dario&rsquo;s ease of use and the lack of need for a special glucometer
are also expected to be of major appeal to the entire Type 2 diabetes population. With our initial market launch, we expect to
address the U.S. and European markets. This will be followed, possibly through marketing collaborations, by targeting additional
large markets such as Brazil.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Manufacturing</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As we do not
plan to engage in manufacturing activity ourselves, we plan to have supply agreements with manufacturers for the Dario device,
glucose test strips, lancing devices and lancets. We have arrangements in place with commercial scale manufacturers for both the
Dario devices and for our test strips.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In June 2012,
we entered into an agreement with a Korean supplier to supply test strips, connectors and other related components for Dario.
The agreement covers a period of three years, but the agreement provides that we have no obligation to continue work with this
supplier as it is cancellable upon specified notice, and we believe that other suppliers could be obtained if necessary.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
in September 2012, we entered into an initial work order arrangement with a U.S. manufacturer to effectuate the final commercial
design for, and manufacture, the molds for the Dario devices. Work commenced under this arrangement in the fourth quarter of 2012,
with the goals of (i) producing the initial devices, (ii) estimating the costs to produce additional devices at scale and (iii)
exploring alternatives, if required, to reduce the cost of the devices. These efforts have yielded positive results and manufacturing
cost savings. As we move closer to full commercial scale manufacturing activities in anticipation of our commercial launch of
Dario in 2013, we expect to enter into a formal supply agreement with this U.S. manufacturer.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Insurance Reimbursement </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In the United
States and in other jurisdictions such as Germany and England, we expect that Dario&rsquo;s test strips should generally be available
for full or partial patient reimbursement by third-party payors.&nbsp; We expect to work with third-party payors in the countries
into which we expect to market Dario in order to establish coverage for test strips, although we cannot be sure of this being
obtained.&nbsp; As of the date of this prospectus, we have begun this process in anticipation of our commercial launch of Dario.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Clinical Trials </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In
October 2012, we completed a required clinical trial to test the usability of Dario which has been used in connection with
our regulatory submissions for the product in Europe and will be used for our FDA submission in the U.S. The purpose of the
study was to assist first time users of the Dario device (1) to use it under minimal guidance materials (i.e. quick user
guide and iPhone App) in an effort to demonstrate how the use of the Dario device and related software could potentially
improve patient care and diabetic compliance, (2) to understand the potential weaknesses of the device and introduce methods
of overcoming them to the users and (3) to&nbsp;establish the proposition that any user can operate the device compared to
other devices on the market.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; color: #222222"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; color: #222222"><FONT STYLE="color: Black">The
study was performed in Israel with the prototype of the Dario product, with its basic functionalities combined with a simulating
program for the smartphone. 61 patients under varied diabetic conditions participated in the study, whose ages were between 8
and 80. The subjects were recruited from the diabetes clinic at Wolfson Medical Center in Tel Aviv.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; color: #222222"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; color: #222222"><FONT STYLE="color: Black">Over
95% of the patients passed the study and the data base had been locked and was included in our European CE Mark regulatory filing.
The study results are also expected to be used for our FDA submission for Dario. As required by Israeli law, the study was confirmed
by a local ethical committee.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #222222"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have been
advised by our regulatory consultants that this study should be sufficient in order to obtain regulatory approvals in the EU and
the U.S., although we may be required to conduct additional clinical studies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; color: #222222"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Government Regulation </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The principal
markets that we are initially targeting for Dario are the European Union and the United States. The following is an overview of
the regulatory regimes in these jurisdictions as well as in Brazil, which we currently believe will be the third geographic location
we may target.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>United States
Regulation Generally</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In the United
States, devices are subject to varying levels of regulatory control, the most comprehensive of which requires that a clinical
evaluation be conducted before a device receives approval for commercial distribution.&nbsp;&nbsp;Under Section 201(h) of the
Food, Drug, and Cosmetic Act, a medical device is an article, which, among other things, is intended for use in the diagnosis
of disease or other conditions, or in the cure, mitigation, treatment or prevention of disease, in man or other animals. We believe
that Dario will be classified as a medical device and subject to regulation by numerous agencies and legislative bodies, including
the FDA and its foreign counterparts.&nbsp;&nbsp;FDA regulations govern product design and development, pre-clinical and clinical
testing, manufacturing, labeling, storage, pre-market clearance or approval, advertising and promotion, and sales and distribution.
Specifically, the FDA classifies medical devices into one of three classes.&nbsp;&nbsp;Class I devices are relatively simple and
can be manufactured and distributed with general controls.&nbsp;&nbsp;Class II devices are somewhat more complex and require greater
scrutiny.&nbsp;&nbsp;Class III devices are new and frequently help sustain life.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In the United
States, a company generally can obtain permission to distribute a new device in two ways &ndash; through a Section 510(k) premarket
notification application or through a Section 515 premarket approval application.&nbsp;&nbsp;The 510(k) submission applies to
any device that is substantially equivalent to a device first marketed prior to May 1976 or to another device marketed after that
date, but which was substantially equivalent to a pre-May 1976 device.&nbsp;&nbsp; Under the 510(k) submission process, the FDA
will issue an order finding substantial equivalence to a predicate device (pre-May 1976 or post-May 1976 device that was substantially
equivalent to a pre-May 1976 device) and permitting commercial distribution of that device for its intended use.&nbsp;&nbsp;A
510(k) submission must provide information supporting its claim of substantial equivalence to the predicate device.&nbsp;&nbsp;The
FDA permits certain low risk medical devices to be marketed without requiring the manufacturer to submit a premarket notification.&nbsp;&nbsp;In
other instances, the FDA may require that a premarket notification not only be submitted, but also be accompanied by clinical
data.&nbsp;&nbsp;If clinical data from human experience is required to support the 510(k) submission, this data must be gathered
in compliance with investigational device exemption regulations for investigations performed in the United States.&nbsp;&nbsp;The
FDA review process for premarket notifications submitted pursuant to section 510(k) should take about 90 days, but it can take
substantially longer if the agency has concerns, and there is no guarantee that the agency will clear the device for marketing,
in which case the device cannot be distributed in the United States.&nbsp;&nbsp;Nor is there any guarantee that the agency will
deem the device subject to the 510(k) process, as opposed to the more time-consuming, resource intensive and problematic PMA process
described below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Unless an exemption
applies, each medical device commercially distributed in the United States will require either a prior 510(k) clearance or a pre-market
approval (or PMA) from the FDA. We believe that Dario will be classified as Class II and that we will make a 510(k) submission
for the product; however, no assurances can be given that it will not be classified as Class III device requiring a PMA. Both
the 510(k) clearance and PMA processes can be expensive and lengthy and entail significant user fees, unless exempt. We will follow
the commonly used industry practice, including those described in the FDA draft guidelines for glucose monitors and test strips,
such as &ldquo;Total Product Life Cycle for Portable Invasive Blood Glucose Monitoring Systems.&rdquo;  </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As mentioned
above, to obtain 510(k) clearance for Dario or any of our potential future devices (or for certain modifications to devices that
have received 510(k) clearance), we must submit a pre-market notification demonstrating that the proposed device is substantially
equivalent to a previously cleared 510(k) device or a pre-amendment device that was in commercial distribution before May&nbsp;28,
1976 for which the FDA has not yet called for the submission of a PMA application. The FDA&rsquo;s 510(k) clearance pathway generally
takes from three to twelve months from the date the application is completed, but can take significantly longer. After a medical
device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would
constitute a significant change in its intended use, requires a new 510(k) clearance.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Moreover, devices
deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices deemed
not substantially equivalent to a previously cleared 510(k) device or device in commercial distribution before May&nbsp;28, 1976
for which PMAs have not been required, generally require a PMA before they can be commercially distributed. Although PMAs may
be required for our potential future products, we do not believe a PMA will be required for Dario. A PMA application must be supported
by extensive data, including technical, pre-clinical, one or more clinical trials, manufacturing and labeling to demonstrate to
the FDA&rsquo;s satisfaction the safety and effectiveness of the device. After a PMA application is complete, the FDA begins an
in-depth review of the submitted information, which generally takes between one and three years, but may take significantly longer.
After any pre-market approval, a new pre-market approval application or application supplement may be required in the event of
modifications to the device, its labeling, intended use or indication or its manufacturing process. In addition, any PMA approval
may be conditioned upon the manufacturer conducting post-market surveillance and testing.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>European
and Non-European Regulation Generally</I> <B> </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Sales of medical
devices outside the United States are subject to foreign regulatory requirements that vary widely from country to country. These
laws and regulations range from simple product registration requirements in some countries to complex clearance and production
controls in others. As a result, the processes and time periods required to obtain foreign marketing approval may be longer or
shorter than those necessary to obtain FDA approval.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">For countries
in the European Union, medical devices must display a CE Mark before they may be imported or sold and must comply with the requirements
of the European Medical Device Directive or the Active Implantable Medical Device Directive, which we refer to as the MDD or the
In Vitro Diagnostic Directive (IVDD).&nbsp;&nbsp;We anticipate that Dario will be subject to the MDD as well as subject to the
IVDD.&nbsp;&nbsp;Compliance with the MDD as well as the IVDD Directives and obtaining a CE Mark involve obtaining International
Organization for Standardization, or ISO 13485 certification, an internationally recognized quality system, and approval of the
product&rsquo;s technical file by a notified body that is recognized by applicable authorities of an EU Member State.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have initiated
the procedures seeking the CE Mark regulatory approval. DEKRA Certification has been assigned as our Notified Body. The regulators
conducted the first audit of our company in October 2012 and we are in the process of completing the technical filings to be sent
for examination.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We may also
seek regulatory approval to market Dario in foreign countries that do not rely on the CE Mark. To date, the only non-CE Mark jurisdictions
which we have identified as an intended target market for our product are South Africa, Russia, India and Brazil, with Brazil
currently being the most likely jurisdiction we will target after the EU and the United States. To the extent that we seek to
market our product in other non-CE Mark countries in the future, we will be required to comply with the applicable regulatory
requirements in each such country.&nbsp;&nbsp;Such regulatory requirements vary by country and may be onerous.&nbsp;&nbsp;As a
result, no assurance can be given that we will be able to satisfy the regulatory requirements to sell our products in any such
country.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">For example,
in Brazil, all medical devices imported into or distributed within Brazil must first be registered with the Ag&ecirc;ncia Nacional
de Vigil&acirc;ncia Sanit&aacute;ria, also known as ANVISA or the National Health Surveillance Agency. Established in 1993 under
Brazil&rsquo;s Ministry of Health, ANVISA is an independently administered, financially autonomous regulatory agency responsible
for the regulation and oversight of medical devices and other medical products in Brazil. Specifically, ANVISA is responsible
for the registration of medical devices and for the maintenance of a registered products database. Unlike the EU notified body
system or the 510(k) system of the FDA, ANVISA performs all registration and inspection functions within the agency.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Only companies
based in Brazil can apply for ANVISA registration. Therefore, companies (like ours) based elsewhere that do not have subsidiaries
in Brazil must depend on Brazilian-based third parties, such as hosting companies, distributors and dealers, to obtain ANVISA
registration for medical devices. Under such an arrangement, the local third party holds the ANVISA registration, and a manufacturer
must maintain an effective commercial relationship with a third party to ensure the ongoing maintenance of a registration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Clinical
Studies</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Even when a
clinical study has been approved or cleared by the FDA or a notified body or deemed approved, the study is subject to factors
beyond a manufacturer&rsquo;s control, including, but not limited to the fact that the institutional review board at a given clinical
site might not approve the study, might decline to renew approval which is required annually, or might suspend or terminate the
study before the study has been completed. There is no assurance that a clinical study at any given site will progress as anticipated;
the interim results of a study may not be satisfactory leading the sponsor or others to terminate the study, there may be an insufficient
number of patients who qualify for the study or who agree to participate in the study, or the investigator at the site may have
priorities other than the study. Also, there can be no assurance that the clinical study will provide sufficient evidence to assure
the FDA or a notified body that the product is substantially equivalent in terms of safety and effectiveness to a predicate device,
a prerequisite for clearance under 510(k).&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Post-Clearance
Matters</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Even if the
FDA or a notified body approves or clears a device, it may limit its intended uses in such a way that manufacturing and distributing
the device may not be commercially feasible. After clearance or approval to market is given, the FDA and foreign regulatory agencies,
upon the occurrence of certain events, are authorized under various circumstances to withdraw the clearance or approval or require
changes to a device, its manufacturing process or its labeling or additional proof that regulatory requirements have been met.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">A manufacturer
of a device approved through the premarket approval&nbsp;application&nbsp;process is not permitted to make changes to the device
which affects its safety or effectiveness without first submitting a supplement application to its premarket approval&nbsp;application
and obtaining FDA approval for that supplement.&nbsp;&nbsp;In some instances, the FDA may require a clinical trial to support
a supplement application.&nbsp;&nbsp;A manufacturer of a device cleared through a 510(k) submission must submit another premarket
notification if it intends to make a change or modification in the device that could significantly affect the safety or effectiveness
of the device, such as a significant change or modification in design, material, chemical composition, energy source or manufacturing
process.&nbsp;&nbsp;Any change in the intended uses of a premarket approval&nbsp;application device or a 510(k) device requires
an approval supplement or cleared premarket notification.&nbsp;&nbsp;Exported devices are subject to the regulatory requirements
of each country to which the device is exported, as well as certain FDA export requirements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Mobile Medical
Applications Guideline</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On July 21,
2011, the FDA issued a draft guideline for comment related to mobile medical applications, which we refer to herein as the Guideline.
Under the Guideline, the FDA plans to apply its regulatory oversights to certain types of mobile medical devices. We anticipate
that Dario will be subject to the Guideline.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Ongoing Regulation
by FDA and International Regulators </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Even after a
device receives clearance or approval and is placed on the market, numerous regulatory requirements apply. These include:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">establishment
                                                                                                             registration and
                                                                                                             device listing;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">quality
                                                                                                             system regulation,
                                                                                                             which requires manufacturers,
                                                                                                             including third party
                                                                                                             manufacturers, to
                                                                                                             follow stringent
                                                                                                             design, testing,
                                                                                                             control, documentation
                                                                                                             and other quality
                                                                                                             assurance procedures
                                                                                                             during all aspects
                                                                                                             of the manufacturing
                                                                                                             process;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">labeling
                                                                                                             regulations and FDA
                                                                                                             prohibitions against
                                                                                                             the promotion of
                                                                                                             products for uncleared,
                                                                                                             unapproved or &ldquo;off-label&rdquo;
                                                                                                             uses, and other requirements
                                                                                                             related to promotional
                                                                                                             activities;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">medical
                                                                                                             device reporting
                                                                                                             regulations, which
                                                                                                             require that manufacturers
                                                                                                             report to the FDA
                                                                                                             if their device may
                                                                                                             have caused or contributed
                                                                                                             to a death or serious
                                                                                                             injury or malfunctioned
                                                                                                             in a way that would
                                                                                                             likely cause or contribute
                                                                                                             to a death or serious
                                                                                                             injury if the malfunction
                                                                                                             were to recur;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">corrections
                                                                                                             and removals reporting
                                                                                                             regulations, which
                                                                                                             require that manufacturers
                                                                                                             report to the FDA
                                                                                                             field corrections
                                                                                                             and product recalls
                                                                                                             or removals if undertaken
                                                                                                             to reduce a risk
                                                                                                             to health posed by
                                                                                                             the device or to
                                                                                                             remedy a violation
                                                                                                             of the Federal Food,
                                                                                                             Drug and Cosmetic
                                                                                                             Act that may present
                                                                                                             a risk to health;&nbsp;and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">post-market
                                                                                                             surveillance regulations,
                                                                                                             which apply when
                                                                                                             necessary to protect
                                                                                                             the public health
                                                                                                             or to provide additional
                                                                                                             safety and effectiveness
                                                                                                             data for the device.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Failure to comply
with applicable regulatory requirements can result in enforcement action by the FDA, and other regulatory agencies, which may
include any of the following sanctions: fines, injunctions, civil or criminal penalties, recall or seizure of our current or future
products, operating restrictions, partial suspension or total shutdown of production, refusing our request for 510(k) clearance
or PMA approval of new products, rescinding previously granted 510(k) clearances or withdrawing previously granted PMA approvals.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We may be subject
to announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of our subcontractors.
If, as a result of these inspections, the FDA determines that our or our subcontractor&rsquo;s equipment, facilities, laboratories
or processes do not comply with applicable FDA regulations and conditions of product approval, the FDA may seek civil, criminal
or administrative sanctions and/or remedies against us, including the suspension of our manufacturing and selling operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">International
sales of medical devices are subject to foreign government regulations, which may vary substantially from country to country.
The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval, and the
requirements may differ. There is a trend towards harmonization of quality system standards among the European Union, United States,
Canada and various other industrialized countries.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>State Licensure
Requirements</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Several states
require that durable medical equipment (or DME) providers be licensed in order to sell products to patients in that state. Certain
of these states require that DME providers maintain an in-state location. If these rules are determined to be applicable to us
and if we were found to be noncompliant, we could lose our licensure in that state, which could prohibit us from selling our current
or future products to patients in that state.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Federal Anti-Kickback
and Self-Referral Laws</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The Federal
Anti-Kickback Statute prohibits the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in
return for, or to induce the:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">referral
                                                                                                             of a person;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">furnishing
                                                                                                             or arranging for
                                                                                                             the furnishing of
                                                                                                             items or services
                                                                                                             reimbursable under
                                                                                                             Medicare, Medicaid
                                                                                                             or other governmental
                                                                                                             programs;&nbsp;or</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">purchase,
                                                                                                             lease, or order of,
                                                                                                             or the arrangement
                                                                                                             or recommendation
                                                                                                             of the purchasing,
                                                                                                             leasing, or ordering
                                                                                                             of any item or service
                                                                                                             reimbursable under
                                                                                                             Medicare, Medicaid
                                                                                                             or other governmental
                                                                                                             programs.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">To the extent
we are required to comply with these regulations, it is possible that regulatory authorities could allege that we have not complied,
which could subject us to sanction. Noncompliance with the federal anti-kickback legislation can result in exclusion from Medicare,
Medicaid or other governmental programs, restrictions on our ability to operate in certain jurisdictions, as well as civil and
criminal penalties, any of which could have an adverse effect on our business and results of operations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Federal law
also includes a provision commonly known as the &ldquo;Stark Law,&rdquo; which prohibits a physician from referring Medicare or
Medicaid patients to an entity providing &ldquo;designated health services,&rdquo; including a company that furnishes durable
medical equipment, in which the physician has an ownership or investment interest or with which the physician has entered into
a compensation arrangement. Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received
under a noncompliant arrangement, civil penalties, and exclusion from Medicare, Medicaid or other governmental programs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Federal False
Claims Act</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The Federal
False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly
presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a
false statement or used a false record to get a claim approved. In addition, amendments in 1986 to the Federal False Claims Act
have made it easier for private parties to bring &ldquo;qui tam&rdquo; whistleblower lawsuits against companies. Penalties include
fines ranging from $5,500 to $11,000 for each false claim, plus three times the amount of damages that the federal government
sustained because of the act of that person.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Civil Monetary
Penalties Law</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The Federal
Civil Monetary Penalties Law prohibits the offering or transferring of remuneration to a Medicare or Medicaid beneficiary that
the person knows or should know is likely to influence the beneficiary&rsquo;s selection of a particular supplier of Medicare
or Medicaid payable items or services. Noncompliance can result in civil money penalties of up to $10,000 for each wrongful act,
assessment of three times the amount claimed for each item or service and exclusion from the Federal healthcare programs.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>State Fraud
and Abuse Provisions</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Many states
have also adopted some form of anti-kickback and anti-referral laws and false claims acts. A determination of liability under
such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Administrative
Simplification of the Health Insurance Portability and Accountability Act of 1996</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The Health Insurance
Portability and Accountability Act of 1996, or HIPAA, mandated the adoption of standards for the exchange of electronic health
information in an effort to encourage overall administrative simplification and enhance the effectiveness and efficiency of the
healthcare industry. Ensuring privacy and security of patient information is one of the key factors driving the legislation.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Intellectual Property </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In May 2011,
our founders filed a Patent Cooperation Treaty (or PCT) application for a &ldquo;smartphone based glucose and other body fluids
content monitor&rdquo; (PCT/IL2011/000369) which incorporates two U.S. provisional patent applications submitted in the preceding
year. These applications and all related intellectual property were transferred to us by our founders on October 27, 2011.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The PCT
covers the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of
body fluids. The PCT has been converted into several national phase patent applications. With respect to PCT/IL2011/000369 for
two U.S. provisional patent applications, we claimed the patent priority dates of September 5, 2010 for patent application
no. 61/332,778 and November 1, 2011 for patent application no. 61/431,449. We have advanced patent applications
of PCT/IL2011/000369 outside the U.S., including Israel, Europe, India, South Africa, Australia, China, Japan
and Brazil.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">With regards
to our technology, we are continuing our pursuit of patent protection and are preparing for regulatory filings in multiple jurisdictions
of both the Dario device and related software.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are preparing
numerous additional patent filings related to the core technology and anticipated future generations of the Dario product. We
are also in the process of defining the final design of the initial Dario product and we are continuing development of the software
through both internal and outsourced resources. In addition, we are seeking to develop new intellectual property around future
generations of Dario hardware and software with the goal of achieving enhanced functionality, user interface and data usability.
However, our patents have not been granted by any of applicable regulatory authority.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
we regularly conduct review of our intellectual property. Our management is timely informed and actively supervising the development
of our intellectual property, including with respect to trademarks.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Competition</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We face competition
principally from two arenas:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Direct competition
from existing companies in the blood based glucose monitors market</I>. We will compete directly and primarily with large pharmaceutical
and medical device companies, including, but not limited to, Abbott Laboratories, Bayer Healthcare Division, Johnson &amp; Johnson
LifeScan, Roche Diagnostics and Sanofi. While the market is highly competitive, we believe that Dario will carry numerous significant
comparative advantages versus other devices in the market. Some of these devices are now offered as connected devices to smartphones,
such as the Sanofi iBGStar.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Dario device
is offering an all in one glucose monitoring system, including a small form factor glucose reader, lancing device and a strip
cartridge integrated with existing smartphones, which will enable Dario to offer features that are similar to or superior to the
most advanced meters in the market (such as the Contour and Ultrasmart) while having a smaller form factor than the compact meters
in the market (FreeStyle Lite and OneTouch UltraMini). We believe this design will be attractive to diabetic patients.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Non-invasive
and continuous blood glucose monitors.</I> While there are numerous continuous blood glucose monitoring technologies in the market,
we believe they are expensive to use and are therefore offered mainly for temporary usage and in medical settings (such as hospitals).
There have been a wealth of attempts for non invasive glucose monitors, but we are not aware of any that are available in the
market or expected to reach the market with significant presence over the next few years.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Employees </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We currently
have 10 full time employees and 5 part time employees. In addition we utilize outsourced personnel and plan to utilize additional
outsourced personnel as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: Black">1.</FONT></TD><TD><FONT STYLE="color: Black"><I>Software and Hardware Engineering</I>.
                                                              Work has been done primarily in Israel, and we shall continue to
                                                              utilize engineering services under the direct supervision of our
                                                              management team.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: Black">2.</FONT></TD><TD><FONT STYLE="color: Black"><I>Sales and Marketing</I>. We plan
                                                              to utilize the outsourced services of experts and affiliate marketing
                                                              networks specializing in online marketing of healthcare products.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Currently, we
have employment agreements with our three executive officers. See &ldquo;Executive Compensation.&rdquo;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Facilities </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black; background-color: white">We
maintain an address at </FONT>40 E. Main Street, Suite 759,<B> </B>Newark, Delaware 19711 and our telephone number is (646) 259-3321.
LabStyle Israel, our wholly-owned Israeli subsidiary, maintains an office in Ramat Gan, Israel. We believe our facilities are
adequate for our current operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Previous Financings</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">To date, we
have raised an aggregate of approximately $5.66 million (before capital raising expenses) through the sale of our common stock
to investors pursuant to private placement transactions. Such private placements are described below. In addition, we received
irrevocable commitments from investors as part of our August 2012 Private Placement to invest additional $1 million in our company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Formation</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On August 11,
2011, in connection with our formation and the contribution of intellectual property to our company in October 2011, our founders
(including an affiliate of Dr. Oren Fuerst, Dr. David Weintraub and Shilo Ben Zeev, each of whom are executives and/or directors
of our company) received an aggregate of 7,500,000 shares of common stock for nominal consideration.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-weight: normal; color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In connection
with our formation on August 11, 2011, we also closed a private placement of 2,000,000 shares of our common stock to an aggregate
of 9 accredited investors for an aggregate purchase price of $10,000. We are not registering the founders&rsquo; shares issued
in our August 11, 2011 private placement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>2011-2012
Private Placement</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On October 27,
2011, we conducted the initial closing of a private placement offering (which we refer to herein as our 2011-2012 Private Placement)
of an aggregate of 2,461,000 shares of our common stock at a purchase price of $1.00 per share and warrants to purchase an aggregate
of 2,461,000 shares of our common stock with an exercise price of $1.50 per share, which warrants are exercisable at any time
within five (5) years from October 27, 2011. The $1.50 exercise price was adjusted to $1.42 per share due to the August 2012 Private
Placement described below and the number of shares of common stock underlying such warrants was adjusted upward by an aggregate
of 138,648 shares. The exercise price of the such warrants as well as the number of shares subject to such warrants is expected
to reduced to $1.30 and 379,774, respectively, accordingly following completing the second and third tranches of the August 2012
Private Placement as described below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The final closing
of the 2011-2012 Private Placement occurred on March 30, 2012. There were a total of 45 accredited investors in the 2011-2012
Private Placement. Spencer Trask Ventures, Inc. (who we refer to herein as Spencer Trask) acted as the placement agent for the
2011-2012 Private Placement. The gross proceeds to us from the 2011-2012 Private Placement were $2.461 million. Pursuant to the
registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued in the 2011-2012 Private Placement for public resale by the selling stockholders named herein
and their assigns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As part of its
compensation for acting as placement agent for the 2011-2012 Private Placement, we issued two warrants to Spencer Trask, each
to purchase 482,200 shares of common stock with an exercise price of, respectively, $1.00 and $1.50 per share (subsequently adjusted
downward to $1.42 and expected to further reduced to $1.30 and in addition the amount of warrants was adjusted to 509,366 and
expected to adjusted to 556,612 warrants). Such warrants contain a &ldquo;cashless exercise&rdquo; feature and are exercisable
at any time prior to the earlier of: (i) March 30, 2019 or (ii) three years following the date that our common stock becomes publicly
traded. We are not registering the shares of common stock underlying the warrants issued to Spencer Trask for public resale. Due
to the August 2012 Private Placement described below, the shares underlying Spencer Trask&rsquo;s were increased by 27,166 shares,
and the exercise price is currently $1.42.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>August 2012
Private Placement</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On August 29,
2012, we consummated the August 2012 Private Placement with 13 accredited investors, including existing stockholders of our company.
Pursuant to this financing, we issued an aggregate of 500,014 shares of our common stock at a price equal to $1.00 per share (for
gross proceeds of $500,014) and issued warrants to purchase an aggregate of 500,014 shares of our common stock with an exercise
price of $1.00 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">In addition,
the investors in the August 2012 Private Placement irrevocably committed to purchase an additional 1,000,022 shares of common
stock in the aggregate at $1.00 per share and warrants to purchase an aggregate of 1,000,022 shares of our common stock with an
exercise price of $1.00 per share, for gross proceeds of $1,000,022. Such purchases shall take place in two tranches, the first
on the 90<SUP>th</SUP> day following the date (which we refer to as the Funding Trigger Date) as of which both: (i) a registration
statement covering the shares of our common stock issued and underlying warrants issued in our August 2012 Private Placement has
been declared effective by the Securities and Exchange Commission and (ii) we have received a ticker symbol for our common stock
and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading
system (consisting of 500,011 shares and 500,011 warrants), and the second the 180<SUP>th</SUP> day following the Funding Trigger
Date (also consisting of 500,011 shares and 500,011 warrants). To evidence this irrevocable commitment, each investor executed
a promissory note in our favor to fund for their pro rata portion of the additional investments as of the foregoing dates. We
expect, therefore, that the total gross proceeds from the August 2012 Private Placement will be $1,500,036, not including any
potential warrant exercises. No placement agents were utilized in connection with the August 2012 Private Placement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">One-half of
the warrants issued in the August 2012 Private Placement have a an exercise period ending on the first anniversary means the date
that our company has received a ticker symbol for our common stock and caused our common stock to be eligible for trading on the
Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (which we refer to as the Warrant Effective Date), and
the exercise period for the remaining one-half of the warrants ends on the second anniversary of the Warrant Effective Date.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued or to be issued in the August 2012 Private Placement for public resale by the selling stockholders
named herein and their assigns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>October 2012
Private Placement</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">On October 17,
2012, we consummated a final closing of a separate private placement transaction (which we refer to as the October 2012 Private
Placement) with 44 accredited investors, including existing stockholders of our company. Pursuant to this financing, we issued
an aggregate of 1,795,009 shares of our common stock at a price equal to $1.50 per share (for gross proceeds of $2,692,513). We
utilized the services of four FINRA member broker-dealers as finders for this private placement, including Spencer Trask, and
we paid commissions to such finders equal to 10% of the funds they each raised in cash and warrants to purchase an aggregate of
179,502 shares of our common stock. Such finder warrants contain a &ldquo;cashless exercise&rdquo; feature and are exercisable
at any time prior to October 16, 2015. We are not registering the shares of common stock underlying the finder warrants for public
resale.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock issued in the October
2012 Private Placement for public resale by the selling stockholders named herein and their assigns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Legal Matters</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are not currently
subject to any material legal proceedings. However, we may from time to time become a party to various legal proceedings arising
in the ordinary course of our business.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal; color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal; color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">MANAGEMENT</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">All
directors hold office for one-year terms until the election and qualification of their successors. Officers are appointed by our
board of directors and serve at the discretion of the board, subject to applicable employment agreements. The following table
sets forth information regarding our executive officers and the members of our board of directors as of the date of this prospectus.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 30%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: justify"><FONT STYLE="color: Black">Name</FONT></TD>
    <TD NOWRAP STYLE="width: 2%; font-weight: bold; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="width: 8%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="color: Black">Age</FONT></TD>
    <TD NOWRAP STYLE="width: 2%; font-weight: bold; text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="width: 58%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: justify"><FONT STYLE="color: Black">Position(s)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Oren Fuerst, Ph.D.</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">45</FONT></TD>
    <TD><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD><FONT STYLE="color: Black">Chief Executive Officer and Chairman of the Board of Directors</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Shilo Ben Zeev</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">39</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">President, Chief Operating Officer and Director</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="color: Black">Mordechi (Motty) Hershkowitz</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">37</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Chief Financial Officer, Treasurer and Secretary</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Dr. David Weintraub</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">61</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt; color: Black">Director</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Malcolm Hoenlein</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">68</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Director</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Nahum D. Melumad</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">57</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Director</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Adam K. Stern</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="color: Black">49</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">&nbsp;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="color: Black">Director</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Except for the
two year right (commencing October 27, 2011) of Spencer Trask to appoint one member to our board of directors, there are no arrangements
between our directors and any other person pursuant to which our directors were nominated or elected for their positions. There
are no family relationships between any of our directors or executive officers.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Oren Fuerst,
Ph.D.</I></B> is our Chairman of the Board and Chief Executive Officer. Dr. Fuerst is a serial entrepreneur, investor, advisor
and inventor of technologies commercialized by numerous medical companies. He presently serves as the Managing Director and Chairman
of Strategic Models, a New York-based investment, strategy and ideas group nurturing boutique, which he founded in 1999, of Geb
Invest Group and of Fuerst Technologies. Strategic Models is one of the founding stakeholders of LabStyle. In 2009, Dr. Fuerst
co-founded and became Chairman of Circ MedTech, a developer of PrePex, an HIV prevention medical device. In 2011, Dr. Fuerst co-founded
and became Chairman of Hiterpia, a development stage company developing a dietary supplement for enhanced brain function, Medivizor,
a health informatics service, and Eco-Fusion, an integrated mobile hardware-software service for general health maintenance and
rehabilitation. In 2007, he co-founded and became Chairman of Tevel Angels and later Tevel Global, a network of investors with
a focus on investing in early-stage Israeli-related technology companies, including numerous medical devices and software companies.
From 1999 to 2003, he was the initiator and later co-Director of the Technology Valuation Executive Program at Columbia Business
School, and from 1997 to 2000, he served as a faculty member at Yale University School of Management and Yale International Center
for Finance, focusing on International and Technology Valuation and Management. Dr. Fuerst is also involved in numerous not for
profit organizations, mostly related to healthcare in disadvantaged communities. We believe Dr. Fuerst is qualified to serve on
our board of directors due to his status as one of our founders and a co-inventor of our core technology and also because of his
extensive experience in innovation, finance and product development with life sciences companies. Dr. Fuerst holds an M.Phil.
and Ph.D. from Columbia Business School with a dissertation topic of the linkages of game theory, valuation and corporate stock
exchange listing. He holds a dual bachelor&rsquo;s degree from Tel Aviv University (Dual Magna Cum Laude) in Accounting and Economics.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Shilo
Ben Zeev </I></B>is our President and Chief Operating Officer as well as a director of our company.&nbsp; Mr. Ben Zeev was appointed
Chief Operating Officer and director at our formation on August 11, 2011 and was appointed President in February 2012.&nbsp; From
2009 to 2012, he served as VP Business Development - Israel for MEX Agency of Medical Experts GmbH, a Germany-based consultancy
agency engaged in building market infrastructure, introduction and assimilation of medical devices companies in the German medical
market. His position included searching and identifying cutting edge Israeli medical technologies and assisting in embedding these
technologies in medical institutions in the German market. During 2010, he also served as Vice President of ThreeWire Inc., a
company engaged in the recruitment and enrollment of patients into clinical trials for international pharmaceuticals and medical
devices companies.&nbsp; From 2006 to 2008, he was the Chief Operating Officer of Lifewave Ltd. (TASE: LIFE), an Israeli medical
device company engaged in the development and marketing of specialized chronic wound treatment technologies. At Lifewave, he was
involved in establishing and managing staff recruitment, the company&rsquo;s initial public offering, clinical trials in Europe,
production and marketing. From 2004 to 2006, Mr. Ben Zeev was a project manager at Baran Raviv Group, a leading engineering and
infrastructure integration firm, where his work included coordination between the Israeli government and the company for the establishment
and construction of cellular sites. Mr. Ben Zeev has also founded and managed D-Cure, a research fund, sponsoring technology-oriented
medical research for diabetes treatments, headed by diabetes expert Professor Itamar Raz. We believe Mr. Ben Zeev is qualified
to serve on our board of directors due to his status as one of our founders and also because of his extensive experience in business
operations for medical device companies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Mordechi
(Motty) Hershkowitz </I></B>has been our Chief Financial Officer since March 2012 and was appointed as our Treasurer and Secretary
in May 2012.&nbsp; From 2006 to 2011, Mr. Hershkowitz was the head of a department in the taxation group at BDO Israel. &nbsp;Prior
to his position at BDO, from 2004 to 2006, Mr. Hershkowitz was a manager at Pelephone Communication Ltd., a mobile phone service
company in Israel. &nbsp;From 2002 to 2004, Mr. Hershkowitz was involved in the management of several not-for-profit entities
focusing in the areas of education and schools. Mr. Hershkowitz is a lecturer at The College of Management Academic Studies in
Israel. &nbsp;He is a Certified Public Accountant in Israel and holds a BA in business management and accounting from Ono Academic
College in <FONT STYLE="font-family: Times New Roman, Times, Serif">Kiryat Ono, Israel</FONT>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Dr. David
Weintraub</I></B> is a founding director and stockholder of our company. Dr. Weintraub has more than 25 years of experience in
medical technologies, including the founding of numerous companies, including Versamed (acquired by GE Healthcare in 2008 for
over $40 million), a developer of a novel line of respirators. Dr. Weintraub founded the first Women Health Center in Israel in
1987 and practices obstetrics and gynecology in his private clinic. Dr. Weintraub has also served as the Medical Director of the
Ramat Aviv Medical Center in Tel Aviv since 2003. As part of his medical device experience, from 2004 to 2005, he was the Medical
Director of UltraShape Ltd., a medical device company, and from 2006 to 2009, he was the co-founder and Medical Director of medical
device maker Anima. He also managed and maintained his own private clinic from 2006 to 2009. We believe Dr. Weintraub is qualified
to serve on our board of directors due to his status as one of our founders and also because of his extensive experience with
medical technologies. He graduated from the Sackler School of Medicine, Tel Aviv University in 1980.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Malcolm
Hoenlein</I></B> has been a director of our company since August 31, 2011. Since 1986, Mr. Hoenlein has served as Chief Executive
Officer and Executive Vice Chairman of the Conference of Presidents of Major American Jewish Organizations, the coordinating body
on international and national concerns for 52 national American Jewish organizations. Previously, he served as the founding Executive
Director of the Jewish Community Relations Council of Greater New York. Prior to that, he was the founding Executive Director
of the Greater New York Conference on Soviet Jewry. A National Defense Fellow at the Near East Center of the University of Pennsylvania,
Mr. Hoenlein taught International Relations in the Political Science Department and served as a Middle East specialist at the
Foreign Policy Research Institute. In addition, he served on the&nbsp;editorial staff of ORBIS, the Journal of International Affairs.
He serves as a director of several companies, including Bank Leumi USA, PureSafe Water Systems, Inc. (OTCBB:PSWS), Powermat USA,
O.D.F. Optronics Ltd. and WellSense Technologies. We believe Mr. Hoenlein is qualified to serve on our board of directors because
of his extensive experience serving on the boards of public and private companies. Mr. Hoenlein has a B.A. in Political Science
from Temple University and a Masters Degree in&nbsp;International Relations from the University of Pennsylvania, as well as an
honorary Doctorate of Laws from Touro College and an honorary Doctorate of Humane Letters from Yeshiva University.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Prof.
Nahum D. Melumad</I> </B>has been a director of our company since August 31, 2011. He is the James Dohr Professor of Accounting
and Business Law at the Columbia Business School (CBS). He has been a member of the CBS faculty since 1993. Between 2000 and 2006,
he served as the chairman of the accounting division at the CBS. Professor Melumad is the recipient of the 2005 Annual CBS Dean&rsquo;s
Award for Excellence in MBA/EMBA teaching. Between 2003 and 2008, he co-directed the Columbia Business School/New York Stock Exchange
Program for directors of public companies titled Integrity in Financial Disclosure. Prior to joining CBS, he was a member of the
faculty at the Stanford Business School. Professor Melumad has served as a consultant and advisor to many organizations, including
Bristol-Myers Squibb, General Electric, Johnson &amp; Johnson, the New York Stock Exchange, and Morgan Stanley. We believe Prof.
Melumad is qualified to serve on our board of directors because of his extensive experience in public company accounting and audit
matters. Professor Melumad is a CPA, received M.B.A. and Ph.D. degrees from the University of California at Berkeley and earned
is B.A. degree from Tel Aviv University.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Adam K.
Stern</I> </B>has been a director of our company since October 27, 2011.<B> </B>Mr. Stern<B> </B>has over 25 years of venture
capital and investment banking experience focusing primarily on the technology and life science industries. Since November 2012,
Mr. Stern has served as the Managing Director of Private Equity Banking at Aegis Capital Corp. and the Chief Executive Officer
of SternAegis Ventures. From 1997 to November 2012, Mr. Stern was affiliated with Spencer Trask, most recently as Managing Director.
From 1989 to 1997, he was associated with Josephthal &amp; Co., members of the New York Stock Exchange, where he served as Senior
Vice President and Managing Director of Private Equity Marketing and held increasingly responsible positions. He has been a licensed
securities broker since 1987 and a General Securities Principal since 1991. From May 2007 until June 2011, he served as a director
of Prolor Biotech Inc. (NYSE MKT: PBTH) and he has served as a director of InVivo Therapeutics Holdings Corp. (OTCBB: NVIV) since
October 2010 and Organovo Holdings, Inc. (OTCBB:ONVO) since February 2012. We believe Mr. Stern is qualified to serve on our
board of directors because of his extensive experience in corporate finance and experience in the technology and life science
industries. Mr. Stern holds a Bachelor of Arts degree with honors from the University of South Florida in Tampa.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Key Employees</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Below are the
biographies of certain key non-executive officer employees of our company:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Tal Givoly
</I></B>has been our Chief Technology Officer since February 2012. Mr. Givoly has over 25 years of systems and software development
experience, and has held management positions in the areas of technology intellectual property, research, development, standards
and product management at both startup companies and multinational corporations. Until March 2011 and for the 7 years prior, Mr.
Givoly was Chief Scientist at Amdocs Limited (NYSE: DOX) and led innovation activities across the company, including heading up
Amdocs&rsquo; technology incubation unit and innovation programs. Mr. Givoly is the inventor of over 25 granted patents with others
pending. He is a co-founder of Medivizor, a medical informatics service. He has been a speaker at major telecommunications industry
events, such as the Mobile World Congress and CTIA &ndash; The Wireless Association. He has also been actively involved in industry
forums and standard bodies, including TM Forum, the Internet Engineering Task Force, the Alliance for Telecommunications Industry
Standards, and IPDR.org. He holds B.Sc. Cum Laude, Mathematics and Physics from Tel Aviv University.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Eyal Sandach
</I></B>has been our Director of Production since July 2012. Mr. Sandach is an experienced executive, with more than 15 years
of experience in the medical device field managing both start-ups and larger companies in both the U.S. and Israel. From May 2006
to July 2008, Mr. Sandich served as Chief Executive Officer of vascular products company B-Balloon Ltd., which company was merged
with Neovasc Medical Ltd. and acquired by Medical Ventures (Canada). From 2008 to 2009, he then served as General Manager of merged
Israel operations for Medical Ventures Corp. From 2000 to 2006, Mr. Sandich worked for American Medical Systems, Inc., a urology
&amp; gynecology company located in Minnetonka, Minnesota. With AMS, Mr. Sandich held several senior management positions, in
operations, mergers and acquisitions and in marketing and sales. Mr. Sandich holds a BSC in Industrial engineering and MBA from
the University of St. Thomas in Saint Paul, Minnesota.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Scientific Advisory Board </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We are in the
process of establishing a scientific advisory board. Our advisory board members will be available to us to advise on our business
plans and operational strategies. The biographical information for our initial advisory board member is listed below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>Professor
Itamar Raz</I></B>.<B> </B>Itamar Raz, M.D. is world-renowned diabetes expert. He is a professor of Internal Medicine at Hadassah
University Medical Center and the head of the Diabetes Unit and Research Center at Hadassah. He also serves as the head of the
Israel National Council of Diabetes and as a member of several international editorial boards. Professor Raz has published extensively
in the area of diabetes, with over 190 publications to his credit.&nbsp;&nbsp;As president of the Israel Diabetes Research Group,
he collaborates with other diabetologists in Israel and worldwide, conducting clinical research aimed at improving the treatment
of diabetic patients. He is also the president of D-Cure, a non-profit foundation involving diabetes research. He is leading several
international clinical studies involving prevention of Type 1 Diabetes and protection of kidneys and hearts of diabetics.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><FONT STYLE="color: Black"><B>Consulting
Agreement with SLD Capital Corp.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">In
October 2012, we entered into a non-exclusive strategic advisory consulting agreement with SLD Capital Corp. SLD Capital is an
affiliate of Steven Rosner, an investor in our company. Pursuant to this agreement, SLD Capital will, over the one year term of
the agreement, provide strategic advice to our management regarding, among other matters: (i) our operations and related obligations
as a U.S. publicly-listed and reporting company, (ii) the industries and businesses in which we are engaged, including our publicly-listed
competitors and (iii) other aspects of or concerning our business about which SLD Capital has knowledge or expertise, including
ongoing our stockholder relations initiatives. SLD Capital will also provide feedback to our management on the evolution of our
business and on our execution of our business plans.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">As consideration
for such services, upon execution of the agreement, we issued SLD Capital 250,000 shares of our common stock and agreed to issue
SLD Capital additional 20,833 shares of common stock per month in arrears during the first eleven months of the agreement term
and 20,837 shares of common stock in the final month of the agreement term, for a total of 250,000 additional shares of common
stock. Pursuant to the registration statement of which this prospectus is a part, we are registering the shares of common stock
issued or to be issued under this consulting agreement for public resale by SLD Capital and its assigns.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Board Committees</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our board of
directors has two standing committees &mdash; an Audit Committee and a Compensation Committee.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Audit Committee
</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our Audit Committee
is comprised of Prof. Nahum D. Melumad and Malcolm Hoenlein, each of whom is an independent director. Prof. Melumad serves as
Chairman of the Audit Committee. The board of directors has determined that Prof. Melumad is an &ldquo;audit committee financial
expert&rdquo; as defined in Item 407(d)(5)(ii) of Regulation S-K.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our Audit Committee
will oversee our corporate accounting, financial reporting practices and the audits of financial statements. For this purpose,
the Audit Committee has a charter (which will be reviewed annually) and performs several functions. The Audit Committee will:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">evaluate
                                                                                                             the independence
                                                                                                             and performance of,
                                                                                                             and assesses the
                                                                                                             qualifications of,
                                                                                                             our independent auditor
                                                                                                             and engage such independent
                                                                                                             auditor;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">approve
                                                                                                             the plan and fees
                                                                                                             for the annual audit,
                                                                                                             quarterly reviews,
                                                                                                             tax and other audit-related
                                                                                                             services and approve
                                                                                                             in advance any non-audit
                                                                                                             service to be provided
                                                                                                             by our independent
                                                                                                             auditor;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">monitor
                                                                                                             the independence
                                                                                                             of our independent
                                                                                                             auditor and the rotation
                                                                                                             of partners of the
                                                                                                             independent auditor
                                                                                                             on our engagement
                                                                                                             team as required
                                                                                                             by law;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">review
                                                                                                             the financial statements
                                                                                                             to be included in
                                                                                                             our Annual Report
                                                                                                             on Form 10-K and
                                                                                                             Quarterly Reports
                                                                                                             on Form 10-Q and
                                                                                                             reviews with management
                                                                                                             and our independent
                                                                                                             auditor the results
                                                                                                             of the annual audit
                                                                                                             and reviews of our
                                                                                                             quarterly financial
                                                                                                             statements;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">oversee
                                                                                                             all aspects our systems
                                                                                                             of internal accounting
                                                                                                             control and corporate
                                                                                                             governance functions
                                                                                                             on behalf of the
                                                                                                             board; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol; color: Black">&middot;</FONT></TD><TD><FONT STYLE="color: Black">provide
                                                                                                             oversight assistance
                                                                                                             in connection with
                                                                                                             legal, ethical and
                                                                                                             risk management compliance
                                                                                                             programs established
                                                                                                             by management and
                                                                                                             the board, including
                                                                                                             compliance with requirements
                                                                                                             of the Sarbanes-Oxley
                                                                                                             Act of 2002, and
                                                                                                             make recommendations
                                                                                                             to the board of directors
                                                                                                             regarding corporate
                                                                                                             governance issues
                                                                                                             and policy decisions.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>Compensation
Committee </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><I>&nbsp;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our Compensation
Committee is comprised of Malcolm Hoenlein and David Weintraub, with Mr. Hoenlein serving as Chairman. The Compensation Committee
will review or recommend the compensation arrangements for our management and employees and also assists the board of directors
in reviewing and approving matters such as company benefit and insurance plans, including monitoring the performance thereof.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The Compensation
Committee has the authority to directly engage, at our expense, any compensation consultants or other advisers as it deems necessary
to carry out its responsibilities in determining the amount and form of employee, executive and director compensation.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-weight: normal; color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black">Director
Independence</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">Our board of
directors has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly.
Based on this review, our board has determined that Messrs. Weintraub, Hoenlein and Melumad are &ldquo;independent directors&rdquo;
as defined in the rules of NASDAQ OMX Group, Inc. corporate governance requirements and Rule 10A-3 promulgated under the Securities
Exchange Act of 1934, as amended.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Code of Business Conduct and
Ethics</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have not
adopted a Code of Business Conduct and Ethics but anticipate doing so following the effectiveness of the registration statement
of which this prospectus is a part.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black"><B>Limitation of Directors Liability
and Indemnification</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The Delaware
General Corporation Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability of
directors to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our certificate of
incorporation limits the liability of our directors to the fullest extent permitted by Delaware law.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">We have director
and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to
us, including matters arising under the Securities Act. Our certificate of incorporation and bylaws also provide that we will
indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved
in a legal proceeding of any nature.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">There is no
pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be
required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">EXECUTIVE
COMPENSATION</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Black"><B>Summary
Compensation Table</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black">The following
table summarizes, as of December 31, 2012, the annual compensation paid to Oren Fuerst, Mordechi (Motty) Hershkowitz<B><I> </I></B>and
Shilo Ben Zeev, whom we refer to collectively as the &ldquo;named executive officers&rdquo; for the fiscal years ended December
31, 2012 and 2011. Our company was formed in August 2011; therefore the figures indicated below for 2011 reflect only a partial
year.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: Black"><B><I>&nbsp;&nbsp;</I></B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 7pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="color: Black; font-weight: bold; border-bottom: Black 1pt solid">Name&nbsp;and<BR> Principal<BR> Position</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Salary&nbsp;<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Bonus<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Stock<BR> Awards</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Option<BR> Awards<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Non-equity<BR> incentive&nbsp;plan<BR> compensation</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Non-qualified<BR> incentive&nbsp;plan<BR> compensation</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">All&nbsp;Other<BR> Compensation<BR> ($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: Black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: Black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total&nbsp;($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: Black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 19%; color: Black; text-align: left">Oren Fuerst (Chairman and CEO)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; color: Black; text-align: center">2012</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 6%; color: Black; text-align: right">198,922</TD><TD STYLE="width: 1%; color: Black; text-align: left">(1)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; color: Black; text-align: right">&mdash;</TD><TD STYLE="width: 1%; color: Black; text-align: left">(2)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; color: Black; text-align: right">&mdash;</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 6%; color: Black; text-align: right">183,622</TD><TD STYLE="width: 1%; color: Black; text-align: left">(3)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; color: Black; text-align: right">&mdash;</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 8%; color: Black; text-align: right">&mdash;</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 6%; color: Black; text-align: right">23,434</TD><TD STYLE="width: 1%; color: Black; text-align: left">(4)</TD><TD STYLE="width: 1%; color: Black">&nbsp;</TD>
    <TD STYLE="width: 1%; color: Black; text-align: left">$</TD><TD STYLE="width: 6%; color: Black; text-align: right">406,978</TD><TD STYLE="width: 1%; color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: center">2011</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">49,884</TD><TD STYLE="color: Black; text-align: left">(1)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">(2)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">2,380</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">52,264</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: center">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Shilo Ben Zeev (President and COO)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: center">2012</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">121,387</TD><TD STYLE="color: Black; text-align: left">(5)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right"><FONT STYLE="color: Black">&mdash;.</FONT></TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">292,000</TD><TD STYLE="color: Black; text-align: left">(6)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">41,545</TD><TD STYLE="color: Black; text-align: left">(7)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">454,931</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: center">2011</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">18,697</TD><TD STYLE="color: Black; text-align: left">(5)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right"><FONT STYLE="color: Black">&mdash;.</FONT></TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">4,446</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">23,143</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: center">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&nbsp;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black; text-align: left">Mordechi (Motty) Hershkowitz (CFO)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: center">2012</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">55,224</TD><TD STYLE="color: Black; text-align: left">(8)</TD><TD STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD STYLE="color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold; text-align: right">&mdash;</TD><TD STYLE="color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">36,400</TD><TD STYLE="color: Black; text-align: left">(9)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">22,781</TD><TD STYLE="color: Black; text-align: left">(10)</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">$</TD><TD STYLE="color: Black; text-align: right">114,404</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="color: Black">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: center">2011</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD STYLE="color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold; text-align: right">&mdash;</TD><TD STYLE="color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold">&nbsp;</TD>
    <TD STYLE="color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black; font-weight: bold; text-align: right">&mdash;</TD><TD STYLE="color: Black; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black">&nbsp;</TD>
    <TD STYLE="color: Black; text-align: left">&nbsp;</TD><TD STYLE="color: Black; text-align: right">&mdash;</TD><TD STYLE="color: Black; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; font-family: Times New Roman, Times, Serif">
<TD STYLE="width: 0; font-family: Times New Roman, Times, Serif"></TD><TD STYLE="width: 0.5in; font-family: Times New Roman, Times, Serif"><FONT STYLE="color: Black">(1)</FONT></TD><TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="color: Black">In accordance with his employment agreement
                                                           with our company (which was approved by our board of directors in March
                                                           2012), Dr. Fuerst was entitled to an annual salary of $192,000. In
                                                           August 2012, upon the approval of the Compensation Committee of our
                                                           board of directors, Dr. Fuerst&rsquo;s annual salary was increased
                                                           to $252,000, starting from August 2012. Since Dr. Fuerst receives part
                                                           of his salary from our Israeli subsidiary denominated in New Israeli
                                                           Shekel (&ldquo;NIS&rdquo;), the compensation received from the Israeli
                                                           subsidiary is calculated for purposes of this table based on the annual
                                                           average currency exchange. Amounts of salary do not include $18,500
                                                           which was earned but not paid at December 31, 2012.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; font-family: Times New Roman, Times, Serif">
<TD STYLE="width: 0; font-family: Times New Roman, Times, Serif"></TD><TD STYLE="width: 0.5in; font-family: Times New Roman, Times, Serif"><FONT STYLE="color: Black">(2)</FONT></TD><TD STYLE="font-family: Times New Roman, Times, Serif"><FONT STYLE="color: Black">In accordance with his employment agreement,
                                                           Dr. Fuerst is entitled to receive bonuses based on his achieving the
                                                           following milestones: (a) $96,000 in the event we achieve data lock
                                                           on least one clinical study required for FDA and/or CE Mark regulatory
                                                           approval, (b) $48,000 in the event we make a 510K regulatory submission
                                                           with the FDA for regulatory clearance of a company product, (c) $48,000
                                                           in the event we obtain a European notified body CE Mark clearance for
                                                           a company product, (d) $48,000 in the event we obtain a market clearance
                                                           for a company product in a market not covered by FDA or CE with a population
                                                           in excess of 100,000,000 and (e) $96,000 in the event we obtain FDA
                                                           regulatory clearance for a company product. Dr. Fuerst is also entitled
                                                           to receive additional bonuses for five years in connection with strategic
                                                           transactions that Dr. Fuerst has helped to consummate. As of December
                                                           31, 2012, Dr. Fuerst was entitled to receive a bonus at the amount
                                                           of $96,000 in light of the achieving of the first milestone described
                                                           above. However, the bonus had not been paid as of December 31, 2012.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in"><FONT STYLE="color: Black">&nbsp;&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(3)</TD><TD>In accordance with his employment agreement with our company, Dr.
                                                           Fuerst was entitled to receive fully-vested options to purchase shares
                                                           of our common stock equal to three percent (3%) of our issued and outstanding
                                                           capital stock on an as-converted fully diluted basis (but no less than
                                                           500,000 shares). Pursuant to Dr. Fuerst&rsquo;s employment agreement
                                                           and for accounting purposes, the exercise price of such options was
                                                           set at $1.00 per share; provided, that the exercise price remained
                                                           subject to modification if deemed appropriate by our board of directors.
                                                           In June 2012, the Compensation Committee of our board of directors
                                                           approved initial option grants under our 2012 Equity Incentive Plan.
                                                           As part of this approval, the Compensation Committee approved a reduction
                                                           in the exercise price of the options Dr. Fuerst was entitled to receive
                                                           from $1.00 to $0.52 and issued additional options at $0.52 per share.
                                                           As such, Dr. Fuerst was granted an aggregate of 750,000 options with
                                                           an exercise price of $0.52 per share. In September 2012, the Compensation
                                                           Committee of our board of directors clarified that 330,000 of these
                                                           options vested immediately, and 420,000 are subject to 2-year vesting
                                                           in equal increments on annual basis. We may grant Dr. Fuerst additional
                                                           options to purchase shares of common stock from time to time at the
                                                           discretion of our board of directors or the Compensation Committee
                                                           thereof. The value of the granted options for purposes of this table
                                                           was derived using the Black-Sholes model.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(4)</TD><TD>In addition to his salary, Dr. Fuerst is entitled to receive a
                                                           leased automobile and mobile phone during his employment as well as
                                                           reimbursements for expenses accrued. These benefits as well as other
                                                           social benefits under Israeli law are included as part of his &ldquo;All
                                                           Other Compensation&rdquo;.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(5)</TD><TD>Since Mr. Ben Zeev receives his entire salary from our Israeli
                                                           subsidiary denominated in NIS, the compensation received is calculated
                                                           for purposes of this table based on the annual average currency exchange.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(6)</TD><TD>As part of the initial grants under our 2012 Equity Incentive Plan
                                                           approved by the Compensation Committee of our board of directors in
                                                           June 2012, Mr. Ben Zeev was granted 400,000 options to purchase shares
                                                           of common stock with an exercise price of $0.001 per share. 100,000
                                                           of these options vested immediately and 300,000 are subject to 2-year
                                                           vesting in equal increments on a quarterly basis. We may grant Mr.
                                                           Ben Zeev additional options to purchase shares of common stock from
                                                           time to time at the discretion of our board of directors or the Compensation
                                                           Committee thereof. The value of the granted options for purposes of
                                                           this table was derived using the Black-Sholes model.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(7)</TD><TD>In addition to his salary, Mr. Ben-Zeev is entitled to receive
                                                           a leased automobile and mobile phone during his employment. These benefits
                                                           as well as other social benefits under Israeli law are included as
                                                           part of his &ldquo;All Other Compensation&rdquo;.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(8)</TD><TD>Mr. Hershkowitz became of Chief Financial Officer in March 2012.
                                                           Since Mr. Hershkowitz receives his entire salary from our Israeli subsidiary
                                                           denominated in NIS, the compensation received is calculated for purposes
                                                           of this table based on the annual average currency exchange.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(9)</TD><TD>As part of the initial grants under our 2012 Equity Incentive Plan
                                                           approved by the Compensation Committee of our board of directors in
                                                           June 2012, Mr. Hershkowitz was granted 70,000 options to purchase shares
                                                           of common stock with an exercise price of $0.47 per share. 10,000 of
                                                           these options vested immediately and 60,000 are subject to 2-year vesting
                                                           in equal increments on a quarterly basis. We may grant Mr. Hershkowitz
                                                           additional options to purchase shares of common stock from time to
                                                           time at the discretion of our board of directors or the Compensation
                                                           Committee thereof. The value of the granted options for purposes of
                                                           this table was derived using the Black-Sholes model.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(10)</TD><TD>In addition to his salary, Mr. Hershkowitz is entitled to receive
                                                            a leased automobile and mobile phone during his employment. These
                                                            benefits as well as other social benefits under Israeli law are included
                                                            as part of his &ldquo;All Other Compensation&rdquo;.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All compensation awarded to our executive
officers were independently reviewed by our Compensation Committee and approved by our entire board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employment Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Except as set forth below, we currently
have no written employment agreements with any of our officers, directors or key employees. The following is a description of
our current executive employment agreements:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Oren Fuerst, Chairman of the Board and
Chief Executive Officer </I>&ndash; We entered into an at-will employment agreement with Dr. Fuerst on March 15, 2012 and effective
on November 1, 2011. Such agreement was amended in August 2012 to increase Dr. Fuerst&rsquo;s annual base salary. Dr. Fuerst is
not required to dedicate a minimum amount of time to fulfilling his roles with our company. Under the terms of his amended agreement,
Dr. Fuerst is entitled to receive an annual base salary of $252,000. Dr. Fuerst is also entitled to receive bonuses based on his
achieving the following milestones: (a) $96,000 in the event we achieve data lock on least one clinical study required for FDA
and/or CE Mark regulatory approval, (b) $48,000 in the event we make a 510K regulatory submission with the FDA for regulatory
clearance of a company product, (c) $48,000 in the event we obtain a European notified body CE Mark clearance for a company product,
(d) $48,000 in the event we obtain a market clearance for a company product in a market not covered by FDA or CE with a population
in excess of 100,000,000 and (e) $96,000 in the event we obtain FDA regulatory clearance for a company product. Moreover, Dr.
Fuerst is entitled to receive the following additional bonuses for five years in connection with strategic transactions of our
company that Dr. Fuerst has helped to consummate as follows: (i) 5% of the revenues of the company from such transaction in the
event we complete a strategic transaction with an aggregate actual or potential value of over US$1 million and less than US$10
million and (ii) 7% of the revenues of the revenues of our company from such transaction in the event we complete a strategic
transaction with an aggregate actual or potential value in excess of $10 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, in accordance with his employment
agreement (which was approved by our board of directors in March 2012), upon the completion of the 2011-2012 Private Placement,
Dr. Fuerst was entitled to receive fully-vested options to purchase shares of our common stock equal to three percent (3%) of
our issued and outstanding capital stock on an as-converted fully diluted basis (but no less than 500,000 shares). Since the trigger
for the grant of such options occurred on March 30, 2012, we recognized for accounting purposes at March 31, 2012 the full compensation
cost related to 547,392 options in total amount of $26,141.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In June 2012, the Compensation Committee
of our board of directors approved a grant under our 2012 Equity Incentive Plan to Dr. Fuerst of 750,000 options to purchase shares
of our common stock (which include the 547,392 options referred to above plus 202,608 additional options). In connection with
such grant, the Compensation Committee reviewed a current valuation of our company and accordingly reduced the exercise price
of the options Dr. Fuerst was entitled to receive under his employment agreement from $1.00 to $0.52 per share and granted the
additional 202,608 with an exercise price of $0.52. In September, 2012 the Compensation Committee of our board of directors clarified
that 330,000 of these options vested immediately, and 420,000 are subject to 2-year vesting in equal increments on annual basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The employment agreement may be terminated
by us at will or upon the following events: death, disability, Change of Control or for Cause (each defined under the employment
agreement). In the event the employment agreement is terminated at will, Dr. Fuerst shall be entitled to receive 6-month base
salary. In the event the employment agreement is terminated and triggered by an event of Change of Control, Dr. Fuerst shall be
entitled to receive (i) benefits for up to two (2) times annual salary, (ii) rights granted to him under our benefit plans and
exercise any unvested options and (iii) right to immediately exercise any unvested options granted to him under our 2012 Equity
Incentive Plan and other applicable sub-plans over a period of three (3) years from the occurrence of Change of Control. In the
event the employment agreement is terminated on death or disability, any unvested options granted to him shall become fully vested
and exercisable. In the event the employment agreement is terminated by us for Cause, Dr. Fuerst will be entitled to payment of
any base salary earned but unpaid through the date of termination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Dr. Fuerst&rsquo;s employment agreement
also includes a one (1) year non-competition and non-solicitation, certain confidentiality covenants and assignment of any his
invention. Under the terms of the agreement, Dr. Fuerst is entitled to certain expense reimbursements and other standard vacation
and sick leave.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Shilo Ben Zeev, President and Chief
Operating Officer</I> &ndash; We entered into an at-will Personal Employment Agreement with Mr. Ben Zeev on March 15, 2012 and
effective on November 1, 2011. Mr. Ben Zeev is required to spend no less than 90% of his entire business time and attention to
the business of our company. Under the terms of his agreement (which was amended in August 2012), Mr. Ben Zeev is entitled to
receive a monthly base salary of NIS 46,000. Mr. Ben Zeev is also entitled to additional options pursuant to our 2012 Equity Incentive
Plan, which may be awarded by the board, in the board&rsquo;s sole discretion, based on certain annual performance-based objectives
established by our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The employment agreement may be terminated
at will or upon the following events by us: death, disability, Change of Control or for Cause (each defined under the employment
agreement). In the event the employment agreement is terminated at will, Mr. Ben Zeev shall be entitled to receive 6-month base
salary and severance payment pursuant to applicable Israeli severance law. In the event the employment agreement is terminated
and triggered by an event of Change of Control, Mr. Ben Zeev shall be entitled to receive (i) benefits for up to two (2) times
annual salary, (ii) rights granted to him under our benefit plans and exercise any unvested options and (iii) right to immediately
exercise any unvested options granted to him under our 2012 Equity Incentive Plan and other applicable sub-plans over a period
of three (3) years from the occurrence of Change of Control. In the event the employment agreement is terminated on death or disability,
any unvested options granted to Mr. Ben Zeev shall become fully vested and exercisable. In the event the employment agreement
is terminated by us for Cause, Mr. Ben Zeev will be entitled to severance payment under applicable Israeli severance law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Mr. Ben Zeev&rsquo;s employment agreement
also includes a one (1) year non-competition and non-solicitation, certain confidentiality covenants and assignment of any his
invention. Under the terms of the agreement, Mr. Ben Zeev is entitled to certain expense reimbursements and other standard benefits,
including vacation, sick leave and life and disability insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Mordechi (Motty) Hershkowitz, Chief
Financial Officer, Treasurer and Secretary </I>&ndash; We entered into an at-will Personal Employment Agreement with Mr. Hershkowitz
on March 15, 2012. Mr. Hershkowitz is a full-time employee of our company. Under the terms of his agreement (which was amended
in August 2012), Mr. Hershkowitz is entitled to receive a base monthly salary of NIS 26,000. Mr. Hershkowitz is also entitled
to additional options pursuant to our 2012 Equity Incentive Plan, which may be awarded by the board, in the board&rsquo;s sole
discretion, based on certain annual performance-based objectives established by the board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The employment agreement may be terminated
at will or for Cause (each defined under the employment agreement) by us. In the event the employment agreement is terminated
at will, Mr. Hershkowitz shall be entitled to receive 3-month base salary and severance payment pursuant to applicable Israeli
severance law. In the event the employment agreement is terminated by us for Cause, Mr. Hershkowitz will be entitled to severance
payment under applicable Israeli severance law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Mr. Hershkowitz&rsquo;s employment agreement
also includes a one (1) year non-competition and non-solicitation, certain confidentiality covenants and assignment of any his
invention. Under the terms of this agreement, Mr. Hershkowitz is entitled to certain expense reimbursements and other standard
benefits, including vacation, sick leave and life and disability insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2012 Equity Incentive Plan </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On January 23, 2012, our board of directors
and stockholders adopted a 2012 Equity Incentive Plan for our company (which includes both U.S. and Israeli sub-plans). An aggregate
of 2,860,000 shares of our common stock have been reserved for issuance under our 2012 Equity Incentive Plan. The purpose of our
2012 Equity Incentive Plan is to attract and retain directors, officers, consultants, advisors and employees whose services are
considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development
and financial achievements. The 2012 Equity Incentive Plan will be administered by the Compensation Committee of our board of
directors or by the full board, which may determine, among other things, the (a) terms and conditions of any option or stock purchase
right granted, including the exercise price and the vesting schedule, (b) persons who are to receive options and stock purchase
rights and (c) the number of shares to be subject to each option and stock purchase right. The 2012 Equity Incentive Plan will
provide for the grant of (i)&nbsp;&rdquo;incentive&rdquo; options (qualified under section 422 of the Internal Revenue Code of
1986, as amended) to employees of our company and (ii)&nbsp;non-qualified options to directors and consultants of our company.
In addition, our board has authorized the appointment of <FONT STYLE="font-family: Times New Roman, Times, Serif">Tamir Fishman
Equity Plan Services</FONT> to act as a trustee for grants of options under the Israeli sub-plan to Israeli residents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with the administration of
our 2012 Equity Incentive Plan, our Compensation Committee will:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>determine which
                                                                                                             employees and other
                                                                                                             persons will be granted
                                                                                                             awards under our
                                                                                                             2012 Equity Incentive
                                                                                                             Plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>grant the awards
                                                                                                             to those selected
                                                                                                             to participate;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>determine the
                                                                                                             exercise price for
                                                                                                             options; and</TD></TR>                                                                                                                                                                        <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>prescribe any
                                                                                                             limitations, restrictions
                                                                                                             and conditions upon
                                                                                                             any awards, including
                                                                                                             the vesting conditions
                                                                                                             of awards.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any grant of awards to any of directors
under our 2012 Equity Incentive Plan must be approved by the Compensation Committee of our board of directors. In addition, our
Compensation Committee will:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>interpret our
                                                                                                             2012 Equity Incentive
                                                                                                             Plan; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>make all other
                                                                                                             determinations and
                                                                                                             take all other action
                                                                                                             that may be necessary
                                                                                                             or advisable to implement
                                                                                                             and administer our
                                                                                                             2012 Equity Incentive
                                                                                                             Plan.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The 2012 Equity Incentive Plan provides
that in the event of a change of control event, the Compensation Committee or our board of directors shall have the discretion
to determine whether and to what extent to accelerate the vesting, exercise or payment of an award.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, our board of directors may
amend our 2012 Equity Incentive Plan at any time. However, without stockholder approval, our 2012 Equity Incentive Plan may not
be amended in a manner that would:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>increase the
                                                                                                             number of shares
                                                                                                             that may be issued
                                                                                                             under our 2012 Equity
                                                                                                             Incentive Plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>materially modify
                                                                                                             the requirements
                                                                                                             for eligibility for
                                                                                                             participation in
                                                                                                             our 2012 Equity Incentive
                                                                                                             Plan;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>materially increase
                                                                                                             the benefits to participants
                                                                                                             provided by our 2012
                                                                                                             Equity Incentive
                                                                                                             Plan; or</TD></TR>                                                                                                                                                                                                                          <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>otherwise disqualify
                                                                                                             our 2012 Equity Incentive
                                                                                                             Plan for coverage
                                                                                                             under Rule 16b-3
                                                                                                             promulgated under
                                                                                                             the Securities Exchange
                                                                                                             Act of 1934, as amended.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Awards previously granted under our 2012
Equity Incentive Plan may not be impaired or affected by any amendment of our 2012 Equity Incentive Plan, without the consent
of the affected grantees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Outstanding Equity Awards </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In June 2012, the Compensation Committee
of our board of directors approved the terms of initial grants under our 2012 Equity Incentive Plan. An aggregate of 2,100,000
stock options were granted to our officers, employees, directors and several of our consultants. The options issued to our executive
officers are described under &ldquo;Summary Compensation Table&rdquo; above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Compensation </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In September 2012, the Compensation Committee
of our board of directors adopted a director compensation policy for our company under which our independent directors will receive
reasonable compensation for their service on our board of directors or any committees thereof. Under this policy, independent
directors will receive, both retroactively for 2012 and going forward, cash fees of: (i) $2,000 per meeting for board meetings
or board calls attended and (ii) $1,000 per meeting for committee meetings or committee calls attended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, as part of the initial grants
of options under our 2012 Equity Incentive Plan approved by the Compensation Committee of our board of directors in June 2012,
two of our three independent directors (Malcolm Hoenlein and Prof. Nahum Melumad) were each granted 200,000 options with an exercise
price of $0.47 per share. In each case, 100,000 of such options vested immediately and the remaining 100,000 options are subject
to 2-year vesting in equal increments on quarterly basis.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">PRINCIPAL STOCKHOLDERS</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
regarding the beneficial ownership of our common stock as of the date of this prospectus by:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each person known
                                                                                                             by us to be the beneficial
                                                                                                             owner of more than
                                                                                                             5% of our outstanding
                                                                                                             shares of common
                                                                                                             stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>each of our named
                                                                                                             executive officers
                                                                                                             and directors; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>all our executive
                                                                                                             officers and directors
                                                                                                             as a group.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Beneficial ownership is determined in accordance
with the rules of the SEC and includes voting or investment power with respect to the securities. Except as otherwise indicated,
each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown
as beneficially owned, subject to applicable community property laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In computing the number and percentage
of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of the date of this prospectus
are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other
person.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; text-decoration: none">
    <TD NOWRAP STYLE="font-weight: bold; text-decoration: none; border-bottom: Black 1pt solid">Name of Beneficial Owner</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none">Shares
    of <BR>Common <BR>Beneficially <BR>Stock Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-decoration: none">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; text-decoration: none"><P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none">Percent
                                                                                                                                of</P> <P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none">Common
                                                                                                         Stock</P> <P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none">Beneficially</P> <P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-decoration: none">Owned<SUP>(1)</SUP></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-decoration: none">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">David
    Weintraub<SUP>(2)</SUP></FONT></TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">2,700,000</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">18.51</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Oren
    Fuerst<SUP>(3)</SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">2,055,000</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">13.91</TD><TD STYLE="font-weight: normal; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify">Meir Plevinski</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">1,275,000</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">8.74</TD><TD STYLE="font-weight: normal; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Spencer
    Trask Investment Partners, LLC<SUP>(4)</SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">1,271,273</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">8.70</TD><TD STYLE="font-weight: normal; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Laurence
    G. Allen<SUP>(5)</SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">904,788</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">6.10</TD><TD STYLE="font-weight: normal; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Adam
    K. Stern<SUP>(6)</SUP> </FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">700,000</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">4.80</TD><TD STYLE="font-weight: normal; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Shilo
    Ben Zeev<SUP>(7)</SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">550,000</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">3.73</TD><TD STYLE="font-weight: normal; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Mordechi
    (Motty) Hershkowitz<SUP>(8)</SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">25,000</TD><TD STYLE="font-weight: normal; text-align: left"></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">*</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Malcolm
    Hoenlein<SUP>(9)</SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">125,000</TD><TD STYLE="font-weight: normal; text-align: left"></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">*</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">Nahum
    D. Melumad<SUP>(10)</SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">125,000</TD><TD STYLE="font-weight: normal; text-align: left"></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">*</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-decoration: none; text-align: justify"><FONT STYLE="font-size: 10pt; font-weight: normal">All
    Executive Officers and Directors as a group (7 persons)<SUP> </SUP></FONT></TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">6,280,000</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">42.82</TD><TD STYLE="font-weight: normal; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">*</TD><TD STYLE="text-align: justify">Less than 1%.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(1)</TD><TD><FONT STYLE="color: black">Percentage ownership is based on </FONT>14,583,522
                                                           <FONT STYLE="color: black">shares of our common stock outstanding as
                                                           of the date of this prospectus and, for each person or entity listed
                                                           above, warrants or options to purchase shares of our common stock which
                                                           exercisable within 60 days of the date of this prospectus.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(2)</FONT></TD><TD>David Weintraub is a director
                                                                                             of our company.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(3)</FONT></TD><TD><FONT STYLE="color: black">Includes:
                                                                                             (i) 1,725,000 shares of common stock
                                                                                             held by </FONT>Strategic Models,
                                                                                             LLC, a Delaware limited liability
                                                                                             company owned and controlled by Dr.
                                                                                             Fuerst and Tzameret Fuerst and (ii)
                                                                                             330,000 vested options to purchase
                                                                                             common stock held by Dr. Fuerst.
                                                                                             Excludes 420,000 options which are
                                                                                             not vested.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(4)</TD><TD>Includes: (i) to purchase<FONT STYLE="color: black"> 700,000 shares
                                                           of common stock with</FONT>;<FONT STYLE="color: black"> (ii) a warrant
                                                           to purchase 277,811 shares of common stock with an exercise price of
                                                           $1.00 per share and (iii) a warrant to purchase 293,462 shares of common
                                                           stock with a current exercise of $1.42 per share. Such warrants were
                                                           originally issued to Spencer Trask as part of its compensation for
                                                           acting as our placement agent and subsequently transferred to Spencer
                                                           Trask Investment Partners, LLC by Spencer Trask. In addition, Spencer
                                                           Trask Investment Partners, LLC will be eligible to receive an additional
                                                           42,337 underlying warrant shares due to further anti-dilution adjustment
                                                           </FONT>following completing the second and third tranches of the August
                                                           2012 Private Placement<FONT STYLE="color: black">. Such warrants are
                                                           exercisable at any time prior to the earlier of: (i) March 30, 2019
                                                           or (ii) three years following the date that our common stock becomes
                                                           publicly traded. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(5)</TD><TD>Laurence G. Allen is the natural person with voting and dispositive
                                                           power over the shares held by ACP X, LP, ACP Investment Group, LLC,
                                                           NYPPEX LLC and NYPPEX Holdings, LLC. This includes 681,901 shares of
                                                           common stock and underlying warrant shares held by ACP X, LP, 51,408
                                                           shares of common stock and underlying warrant shares held by ACP Investment
                                                           Group, LLC, 42,254 shares of underlying warrant shares held by NYPPEX
                                                           LLC, and 26,408 shares of underlying warrant shares held by NYPPEX
                                                           Holdings, LLC. Also includes 102,817 shares of common stock and underlying
                                                           warrant shares held by an individual retirement account for Mr. Allen.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(6)</TD><TD>Adam K. Stern is a director of our company. The share numbers include
                                                           shares owned individually by Mr. Stern and through two entities (Piper
                                                           Venture Partners, LLC and Pavilion Capital Partners, LLC) owned and/or
                                                           controlled by Mr. Stern.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(7)</FONT></TD><TD>Shilo Ben Zeev is our President
                                                                                             and Chief Operating Officer. Includes
                                                                                             175,000 vested options to purchase
                                                                                             common stock held by Mr. Ben Zeev.
                                                                                             Excludes 225,000 options which are
                                                                                             not vested.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(8)</TD><TD>Motty Hershkowitz is our Chief Financial Officer, Treasurer and
                                                           Secretary. Includes 25,000 vested options to purchase common stock
                                                           held by Mr. Hershkowitz. Excludes 45,000 options which are not vested.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(9)</TD><TD>Malcolm Hoenlein is a director of our company. Includes 125,000
                                                           vested options to purchase common stock held by Mr. Hoenlein. Excludes
                                                           75,000 options which are not vested.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(10)</TD><TD>Nahum D. Melumad is a director of our company. Includes 125,000
                                                           vested options to purchase common stock held by Prof. Melumad. Excludes
                                                           75,000 options which are not vested.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">CERTAIN RELATIONSHIPS AND RELATED
PARTY TRANSACTIONS</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Founders and Management</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with our formation in August
2011 and the contribution of intellectual property to our company in October 2011, our founders (including an affiliate of Dr.
Oren Fuerst, Dr. David Weintraub and Shilo Ben Zeev, each of whom are executives, directors and/or employees of our company) received
an aggregate of 7,500,000 shares of common stock for nominal consideration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Spencer Trask and its Related Parties</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">In connection with our
formation on August 11, 2011, certain affiliates of Spencer Trask Ventures, Inc. and certain other parties not affiliated with
our company or Spencer Trask received an aggregate of 2,000,000 shares of common stock, for which they agreed to pay an aggregate
of $10,000 (or $0.005 per share). Under this transaction, Spencer Trask Investment Partners, LLC, an affiliate of Spencer Trask,
purchased 700,000 shares of common stock and Adam K. Stern, a former affiliate of Spencer Trask and also now a director of our
company, both individually and through two entities controlled by him, purchased 700,000 shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Spencer Trask, acting
as our placement agent in our 2011-2012 Private Placement, received certain cash placement fees and was also granted two warrants:
(i) to purchase<FONT STYLE="color: black"> 482,200 shares of common stock with an exercise price of $1.00 and (ii) to purchase
509,366 shares of common stock with a current exercise price of $1.42 per share. In addition, Spencer Trask will be granted additional
47,246 underlying warrant shares due to further anti-dilution adjustment</FONT> following completing the second and third tranches
of the August 2012 Private Placement<FONT STYLE="color: black">. Such warrants are exercisable at any time prior to the earlier
of: (i) March 30, 2019 or (ii) three years following the date that our common stock becomes publicly traded. Subsequent to issuance,
and as permitted under FINRA rules, such warrants were divided and allocated to certain affiliates and individual employees of
Spencer Trask. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Pursuant to the terms
of a placement agent agreement, dated September 8, 2011, between us and Spencer Trask entered into in connection with our 2011-2012
Private Placement, Spencer Trask appointed Adam K. Stern as a member of our board of directors for a two-year term from October
27, 2011. His successor during such two year period, if any, will be chosen by Spencer Trask, subject to our reasonable approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">We also entered into
a Right of First Refusal Agreement with Spencer Trask on October 27, 2011 which provides that, for a period of two (2) years from
March 30, 2012, Spencer Trask has the irrevocable preferential right of first refusal (i) to purchase for its own account or to
act as agent for any proposed private offering of securities (equity or debt) by us and (ii) to purchase or sell such securities
on terms no less favorable than we can obtain elsewhere. If, within ten (10) days of the receipt of such notice of intention and
statement of terms, Spencer Trask does not accept in writing such offer to purchase such securities or to act as agent with respect
to such offering upon the terms proposed, we will be free to negotiate terms with third parties with respect to such offering
and to effect such offering on such proposed terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In addition, on October 27, 2011, we entered
into a non-exclusive Finder&rsquo;s Fee Agreement with Spencer Trask which provides that if we or any of our affiliates enter
into any of certain transactions enumerated in the Finder&rsquo;s Agreement (including financing transactions and business combinations
or similar arrangements) with any party introduced to us by Spencer Trask, directly or indirectly at any time prior to the date
which is four (4) years after March 30, 2012, then we shall pay or cause to be paid to Spencer Trask certain cash finder&rsquo;s
fees as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(i)</TD><TD>7% of the first $1,000,000 or portion thereof of the consideration
                                                               paid in such<BR>
                                                               transaction; plus</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(ii)</TD><TD>6% of the next $1,000,000 or portion thereof of the consideration
                                                                paid in such transaction; plus</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(iii)</TD><TD>5% of the next $5,000,000 or portion thereof of the consideration
                                                                 paid in such transaction; plus</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(iv)</TD><TD>4% of the next $1,000,000 or portion thereof of the consideration
                                                                paid in such transaction; plus</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(v)</TD><TD>3% of the next $1,000,000 or portion thereof of the consideration
                                                               paid in such transaction; plus</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in">(vi)</TD><TD>2.5% of any consideration paid in such transaction in excess
                                                                of $9,000,000.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 20, 2012, we entered into another
non-exclusive Finder&rsquo;s Agreement with Spencer Trask in connection with our October 2012 Private Placement under which we
paid to Spencer Trask (i) a cash fee equal to 10% of the consideration actually paid to us by investors introduced to us by Spencer
Trask and (ii) a warrant to purchase shares of common stock equal to 10% of the number of shares of common stock purchased by
investors introduced to us by Spencer Trask and (iii) reimbursement for expenses related to the Private Placement at the amount
of up to $10,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employment Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We entered into an employment agreement
with Dr. Oren Fuerst, our Chairman and Chief Executive Officer in March, 2012. For a full description of the employment agreement
with Dr. Oren Fuerst, see &ldquo;Executive Compensation.&rdquo; This agreement was amended on August 8, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We entered into an employment agreement
with Shilo Ben Zeev, our Chief Operating Officer, in March, 2012. For a full description of the employment agreement with Mr.
Ben Zeev, see &ldquo;Executive Compensation.&rdquo; This agreement was amended as of September 2012 and effective starting from
August 2012.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We entered into an employment agreement
with Mordechi (Motty) Hershkowitz, our Chief Financial Officer, in March, 2012. For a full description of the employment agreement
with Mr. Hershkowitz, see &ldquo;Executive Compensation.&rdquo; This agreement was amended as of September 2012 and effective
starting from August 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">DESCRIPTION OF SECURITIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following description of our capital
stock is a summary and does not purport to be complete and is subject to, and qualified in its entirety by, our certificate of
incorporation, our bylaws which we have included as exhibits to the registration statement of which this prospectus forms a part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">Our Certificate of Incorporation
authorizes us to issue:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>



<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
                              </FONT></TD><TD STYLE="text-align: left">45
                                                                                                                                                                                                                                                                                                                                               million
                                                                                                                                                                                                                                                                                                                                               shares
                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                               common
                                                                                                                                                                                                                                                                                                                                               stock,
                                                                                                                                                                                                                                                                                                                                               par
                                                                                                                                                                                                                                                                                                                                               value
                                                                                                                                                                                                                                                                                                                                               $0.0001
                                                                                                                                                                                                                                                                                                                                               per
                                                                                                                                                                                                                                                                                                                                               share;
                                                                                                                                                                                                                                                                                                                                               and</TD></TR>                                                                                                                                                                                                                                                                                                                                                                                                                                                         <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>



<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
                              </FONT></TD><TD STYLE="text-align: left">5
                                                                                                                                                                                                                                                                                                                                               million
                                                                                                                                                                                                                                                                                                                                               shares
                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                               &ldquo;blank
                                                                                                                                                                                                                                                                                                                                               check&rdquo;
                                                                                                                                                                                                                                                                                                                                               preferred
                                                                                                                                                                                                                                                                                                                                               stock,
                                                                                                                                                                                                                                                                                                                                               par
                                                                                                                                                                                                                                                                                                                                               value
                                                                                                                                                                                                                                                                                                                                               $0.0001
                                                                                                                                                                                                                                                                                                                                               per
                                                                                                                                                                                                                                                                                                                                               share,
                                                                                                                                                                                                                                                                                                                                               none
                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                               which
                                                                                                                                                                                                                                                                                                                                               have
                                                                                                                                                                                                                                                                                                                                               yet
                                                                                                                                                                                                                                                                                                                                               been
                                                                                                                                                                                                                                                                                                                                               designated.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">In order to provide our
management with the flexibility to properly structure our capitalization as a public company, in May 2012, our board of directors
and stockholders granted our management the authority to declare a forward stock split of our outstanding and authorized common
stock in a ratio of up to 4-for-1. Our management may exercise their discretion to declare such split at any time prior to June
1, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The following statements
are summaries only of provisions of our authorized capital stock and are qualified in their entirety by our Certificate of Incorporation.
You should review these documents for a description of the rights, restrictions and obligations relating to our capital stock.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">Common Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Voting. </I>The holders
of our common stock are entitled to one vote for each share held of record on all matters on which the holders are entitled to
vote (or consent to).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Dividends. </I>The
holders of our common stock are entitled to receive, ratably, dividends only if, when and as declared by our board of directors
in their discretion pursuant to the Delaware General Corporation Law therefor and after provision is made for each class of capital
stock having preference over the common stock (including the preferred stock if any).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Liquidation Rights.
</I>In the event of our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share, ratably,
in all assets remaining available for distribution after payment of all liabilities and after provision is made for each class
of capital stock having preference over the common stock (including the preferred stock if any).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Conversion Rights.
</I>The holders of our common stock have no conversion rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Preemptive and Similar
Rights. </I>The holders of our common stock have no preemptive or similar rights under our Certificate of Incorporation but will
have rights of anti-dilution, price protection and participation in future private financings of our company as provided for in
a certain Investor Rights Agreement entered into in connection with the 2011-2012 Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Tag-along, Drag-along
and Registration Rights. </I>The holders of our common stock have rights of tag-along, drag along and registration as provided
for in a certain Investors Rights Agreement entered into in connection with the 2011-2012 Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Redemption/Put Rights.
</I>There are no redemption or sinking fund provisions applicable to the common stock. All of the outstanding shares of our common
stock are fully-paid and nonassessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Transfer Restrictions.
</I>Shares of our common stock are subject to transfer restrictions. See &ldquo;Restrictions on the Transfer of Securities.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><B>Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>2011-2012 Warrants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>General Terms. </I>In
connection with our 2011-2012 Private Placement, we issued warrants to 45 investors to purchase an aggregate 2,461,000 shares
of our common stock. We refer to these warrants as the 2011-2012 Investor Warrants. The 2011-2012 Investor Warrants are exercisable
for our common stock at an exercise price equal to $1.50 per share (the &ldquo;Exercise Price&rdquo;). The Exercise Price and
the number of securities issued upon exercise of the 2011-2012 Investor Warrants are subject to adjustment in certain cases described
below under &ldquo;Adjustments.&rdquo; The Exercise Price has been adjusted to $1.42 per share and 138,648 underlying warrant
shares were issued to the holders of the 2011-2012 Investor Warrants due to a dilutive issuance arising out of the consummation
of the first tranche of the August 2012 Private Placement. The exercise price of the said warrants are expected to be adjusted
to $1.30 per share following completion of the second and third tranches of the August 2012 Private Placement. The total number
of additional warrant shares granted to such holders is 379,774 as a result of the entire August 2012 Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Exercisability. </I>The
2011-2012 Investor Warrants are exercisable immediately upon issuance and may be exercised at any time prior to October 27, 2016.
The 2011-2012 Investor Warrants may be exercised at any time in whole or in part at the applicable exercise price until expiration
of the 2011-2012 Investor Warrants. No fractional shares will be issued upon the exercise of the 2011-2012 Investor Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Adjustments </I>The
exercise price and the number of warrant shares purchasable upon the exercise of the 2011-2012 Investor Warrants are subject to
&ldquo;weighted average&rdquo; adjustment for dilutive issuance as well as adjustment upon the occurrence of certain events, including
stock dividends, stock splits, combinations, down round protection and reclassifications of our capital stock. Additionally, an
adjustment would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into another
corporation (other than a consolidation or merger in which our company is the surviving corporation) or sale of all or substantially
all of the assets of our company in order to enable holders of the 2011-2012 Investor Warrants to acquire the kind and number
of shares of stock or other securities or property receivable in such event by a holder of the number of shares common stock that
might otherwise have been purchased upon the exercise of the 2011-2012 Investor Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Warrantholder Not
a Stockholder. </I>The 2011-2012 Investor Warrants do not confer upon the holders thereof any voting, dividend or other rights
as stockholders of our company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><I>Placement Agent Warrants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">As part of the consideration
issued to Spencer Trask for acting as the placement agent in our 2011-2012 Private Placement, we issued to Spencer Trask: (i)
a warrant to purchase 482,200 shares of our common stock at an exercise price equal to $1.00 per share and (ii) a second warrant
to purchase 482,200 shares of our common stock at an exercise price equal to $1.50 per share (the &ldquo;$1.50 Exercise Price&rdquo;).
The $1.50 Exercise Price has been adjusted to $1.42 per share due to a dilutive issuance arising out of the consummation of the
first tranche of the August 2012 Private Placement and Spencer Trask is entitled to purchase additional 27,166 shares of common
stock at the current exercise of $1.42 per share for the second warrant. The exercise price of the said warrants are expected
to be further reduced to $1.30 per share following completing the second and third trances of the August 2012 Private Placement.
Spencer Trask will be entitled to purchase additional 74,412 shares of common stock at the exercise of $1.30 per share for the
second warrant as a result of the entire August 2012 Private Placement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Exercisability. </I>The
STV Placement Agent Warrants are exercisable immediately upon issuance and may be exercised at any time prior to the earlier of:
(i) March 30, 2019 or (ii) three years after we become a publicly traded company. The STV Placement Agent Warrants contain a &ldquo;cashless
exercise&rdquo; provision and may be exercised at any time in whole or in part at the applicable exercise price until expiration
of the STV Placement Agent Warrants. No fractional shares will be issued upon the exercise of the STV Placement Agent Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Adjustments. </I>The
exercise price and the number of warrant shares purchasable upon the exercise of the STV Placement Agent Warrants are subject
to &ldquo;weighted average&rdquo; adjustment for dilutive issuance as well as adjustment upon the occurrence of certain events,
including stock dividends, stock splits, combinations down round protection and reclassifications of our capital stock. Additionally,
an adjustment would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into
another corporation (other than a consolidation or merger in which our company is the surviving corporation) or sale of all or
substantially all of the assets of our company in order to enable holders of the STV Placement Agent Warrants to acquire the kind
and number of shares of stock or other securities or property receivable in such event by a holder of the number of shares common
stock that might otherwise have been purchased upon the exercise of the STV Placement Agent Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Warrantholder Not
a Stockholder. </I>The STV Placement Agent Warrants do not confer upon the holders thereof any voting, dividend or other rights
as stockholders of our company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><I>August 2012 Warrants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>General Terms. </I>In
connection with our August 2012 Private Placement, we issued warrants to 13 investors to purchase an aggregate 500,014 shares
of our common stock. Following completing the 2<SUP>nd</SUP> and the 3<SUP>rd</SUP> trance of the August 2012 Private Placement,
we will issue additional warrants to such investors. We refer to these warrants in the aggregate as the August 2012 Investor Warrants.
The August Investor Warrants are exercisable for our common stock at an exercise price equal to $1.00 per share. The exercise
price and the number of securities issued upon exercise of the August 2012 Investor Warrants are subject to adjustment in certain
cases described below under &ldquo;Adjustments.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Exercisability. </I>The
August 2012 Investor Warrants are exercisable immediately upon issuance and may be exercised at any time: (i) until the first
anniversary of the Effective Date (as defined below) with respect to the one hundred percent (100%) of the August 2012 Investor
Warrants and (ii) until the second anniversary of the Effective Date with respect to fifty percent (50%) of the August 2012 Investor
Warrants. The August 2012 Investor Warrants may be exercised at any time in whole or in part at the applicable exercise price
until expiration of the August 2012 Investor Warrants. No fractional shares will be issued upon the exercise of the August 2012
Investor Warrants. The term &ldquo;Effective Date&rdquo; means the date that we have received a ticker symbol for our common stock
and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading
system.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Adjustments. </I>The
exercise price and the number of warrant shares purchasable upon the exercise of the August 2012 Investor Warrants are not subject
to &ldquo;weighted average&rdquo; or any other price based adjustment. The exercise price is subject to adjustment upon the occurrence
of certain events, including stock dividends, stock splits, combinations and reclassifications of our capital stock. Additionally,
an adjustment would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into
another corporation (other than a consolidation or merger in which our company is the surviving corporation) or sale of all or
substantially all of the assets of our company in order to enable holders of the August 2012 Investor Warrants to acquire the
kind and number of shares of stock or other securities or property receivable in such event by a holder of the number of shares
common stock that might otherwise have been purchased upon the exercise of the August 2012 Investor Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Warrantholder Not
a Stockholder. </I>The August 2012 Investor Warrants do not confer upon the holders thereof any voting, dividend or other rights
as stockholders of our company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><I>Finder Warrants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">As part of the consideration
issued to the FINRA members we engaged as finders for our October 2012 Private Placement we issued to such finders warrants to
purchase an aggregate of 179,502 shares of our common stock at an exercise price equal to $1.50 per share. We refer to these warrants
as the Finder Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Exercisability. </I>The
Finder Warrants are exercisable immediately upon issuance and may be exercised at any time prior to the third anniversary of the
issuance of the Finder Warrants. The Finder Warrants contain a &ldquo;cashless exercise&rdquo; provision and may be exercised
at any time in whole or in part at the applicable exercise price until expiration of the Finder Warrants. No fractional shares
will be issued upon the exercise of the Finder Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Adjustments. </I>The
exercise price and the number of warrant shares purchasable upon the exercise of the Finder Warrants are not subject to &ldquo;weighted
average&rdquo; or any other price based adjustment. The exercise price is subject to adjustment upon the occurrence of certain
events, including stock dividends, stock splits, combinations and reclassifications of our capital stock. Additionally, an adjustment
would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into another corporation
(other than a consolidation or merger in which our company is the surviving corporation) or sale of all or substantially all of
the assets of our company in order to enable holders of the Finder Warrants to acquire the kind and number of shares of stock
or other securities or property receivable in such event by a holder of the number of shares common stock that might otherwise
have been purchased upon the exercise of the Finder Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"><I>Warrantholder Not
a Stockholder. </I>The Finder Warrants do not confer upon the holders thereof any voting, dividend or other rights as stockholders
of our company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Transfer Agent and Registrar</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">VStock Transfer, LLC is the transfer agent
and registrar for our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Quotation of Securities</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We intend to seek to have a broker-dealer
file a Form 211 in order to have our common stock quoted on the OTC Bulletin Board and/or OTCQB. It is anticipated that our common
stock will be quoted on the OTC Bulletin Board and/or OTCQB on or promptly after the date of this prospectus, provided, however,
that is no assurance that our common stock will actually be approved and quoted on the OTC Bulletin Board or OTCQB.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Anti-Takeover Effect of Delaware Law, Certain Charter and
Bylaw Provisions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our certificate of incorporation and bylaws
contain provisions that could have the effect of discouraging potential acquisition proposals or tender offers or delaying or
preventing a change of control of our company. These provisions are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Symbol; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>they provide
                                                                                                             that special meetings
                                                                                                             of stockholders may
                                                                                                             be called only by
                                                                                                             the board of directors,
                                                                                                             President or our
                                                                                                             Chairman of the Board
                                                                                                             of Directors, or
                                                                                                             at the request in
                                                                                                             writing by stockholders
                                                                                                             of record owning
                                                                                                             at least fifty (50%)
                                                                                                             percent of the issued
                                                                                                             and outstanding voting
                                                                                                             shares of common
                                                                                                             stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>they do not include
                                                                                                             a provision for cumulative
                                                                                                             voting in the election
                                                                                                             of directors. Under
                                                                                                             cumulative voting,
                                                                                                             a minority stockholder
                                                                                                             holding a sufficient
                                                                                                             number of shares
                                                                                                             may be able to ensure
                                                                                                             the election of one
                                                                                                             or more directors.
                                                                                                             The absence of cumulative
                                                                                                             voting may have the
                                                                                                             effect of limiting
                                                                                                             the ability of minority
                                                                                                             stockholders to effect
                                                                                                             changes in our board
                                                                                                             of directors; and</TD></TR>                                                                                                                                        <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>they allow us
                                                                                                             to issue, without
                                                                                                             stockholder approval,
                                                                                                             up to 5,000,000 shares
                                                                                                             of preferred stock
                                                                                                             that could adversely
                                                                                                             affect the rights
                                                                                                             and powers of the
                                                                                                             holders of our common
                                                                                                             stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are subject to the provisions of Section
203 of the General Corporation Law of the State of Delaware, an anti-takeover law. In general, Section 203 prohibits a publicly
held Delaware corporation from engaging in a &ldquo;business combination&rdquo; with an &ldquo;interested stockholder&rdquo; for
a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business
combination is approved in the following prescribed manner:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>prior to the
                                                                                                             time of the transaction,
                                                                                                             the board of directors
                                                                                                             of the corporation
                                                                                                             approved either the
                                                                                                             business combination
                                                                                                             or the transaction
                                                                                                             which resulted in
                                                                                                             the stockholder becoming
                                                                                                             an interested stockholder;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>upon completion
                                                                                                             of the transaction
                                                                                                             that resulted in
                                                                                                             the stockholder becoming
                                                                                                             an interested stockholder,
                                                                                                             the stockholder owned
                                                                                                             at least 85% of the
                                                                                                             voting stock of the
                                                                                                             corporation outstanding
                                                                                                             at the time the transaction
                                                                                                             commenced, excluding
                                                                                                             for purposes of determining
                                                                                                             the number of shares
                                                                                                             outstanding (1) shares
                                                                                                             owned by persons
                                                                                                             who are directors
                                                                                                             and also officers
                                                                                                             and (2) shares owned
                                                                                                             by employee stock
                                                                                                             plans in which employee
                                                                                                             participants do not
                                                                                                             have the right to
                                                                                                             determine confidentially
                                                                                                             whether shares held
                                                                                                             subject to the plan
                                                                                                             will be tendered
                                                                                                             in a tender or exchange
                                                                                                             offer; and</TD></TR>                                                                                                                                 <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>on or subsequent
                                                                                                             to the time of the
                                                                                                             transaction, the
                                                                                                             business combination
                                                                                                             is approved by the
                                                                                                             board and authorized
                                                                                                             at an annual or special
                                                                                                             meeting of stockholders,
                                                                                                             and not by written
                                                                                                             consent, by the affirmative
                                                                                                             vote of at least
                                                                                                             66 2/3% of the outstanding
                                                                                                             voting stock which
                                                                                                             is not owned by the
                                                                                                             interested stockholder.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Generally, for purposes of Section 203,
a &ldquo;business combination&rdquo; includes a merger, asset or stock sale, or other transaction resulting in a financial benefit
to the interested stockholder. An &ldquo;interested stockholder&rdquo; is a person who, together with affiliates and associates,
owns or, within three years prior to the determination of interested stockholder status, owned 15% or more of a corporation&rsquo;s
outstanding voting securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">SELLING STOCKHOLDERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth information
as of the date of this prospectus, to our knowledge, about the beneficial ownership of our common stock by the selling stockholders
both before and immediately after the offering.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: black">All of the selling
stockholders received their securities in: (i) the </FONT>2011-2012 Private Placement<FONT STYLE="color: black">, (ii) the August
2012 Private Placement and/or (iii) the October 2012 Private Placement, in each case prior to the initial filing date of the registration
statement of which this prospectus is a part.&nbsp; The securities registered on behalf of the investors in the August 2012 Private
Placement include the securities they are expected to receive upon the full funding of their irrevocable commitments to provide
funding to our company. We believe that the selling stockholders have sole voting and investment power with respect to all of
the shares of common stock beneficially owned by them unless otherwise indicated.&nbsp; </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: black">The percent
of beneficial ownership for the selling stockholders is based on </FONT>14,583,522<FONT STYLE="color: black">shares of common
stock outstanding as of the date of this prospectus.&nbsp; Warrants to purchase shares of our common stock held by certain investors
that are currently exercisable or exercisable within 60 days of the date of this prospectus are considered outstanding and beneficially
owned by such investors for the purpose of computing the percentage ownership of their respective percentage ownership but are
not treated as outstanding for the purpose of computing the percentage ownership of any other stockholder.&nbsp; Unless otherwise
stated below, to our knowledge, none of the selling stockholders has had a material relationship with us other than as a stockholder
at any time within the past three years or has ever been one of our officers or directors.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to Rules 13d-3 and 13d-5 of the
Exchange Act, beneficial ownership includes any shares of our common stock as to which a stockholder has sole or shared voting
power or investment power, and also any shares of our common stock which the stockholder has the right to acquire within 60 days,
including upon exercise of warrants to purchase shares of our common stock.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The shares of common stock being offered
pursuant to this prospectus may be offered for sale from time to time during the period the registration statement of which this
prospectus is a part remains effective, by or for the account of the selling stockholders.&nbsp; After the date of effectiveness,
the selling stockholders may have sold or transferred, in transactions covered by this prospectus or in transactions exempt from
the registration requirements of the Securities Act, some or all of their common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Information about the selling stockholders
may change over time.&nbsp; Any changed information will be set forth in an amendment to the registration statement or supplement
to this prospectus, to the extent required by law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Shares Beneficially <BR>Owned as of the date of <BR>this
    Prospectus</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">Shares <BR>Offered by <BR>this</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Shares
                                                                         Beneficially</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Owned
                                                                                                                                                                                               After
                                                                                                                                                                                               the</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Offering<SUP>(<FONT STYLE="font-family: Times New Roman, Times, Serif">1</FONT>)</SUP></B></P></TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Name of Selling Stockholder</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Percent</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Prospectus</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Percent</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 45%; text-align: left"><FONT STYLE="font-size: 10pt">DIT Equity Holdings, LLC<SUP>(2) (3) (4) (5)</SUP></FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">386,150</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">2.64</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">791,049</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Anthony Ivankovich<SUP>(2) (3) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">635,950</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.32</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">704,909</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">FEQ Realty, LLC<SUP>(2) (3) (4) (6)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">251,408</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.71</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">653,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<!-- Field: Page; Sequence: 81; Value: 64 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->78<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->
<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; width: 45%"><FONT STYLE="font-size: 10pt">ACP X, LP<SUP>(2) (4) (7)</SUP></FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">681,901</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">4.58</TD><TD STYLE="text-align: left; width: 1%">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">671,295</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Veladen Investments Corp, LLC<SUP>(2) (3) (8)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.36</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">600,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">David Blonder<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">514,085</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.46</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">538,579</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">George Karfunkel<SUP>(2) (3) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">435,950</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.95</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">504,909</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">SLD Capital Corp.<SUP>(2) (9) </SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">312,499</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Donald Wray &amp; Linda Wray JTWROS<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">411,268</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.78</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">430,863</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Moggle Investors, LLC<SUP>(2) (3) (10)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">134,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">402,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Steven B. Rosner<SUP>(2) (3)(9)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">492,499</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.38</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Sten-Anders Fellman<SUP>(2) (3) (4) </SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">251,309</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.71</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">285,787</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Steven B. Rosner, as trustee for SLD Capital Corp. MPP<SUP>(2)
    (3)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">240,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">ABBA Properties Partnership<SUP>(2) (4) (11)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">205,634</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.40</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">215,432</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Mondas Investments Ltd.<SUP> (2) (4) (12)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">205,634</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.40</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">215,432</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">White Rock Capital Partners, L.P.<SUP> (13)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">166,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.14</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">166,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Montague Capital LP<SUP>(14)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.03</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Porthos Ventures, LLC<SUP>(15)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,333</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Avrom Balsam<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">123,380</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">129,259</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">RBC Capital Markets Cust FBO Laurence G. Allen IRA<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,817</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Barbara S. Dickler Trust<SUP>(2) (4) (16)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,817</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Bruce P. Andre Trust<SUP>(2) (4) (17)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,817</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Dan Manor<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,817</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Edward S. Rosenthal<SUP>(2)</SUP> <SUP>(4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,817</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Maurice Aaron<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,817</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<!-- Field: Page; Sequence: 82; Value: 64 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->
<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; width: 45%"><FONT STYLE="font-size: 10pt">Robert D DeRose and Susan DeRose Family Trust<SUP>(2)
    (4) (18)</SUP></FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">102,817</TD><TD STYLE="text-align: left; width: 1%"></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">*</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">107,716</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Steve M. Payne<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">102,817</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">107,716</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">CRL Management LLC<SUP>(19)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Don Bahouth</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Nathaniel Abramson<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">74,028</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77,555</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Four Jr. Investments LTD. <SUP>(20)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Robert M. Newsome</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Louis A. Romeo &amp; Brenda K. Romeo</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Henry Rothman<SUP>(2) (3) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,496</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">63,114</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">John E. Dell</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">ACP Investment Group, LLC<SUP>(2) (4) (21)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Clayton Struve<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">David &amp; Julie Rosen<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Marvin Boehm<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Mary L. Marcus-West Declaration Trust<SUP>(2) (4) (22)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Larry W. Schwartz<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Graham Short<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">NYPPEX Holdings, LLC<SUP>(2) (4) (23)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Richard Neustadter<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Richard Todd Gross<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,408</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,858</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Renald &amp; Catherine Anelle</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">John R. Campo</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<!-- Field: Page; Sequence: 83; Value: 64 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->80<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->
<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; width: 45%"><FONT STYLE="font-size: 10pt">Charles Affron and Mirella Affron JTWROS<SUP>(2) (4)</SUP></FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">41,127</TD><TD STYLE="text-align: left; width: 1%"></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">*</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">43,086</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Fabrizio Balestri<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,127</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,086</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Joseph Merrill<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,127</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,086</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Raymond L. Vollintine<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41,127</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,086</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Howard K. Fuguet</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Michael Leiter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,333</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Robert Montgomery<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,563</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Edward Dunn</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">David A. Rosner<SUP>(2) (3)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Lauren Paige Rosner<SUP>(2) (3) </SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">John Dempsey<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,704</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,929</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Ron Eller<SUP>(2) (3) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,797</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,245</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Akita Capital, LLC<SUP>(24)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,866</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,866</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Ian Stern<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,563</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Robert Frome<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,563</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Walter J. Lachewitz Jr.<SUP> (2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,563</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,543</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Michael Willis</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Thomas C. Stephens</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">John T. Winebrenner Trust<SUP>(25)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Robyn Schreiber Irrevocable Trust<SUP>(26)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">William C. Stone &amp; Megan N. Williams</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Richard Grossbard</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Derek Sroufe</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Robert B. Baker</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<!-- Field: Page; Sequence: 84; Value: 64 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->81<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->
<P STYLE="margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; width: 45%">Trevor R. Ashmore</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">16,666</TD><TD STYLE="text-align: left; width: 1%"></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">*</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">16,666</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: left; width: 1%">&nbsp;</TD><TD STYLE="text-align: right; width: 8%">&mdash;</TD><TD STYLE="text-align: left; width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">David &amp; Lillian Barry</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Scott Anderson</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Lawrence Grossbard</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Brian and Debbie Keller<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,423</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Paul O&rsquo;Brien</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Brooks and Carmen McCartney</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,400</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,400</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">John C. Boyer</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,333</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Paul V. Isicrate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,300</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Israel Bernstein<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,282</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,772</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">PNT Marketing Services Inc. Profit Sharing Plan &amp; Trust FBO
    Anthony Coretto<SUP>(2) (4) (27)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,282</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,772</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><FONT STYLE="font-size: 10pt">Tatiana Ivanova<SUP>(2) (4)</SUP></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,282</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,772</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Bill L. Boad</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Michael Hetzner &amp; Ann Hetzner</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Mark A. Dante</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,333</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,333</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Eric J. Cooper</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,750</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">John F. Neary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,700</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,700</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Grigoriy Levitskiy</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,666</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Rafique Sheikh</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Dmitry Dary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Robert Friedman</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,000</TD><TD STYLE="text-align: left"></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">*</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">TOTAL</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">8,600,677</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right"></TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">10,596,855</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">*&#9;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less than 1%.</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(1)</TD><TD>Assumes the sale of all shares offered pursuant to this prospectus.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(2)</TD><TD>Share numbers include shares underlying warrants held by the selling
                                                           stockholders.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(3)</FONT></TD><TD>Securities registered include
                                                                                             shares of common stock and shares
                                                                                             of common stock underlying warrants
                                                                                             to be purchased by the selling stockholder
                                                                                             pursuant to the irrevocable commitment
                                                                                             to purchase such securities provided
                                                                                             by such selling stockholder in connection
                                                                                             with the August 2012 Private Placement.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(4)</TD><TD>Securities registered include additional shares of common stock
                                                           to be available underlying warrants held by the selling stockholder
                                                           as a result of anti-dilution adjustments to be caused by the funding
                                                           of tranches two and three of the August 2012 Private Placement.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(5)</TD><TD><FONT STYLE="color: black">Kyung Won Lee </FONT>is the natural
                                                           person with voting and dispositive power over the shares held by DIT
                                                           Equity Holdings, LLC.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(6)</FONT></TD><TD><FONT STYLE="color: black">Ernest
                                                                                             Bartlett </FONT>is the natural person
                                                                                             with voting and dispositive power
                                                                                             over the shares held by FEQ Realty,
                                                                                             LLC.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(7)</FONT></TD><TD><FONT STYLE="color: black">Laurence
                                                                                             G. Allen is the natural person </FONT>with
                                                                                             voting and dispositive power over
                                                                                             the shares held by ACP X, LP, ACP
                                                                                             Investment Group, LLC, NYPPEX, LLC
                                                                                             and NYPPEX Holdings, LLC. Mr. Allen
                                                                                             and NYPPEX Holdings, LLC are affiliated
                                                                                             with NYPPEX, LLC, a FINRA member
                                                                                             broker-dealer.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(8)</FONT></TD><TD>William Miller <FONT STYLE="color: black">is
                                                                                             the natural person </FONT>with voting
                                                                                             and dispositive power over the shares
                                                                                             held by Veladen Investments Corp,
                                                                                             LLC.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(9)</FONT></TD><TD>Steven B. Rosner <FONT STYLE="color: black">is
                                                                                             the natural person </FONT>with voting
                                                                                             and dispositive power over the shares
                                                                                             held by SLD Capital Corp and Steven
                                                                                             B. Rosner, as Trustee for SLD Capital
                                                                                             Corp. MPP. The shares offered by
                                                                                             SLD Capital Corp. consist of shares
                                                                                             received under a Consulting Agreement
                                                                                             between SLD Capital Corp. and our
                                                                                             company. See &ldquo;Management &mdash;
                                                                                             Consulting Agreement with SLD Capital
                                                                                             Corp.&rdquo;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(10)</FONT></TD><TD>Stephen Harrington <FONT STYLE="color: black">is
                                                                                              the natural person </FONT>with voting
                                                                                              and dispositive power over the shares
                                                                                              held by Moggle Investors, LLC.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(11)</TD><TD>Avrom Balsam and Nathaniel Abramson are the natural persons with
                                                            voting and dispositive power over the shares held by ABBA Properties
                                                            Partnership.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(12)</TD><TD>Marika Favre-Calo and Francois Kirschmann are the natural persons
                                                            with voting and dispositive power over the shares held by Mondas Investments
                                                            Ltd.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(13)</TD><TD>Thomas U. Barton <FONT STYLE="color: black">is the natural person
                                                            </FONT>with voting and dispositive power over the shares held by White
                                                            Rock Capital Partners, L.P.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(14)</FONT></TD><TD>Denis Kalenja is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by Montague
                                                                                              Capital LP.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(15)</FONT></TD><TD>Nick Patel is the natural person
                                                                                              with voting and dispositive power
                                                                                              over the shares held by Porthos
                                                                                              Ventures, LLC.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(16)</TD><TD>Barbara S. Dickler and Marshall N. Dickler<FONT STYLE="color: black">
                                                            are </FONT>the co-trustees with voting and dispositive power over
                                                            the shares held by the Barbara S. Dickler Trust.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(17)</TD><TD>Bruce P. Andre<FONT STYLE="color: black"> </FONT>is the trustee
                                                            with voting and dispositive power over the shares held by the Bruce
                                                            P. Andre Trust.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(18)</TD><TD>Robert D. DeRose and Susan DeRose are co-trustees with voting
                                                            and dispositive power over the shares held by the Robert D DeRose
                                                            and Susan DeRose Family Trust.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(19)</FONT></TD><TD>Charles Raymond Langston<B>
                                                                                              </B>is the natural person with voting
                                                                                              and dispositive power over the shares
                                                                                              held by<B> </B>CRL Management LLC.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(20)</FONT></TD><TD>Robert D. Burke MD is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by Four
                                                                                              Jr. Investments LTD.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(21)</FONT></TD><TD><FONT STYLE="color: black">Laurence
                                                                                              G. Allen is the natural person </FONT>with
                                                                                              voting and dispositive power over
                                                                                              the shares held by ACP X, LP, ACP
                                                                                              Investment Group, LLC and NYPPEX
                                                                                              Holdings, LLC.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(22)</TD><TD>Mary L. Marcus-West<FONT STYLE="color: black"> </FONT>is the trustee
                                                            with voting and dispositive power over the shares held by the Mary
                                                            L. Marcus-West Declaration Trust.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(23)</FONT></TD><TD><FONT STYLE="color: black">Laurence
                                                                                              G. Allen is the natural person </FONT>with
                                                                                              voting and dispositive power over
                                                                                              the shares held by ACP X, LP, ACP
                                                                                              Investment Group, LLC and NYPPEX
                                                                                              Holdings, LLC.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.5in"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-size: 10pt; color: black">(24)</FONT></TD><TD>Gary Gotto
                                                                                                               <FONT STYLE="font-size: 10pt">is
                                                                                                               the natural person
                                                                                                               with voting and
                                                                                                               dispositive power
                                                                                                               over the shares
                                                                                                               held by Akita Capital,
                                                                                                               LLC.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(25)</FONT></TD><TD>Thomas C. Stephens is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by John
                                                                                              T. Winebrenner Trust.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in"><FONT STYLE="color: black">(26)</FONT></TD><TD>Warren Schreiber is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Robyn Shreiber Irrevocable Trust.</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">(27)</TD><TD>Anthony Coretto<FONT STYLE="color: black"> </FONT>is the trustee
                                                            with voting and dispositive power over the shares held by the PNT
                                                            Marketing Services Inc. Profit Sharing Plan &amp; Trust FBO Anthony
                                                            Coretto.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">PLAN OF DISTRIBUTION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The selling stockholders, which as used
herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares
of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution
or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or
interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private
transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The selling security holders may sell some
or all of their shares at a fixed price of $1.50 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB
Market and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board
and/or OTCQB Market, shareholders may sell their shares in private transactions to other individuals.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our common stock is not listed or traded
on any public exchange, and we have not applied for listing or quotation on any exchange. We are seeking sponsorship for the quotation
of our common stock on the OTC Bulletin Board and/or OTCQB Market. In order to be quoted on the OTC Bulletin Board and/or OTCQB
Market, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no
assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such
an application for quotation will be approved. &nbsp;There is further no assurance that an active trading&nbsp;market for our
shares will develop, or, if developed, that it will be sustained.&nbsp;&nbsp;In the absence of a trading market or an active trading
market, investors may be unable to liquidate their investment.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The selling stockholders may use any one
or more of the following methods when disposing of shares or interests therein:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>ordinary brokerage
                                                                                                             transactions and
                                                                                                             transactions in which
                                                                                                             the broker-dealer
                                                                                                             solicits purchasers;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>block trades
                                                                                                             in which the broker-dealer
                                                                                                             will attempt to sell
                                                                                                             the shares as agent,
                                                                                                             but may position
                                                                                                             and resell a portion
                                                                                                             of the block as principal
                                                                                                             to facilitate the
                                                                                                             transaction;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>purchases by
                                                                                                             a broker-dealer as
                                                                                                             principal and resale
                                                                                                             by the broker-dealer
                                                                                                             for its account;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>privately negotiated
                                                                                                             transactions;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>short sales;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>through the writing
                                                                                                             or settlement of
                                                                                                             options or other
                                                                                                             hedging transactions,
                                                                                                             whether through an
                                                                                                             options exchange
                                                                                                             or otherwise;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>broker-dealers
                                                                                                             may agree with the
                                                                                                             selling stockholders
                                                                                                             to sell a specified
                                                                                                             number of such shares
                                                                                                             at a stipulated price
                                                                                                             per share;</TD></TR></TABLE>

<P STYLE="font: 10pt Symbol; margin: 0pt 0 0pt 1in; text-indent: -0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>a combination
                                                                                                             of any such methods
                                                                                                             of sale; and</TD></TR>                                                                                                                                   <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>any other method
                                                                                                             permitted pursuant
                                                                                                             to applicable law.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The selling stockholders may, from time
to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for
purposes of this prospectus; provided, however, that prior to any such transfer the following information (or such other information
as may be required by the federal securities laws from time to time) with respect to each such selling beneficial owner must be
added to the prospectus by way of a prospectus supplement or post-effective amendment, as appropriate: (1) the name of the selling
beneficial owner; (2) any material relationship the selling beneficial owner has had within the past three years with us or any
of our predecessors or affiliates; (3) the amount of securities of the class owned by such beneficial owner before the offering;
(4) the amount to be offered for the beneficial owner&rsquo;s account; and (5) the amount and (if one percent or more) the percentage
of the class to be owned by such beneficial owner after the offering is complete.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with the sale of our common
stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.
The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short
positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders
may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by
this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented
or amended to reflect such transaction).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The aggregate proceeds to the selling stockholders
from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions,
if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject,
in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the
proceeds from this offering, provided, however, we will receive proceeds from the exercise of the warrants held by certain investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The selling stockholders also may resell
all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided
that they meet the criteria and conform to the requirements of that rule.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The selling stockholders and any underwriters,
broker-dealers or agents that participate in the sale of the common stock or interests therein may be &ldquo;underwriters&rdquo;
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any
resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are &ldquo;underwriters&rdquo;
within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities
Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">To the extent required, the shares of our
common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the
names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement
that includes this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The maximum amount of compensation to be
received by any FINRA member or independent broker-dealer for the sale of any securities registered under this prospectus will
not be greater than 8.0% of the gross proceeds from the sale of such securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In order to comply with the securities
laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers
or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or
an exemption from registration or qualification requirements is available and is complied with.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have advised the selling stockholders
that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the
activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be
supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus
delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Market Information </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">There is no public trading market on which
our common stock is traded. Among other matters, in order for our common stock to become OTCBB/OTCQB eligible, a FINRA-member
broker/dealer must file a Form 211 with FINRA and commit to make a market in our securities once the Form 211 is approved by FINRA.
As of the date of this prospectus, the Form 211 has not been filed with FINRA. There is no assurance that our common stock will
be included on the OTCBB/OTCQB.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="color: black">The </FONT>shares
of common stock registered hereby can be sold by selling stockholders at a fixed price of $1.50 per share until our shares are
quoted on the OTC Bulletin Board and/or OTCQB<FONT STYLE="color: black"> Market </FONT>and thereafter at prevailing market prices
or privately negotiated prices. We determined such fixed price based on the highest price at which shares of our common stock
were sold in our previous private placements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We can offer no assurance that an active
public market in our shares will develop or be sustained. Future sales of substantial amounts of our shares in the public market
could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale
of our equity securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Holders</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of the date of this prospectus, there
are 108 record holders of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">LEGAL MATTERS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The validity of the securities offered
in this prospectus is being passed upon for us by Ellenoff Grossman &amp; Schole LLP, New York, New York.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 23.9pt">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">EXPERTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The consolidated financial statements of
LabStyle Innovations Corp. appearing in this prospectus and related registration statement have been audited by Kost Forer Gabbay
&amp; Kasierer, a member of Ernst &amp; Young Global, independent registered public accounting firm, as set forth in their report
thereon (which contains an explanatory paragraph describing conditions that raise substantial doubt about our ability to continue
as a going concern as described in Note 1b to the consolidated financial statements) appearing elsewhere herein, and are included
in reliance upon such report given on the authority of such firm as experts in accounting and auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">DISCLOSURE OF COMMISSION POSITION
OF<BR>
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our directors and officers are indemnified
to the fullest extent permitted under Delaware law. We may also purchase and maintain insurance which protects our officers and
directors against any liabilities incurred in connection with their service in such a capacity, and such a policy may be obtained
by us in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing,
or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by a director, officer or controlling person of ours in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">WHERE YOU CAN FIND ADDITIONAL INFORMATION</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have filed with the SEC a registration
statement on Form S-1 under the Securities Act, with respect to the common stock offered by this prospectus. This prospectus,
which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the
registration statement. For further information pertaining to us and our common stock, reference is made to the registration statement
and the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents or provisions
of any documents referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document
has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of
the matters involved.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">You may read and copy all or any portion
of the registration statement without charge at the office of the SEC at the Public Reference Room at Station Place, 100 F Street,
N.E., Washington, D.C. 20549. Copies of the registration statement may be obtained from the SEC at prescribed rates from the Public
Reference Section of the SEC at such address. In addition, registration statements and certain other filings made with the SEC
electronically are publicly available through the SEC&rsquo;s web site at <I>http://www.sec.gov</I>. The registration statement,
including all exhibits and amendments to the registration statement, has been filed electronically with the SEC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Contemporaneously with the effectiveness
of the registration statement of which this prospectus is a part, we will file a Registration Statement on Form 8-A and become
subject to the information and periodic reporting requirements of the Exchange Act and, accordingly, will file annual reports
containing financial statements audited by an independent public accounting firm, quarterly reports containing unaudited financial
data, current reports, proxy statements and other information with the Securities and Exchange Commission. You will be able to
inspect and copy such periodic reports, proxy statements and other information at the SEC&rsquo;s public reference room, and the
web site of the SEC referred to above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">INDEX TO FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 88%; font-weight: bold; text-align: justify; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 12%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Page</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Report of Independent Registered Public Accounting Firm</TD>
    <TD STYLE="text-align: center">F-2</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Consolidated Balance Sheets</TD>
    <TD STYLE="text-align: center">F-3 - F-4</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Consolidated Statements of Operations</TD>
    <TD STYLE="text-align: center">F-5</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Statements of Changes in Stockholders&rsquo; Equity (deficit)</TD>
    <TD STYLE="text-align: center">F-6</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Consolidated Statements of Cash Flows</TD>
    <TD STYLE="text-align: center">F-7</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: justify">Notes to Consolidated Financial Statements</TD>
    <TD STYLE="text-align: center">F-8 - F-26</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><img src="tpg96.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>To the Board of Directors and Shareholders
of</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LABSTYLE INNOVATIONS CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have audited the
accompanying consolidated balance sheet of LabStyle Innovations Corp. (the &ldquo;Company&rdquo;) and its subsidiary as of December
31, 2011, and the related consolidated statements of operations, shareholders&rsquo; equity and cash flows for the period from
August 11, 2011 (inception date) through December 31, 2011. These consolidated financial statements are the responsibility of
the Company&rsquo;s management. Our responsibility is to express an opinion on these consolidated financial statements based on
our audit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">We conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatements. We were not engaged to perform an audit of the Company&rsquo;s and its subsidiary internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company&rsquo;s
and its subsidiary internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">In our opinion,
the financial statements referred to above, present fairly, in all material respects, the consolidated financial position of the
Company and its subsidiary as of December&nbsp;31, 2011, and the consolidated results of their operations and their cash flows
for the period from August 11, 2011 (inception date) through December&nbsp;31, 2011, in conformity with U.S. generally accepted
accounting principles.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 28.35pt">The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1b,
<FONT STYLE="color: black">the Company has incurred recurring operating losses </FONT>and negative cash flows from operating activities
during the period from August 11, 2011 (inception date) through December&nbsp;31, 2011<FONT STYLE="color: black">. Its ability
to continue to operate is dependent upon obtaining additional financial support. This condition as described in Note 1b, raise
substantial doubt about the Company&rsquo;s ability to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 57%; padding-left: 2.85pt; text-align: justify">Tel-Aviv, Israel</TD>
    <TD STYLE="width: 43%; text-align: center">KOST FORER GABBAY &amp; KASIERER</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 2.85pt; text-align: left">June 26, 2012</TD>
    <TD STYLE="padding-left: 2.85pt; text-align: center">A Member of Ernst &amp; Young Global</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-left: 2.85pt; text-align: left">Except for Note 1b and Note 10 to which <BR> the date is December 10, 2012</TD>
    <TD STYLE="padding-left: 2.85pt; text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: windowtext 1pt solid; font-weight: bold">CONSOLIDATED BALANCE SHEETS</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">U.S. dollars</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">September 30,</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">December 31,</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">CURRENT ASSETS:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">820,017</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">908,765</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Short-term bank deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,571</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,130</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Other accounts receivable and prepaid expenses (Note 3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88,824</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,664</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Receivable on account of shares (Note 8g)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,050,074</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><U>Total</U> current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,992,486</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">934,559</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">LEASE DEPOSIT</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">21,146</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,616</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">PROPERTY AND EQUIPMENT, NET (Note 4)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">50,120</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,223</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><U>Total</U> assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,063,752</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">978,398</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral
part of the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: windowtext 1pt solid; font-weight: bold">CONSOLIDATED BALANCE SHEETS</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">U.S. dollars (except stock data)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">September 30,</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">December 31,</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY (DEFICIT)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">CURRENT LIABILITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt">Trade payables</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">220,269</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">32,578</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Other accounts payable and accrued expenses (Note 5)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">357,079</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,313</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><U>Total</U> current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">577,348</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">120,891</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">LIABILITY RELATED TO WARRANTS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,218,140</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">664,363</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">COMMITMENTS AND CONTINGENT LIABILITIES (Note 6)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">STOCKHOLDERS&rsquo; EQUITY (DEFICIT) (Note 8):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 18pt">Common Stock of $0.0001 par value - Authorized: 45,000,000
    shares at September 30, 2012 and December 31, 2011; Issued: 13,262,747 (unaudited) and 10,830,000 shares at September 30,
    2012 and December 31, 2011, respectively; Outstanding: 13,262,747 (unaudited) and 10,830,000 shares at September 30, 2012
    and December 31, 2011, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,326</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,083</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 18pt">Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at
    September 30, 2012 and December 31, 2011; Issued: None at September 30, 2012 and December 31, 2011; Outstanding: None at September
    30, 2012 and December 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 0.12in">&nbsp;Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,146,555</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">577,410</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.12in">&nbsp;Deficit accumulated during the development stage</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,879,617</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(385,349</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><U>Total</U> stockholders&rsquo; equity (deficit)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,731,736</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">193,144</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><U>Total</U> liabilities and stockholders&rsquo; equity (deficit)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,063,752</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">978,398</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral
part of the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: windowtext 1pt solid; font-size: 10pt; font-weight: bold">CONSOLIDATED STATEMENTS OF
    OPERATIONS</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; font-weight: bold">U.S. dollars</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;months <BR>ended <BR>September&nbsp;30,
    <BR>2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Period&nbsp;from <BR>August&nbsp;11,&nbsp;2011
    <BR>(inception&nbsp;date) <BR>to&nbsp;December&nbsp;31, <BR>2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Period&nbsp;from <BR>August&nbsp;11,&nbsp;2011
    <BR>(inception&nbsp;date) <BR>to&nbsp;September <BR>30,&nbsp;2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Operating expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 64%; text-align: left; padding-left: 9pt">Research and development</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">1,012,087</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">77,895</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">1,089,982</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Marketing and pre-production costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">128,171</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">128,171</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">General and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,244,053</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">156,818</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,400,871</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total operating loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,384,311</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">234,713</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,619,024</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Financial expenses, net (Note 9a)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,109,957</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">150,636</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,260,593</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,494,268</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">385,349</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,879,617</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Net loss per share (Note 9b)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Basic and diluted loss per share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.38</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.04</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Weighted average number of common stock used in computing basic and diluted
    net loss per share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,676,809</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,499,507</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral
part of the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: windowtext 1pt solid; font-weight: bold">STATEMENTS OF CHANGES IN STOCKHOLDERS&rsquo;
    EQUITY (DEFICIT)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">U.S. dollars (except stock data)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Common&nbsp;stock</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">Additional <BR>paid-in</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">Accumulated</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">Total <BR>stockholders&rsquo;</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">capital</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">deficit</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">equity&nbsp;(deficit)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Balance as of August 11, 2011 (inception date)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock to founders upon
    inception date at par value</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">6,500,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">650</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">-</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">650</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock to accredited investors upon
    inception date at par value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,800</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock to founders in October 2011
    at par value</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">100</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock &nbsp;in October 2011 at $0.61
    per stock, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">805,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">346,082</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">346,163</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock in November&nbsp; 2011at $0.61
    per stock, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">335,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">135,294</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">135,327</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock in December 2011 at $0.62
    per stock, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">190,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86,234</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">86,253</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(385,349</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(385,349</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Balance as of December 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,830,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,083</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">577,410</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(385,349</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">193,144</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock in February 2012 at $0.63
    per stock, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">171,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81,465</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">81,482</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock in March 2012 at $0.63 per
    stock, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">890,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">89</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">422,031</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">422,120</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock in March 2012 at $0.63 per
    stock, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,507</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock and warrants in August 2012
    at $1.00 per unit, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,014</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">498,107</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">498,157</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Issuance of common stock in September 2012 at $1.50
    per stock, net of issuance cost</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">801,733</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,049,994</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,050,074</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">481,048</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">481,048</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,494,268</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,494,268</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Balance as of September 30, 2012 (unaudited)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,262,747</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,326</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,146,555</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(4,879,617</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,731,736</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral
part of the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; border-bottom: windowtext 1pt solid; font-weight: bold">CONSOLIDATED STATEMENT OF CASH FLOWS</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">U.S. dollars</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;months <BR>ended <BR>September&nbsp;30,
    <BR>2012</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Period&nbsp;from <BR>August&nbsp;11,
    <BR>2011 <BR>(inception <BR>date)&nbsp;to <BR>December&nbsp;31, <BR>2011</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Period&nbsp;from <BR>August&nbsp;11,
    <BR>2011 <BR>(inception <BR>date)&nbsp;to <BR>September,&nbsp;30, <BR>2012</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from operating
    activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 64%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(4,494,268</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(385,349</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(4,879,617</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Adjustments required to reconcile net loss to net
    cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">481,048</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">481,048</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Issuance cost related to warrants to investors and
    service provider</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101,263</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">156,097</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">257,360</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Issuance cost related to common shares to founders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">750</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">750</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.35in">Depreciation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,748</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">504</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,252</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in other accounts receivable and prepaid
    expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(77,280</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,358</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(89,638</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in trade payables</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">187,691</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,578</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">220,269</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Change in the fair value of warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,006,777</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(15,867</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,990,910</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Increase in other accounts payable
    and accrued expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">268,766</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">88,313</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">357,079</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,519,255</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(135,332</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,654,587</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from investing
    activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Investment in short-term bank deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19,851</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(13,437</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(33,288</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Investment in lease deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(20,616</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(20,616</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Purchase of property and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(33,645</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(23,727</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(57,372</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(53,496</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(57,780</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(111,276</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from financing
    activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Proceeds from issuance of Common
    Stock and warrants, net of issuance cost</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,484,003</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,101,877</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,585,880</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net cash provided by financing
    activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,484,003</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,091,877</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,585,880</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Increase (decrease) in cash and cash equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(88,748</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">908,765</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">820,017</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Cash and cash equivalents at the
    beginning of the period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">908,765</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Cash and cash equivalents at
    the end of the period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">820,017</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">908,765</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">820,017</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-decoration: underline; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Non-cash investing and
    financing and activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Receivable on account of shares</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,050,074</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,050,074</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral
part of the consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 100%; font-size: 10pt; font-weight: bold; text-align: right">LABSTYLE INNOVATIONS CORP.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; font-weight: bold; text-align: right"><FONT STYLE="font-size: 10pt"><B>(Development stage Company)</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; font-weight: bold; text-align: right">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; padding-right: -1.15pt; font-size: 10pt; font-weight: bold">NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; font-weight: bold">U.S. dollars (except stock and per stock data)</TD></TR>
</TABLE>
<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 1:-</TD><TD STYLE="text-align: justify">GENERAL</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">a.</TD><TD STYLE="text-align: justify">LabStyle Innovations Corp. (the
                                                                 &ldquo;Company&rdquo;) was incorporated in Delaware, to exploit
                                                                 a proprietary technology and commenced its operations on August
                                                                 11, 2011. The Company&rsquo;s technology is seeking to bring
                                                                 laboratory testing capabilities to consumers through the use
                                                                 of smartphones. Accordingly, the Company is considered to be
                                                                 in the development stage as defined in ASC No. 915, &ldquo;Development
                                                                 stage entities&rdquo;.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The Company
has a wholly owned subsidiary, LabStyle Innovations Ltd. (&ldquo;Ltd.&rdquo;), incorporated and located in Israel, which commenced
operations on September 14, 2011. Its principal business activity is to perform the research and development activities of the
group.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 82.5pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">b.</TD><TD STYLE="text-align: justify">Through September 30, 2012, the
                                                                 Company incurred recurring operating losses from operating activities
                                                                 and negative cash flows from operating activities since inception
                                                                 amounting to $<FONT STYLE="color: black">2,619,024 </FONT>and
                                                                 $1,654,587, respectively. The Company will have to obtain additional
                                                                 capital resources to maintain its commercialization, research
                                                                 and development activities. According to the management estimates,
                                                                 based on the Company&rsquo;s budget and the assumption that initial
                                                                 commercial sales will commence, the Company will have sufficient
                                                                 liquidity resources to continue its activity at least until the
                                                                 end of 2013. However, if the Company is unable to meet its commercial
                                                                 sales targets or in obtaining additional capital resources, it
                                                                 won&rsquo;t be able to continue its activity beyond the end of
                                                                 2013. The Company is addressing its liquidity issues by seeking
                                                                 additional fund raisings and implementing initiatives to allow
                                                                 covering its anticipated budget deficit for 2013. The Company
                                                                 plans to have its securities quoted on the Over-the-Counter Bulletin
                                                                 Board (&ldquo;OTCBB&rdquo;) and/or the OTCQB Market operated
                                                                 by OTC Markets Group, Inc. (&ldquo;OTCQB&rdquo;) as soon as practicable
                                                                 thereafter, for the purpose of raising capital to finance its
                                                                 operations. Additionally, the Company is trying to raise capital
                                                                 from other sources.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">There are
no assurances, however, that the Company will be able to obtain an adequate level of financing needed for the long-term development
and commercialization of its products or have its securities quoted on OTCBB and / or OTCQB. These conditions raise substantial
doubt about the Company&rsquo;s ability to continue as a going concern. The accompanying financial statements do not include any
adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Subsequent
to the balance sheet date, the Company obtained additional financing in total amount of $1,334,404, net of issuance cost, through
the issuance of shares of Company common stock, par value $0.0001 per share (the &ldquo;Common Stock&rdquo;) as described in more
detail in Note 10b.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 2:-</TD><TD STYLE="text-align: justify">SIGNIFICANT ACCOUNTING POLICIES</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: 0in">The consolidated
financial statements are prepared according to United&nbsp;States generally accepted accounting principles (&ldquo;U.S.&nbsp;GAAP&rdquo;).</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">a.</TD><TD STYLE="text-align: justify">Use of estimates:</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The preparation
of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">b.</TD><TD STYLE="text-align: justify">Financial statements in U.S.
                                                                 dollars:</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">The accompanying financial
statements have been prepared in U.S.&nbsp;dollars.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">Ltd.&rsquo;s financing activities
are incurred in U.S. dollars. Although a portion of the Company&rsquo;s expenses are denominated in NIS (mostly salaries and rent),
a substantial portion of their expenses are denominated in U.S. dollars. The Company&rsquo;s management believes that the currency
of the primary economic environment in which the operations of the Company and its Israeli subsidiary are conducted is the U.S.
dollar (&ldquo;dollar&rdquo;); thus, the dollar is the functional currency of the Company and Ltd.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">Transactions and balances
denominated in U.S. dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the
dollar are re-measured into dollars in accordance with ASC No.&nbsp;830, &ldquo;Foreign Currency Matters&rdquo;. All transaction
gains and losses of the re-measurement of monetary balance sheet items are reflected in the consolidated statement of operations
as financial income or expenses, as appropriate.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">c.</TD><TD STYLE="text-align: justify">Principles of consolidation:</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">The consolidated financial
statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated
upon consolidation.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">d.</TD><TD STYLE="text-align: justify">Cash equivalents:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">The Company considers all
highly liquid investments, which are readily convertible to cash with a maturity of three months or less at the date of acquisition,
to be cash equivalents.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 2:-</TD><TD STYLE="text-align: justify">SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">e.</TD><TD STYLE="text-align: justify">Short-term bank deposits:</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">Short-term bank deposits are
deposits with maturities of more than three months and up to one year. The short-term bank deposits are denominated in <FONT STYLE="color: #222222">Israeli
New Shekels</FONT> (&ldquo;NIS&rdquo;) and bear interest at an average rate of 2.72 % and 2.17 % as of December 31, 2011 and September
30, 2012, respectively. The short-term bank deposits are presented at their cost, including accrued interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt; text-align: left">f.</TD><TD STYLE="text-align: justify">Long-term lease deposit:</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">Long-term lease deposit includes
long-term deposit for offices rent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">g.</TD><TD STYLE="text-align: justify">Property and equipment:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">Property and equipment are
stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets at the following annual rates:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">%</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top">Computers, and peripheral equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">15-33</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 59%; text-align: left; vertical-align: top">Office furniture and equipment</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 40%; text-align: center">6</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; vertical-align: top">Leasehold improvements</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: center">Over the shorter of the lease term or useful economic life</TD></TR>
</TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">h.</TD><TD STYLE="text-align: justify">Impairment of long-lived assets:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">Property and equipment are
reviewed for impairment in accordance with ASC No. 360, &ldquo;Property, Plant and Equipment,&rdquo; whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated
by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. During the period from August 11, 2011 until December
31, 2011 and for nine months period ended September 30, 2012, no impairment losses have been recorded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">i.</TD><TD STYLE="text-align: justify">Concentrations of credit risk:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">Financial instruments that
potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term
bank deposit and other account receivables.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 2:-</TD><TD STYLE="text-align: justify">SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">The majority of cash and cash
equivalents of the Company and its subsidiary are invested in deposits and current accounts with major U.S. and Israeli banks.
Such cash and cash equivalents may be in excess of insured limits and are not insured in other jurisdictions. Generally, cash
and cash equivalents may be redeemed and therefore a minimal credit risk exists with respect to these deposits and investments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">j.</TD><TD STYLE="text-align: justify">Research and development costs:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Research
and development costs are charged to the statement of operations, as incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">k.</TD><TD STYLE="text-align: justify">Income taxes:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">The Company accounts for income
taxes in accordance with ASC No. 740, &ldquo;Income Taxes&rdquo;. This Statement prescribes the use of the liability method whereby
deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated
realizable value. As of December 31, 2011 and September 30, 2012, a full valuation allowance was provided by the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">ASC 740 contains a two-step
approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position
taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely
than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of
any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more
than 50% likely to be realized upon ultimate settlement. No liability for unrecognized tax benefits was recorded as a result of
the implementation of ASC 740.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">l.</TD><TD STYLE="text-align: justify">Fair value of financial instruments:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The Company
applies ASC 820, &ldquo;Fair Value Measurements and Disclosures&rdquo;. Under this standard, fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability (i.e., the &ldquo;exit price&rdquo;) in an orderly transaction
between market participants at the measurement date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">In determining
fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability
developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the
Company&rsquo;s assumptions about the assumptions market participants would use in pricing the asset or liability developed based
on the best information available in the circumstances.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 2:-</TD><TD STYLE="text-align: justify">SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The hierarchy
is broken down into three levels based on the inputs as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 85.05pt"></TD><TD STYLE="width: 56.7pt">Level 1 -</TD><TD STYLE="text-align: justify">Valuations based on quoted
                                                                      prices in active markets for identical assets that the Company
                                                                      has the ability to access. Valuation adjustments and block
                                                                      discounts are not applied to Level 1 instruments. Since
                                                                      valuations are based on quoted prices that are readily and
                                                                      regularly available in an active market, valuation of these
                                                                      products does not entail a significant degree of judgment.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 85.05pt"></TD><TD STYLE="width: 56.7pt">Level 2 -</TD><TD STYLE="text-align: justify">Valuations based on one
                                                                      or more quoted prices in markets that are not active or
                                                                      for which all significant inputs are observable, either
                                                                      directly or indirectly.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 85.05pt"></TD><TD STYLE="width: 56.7pt">Level 3 -</TD><TD STYLE="text-align: justify">Valuations based on inputs
                                                                      that are unobservable and significant to the overall fair
                                                                      value measurement.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The availability
of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example,
the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation
is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires
more judgment and the investments are categorized as Level 3.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The carrying
amounts of cash and cash equivalents, short-term bank deposit, other accounts receivable, trade payables and other accounts payable
approximate their fair value due to the short-term maturity of such instruments. Warrants are classified within Level 3 because
they are valued using valuation techniques. Some of the inputs to these models are unobservable in the market and are significant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Fair value
measurements using significant unobservable inputs (Level 3):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair&nbsp;value <BR>of&nbsp;embedded <BR>derivatives</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Balance at August 11, 2011 (inception date)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%; text-align: left">Fair value of warrants to investors and service provider (see Note 8e)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">680,230</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Change in fair value of warrants (see Note 8e)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(15,867</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Balance at December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">664,363</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 2:-</TD><TD STYLE="text-align: justify">SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair&nbsp;value <BR>of&nbsp;embedded <BR>derivatives</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%; text-align: left">Balance at December 31, 2011 (inception date)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">664,363</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Fair value of warrants to investors and service provider (see Note 8e)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">547,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Change in fair value of warrants (see Note 8e)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,006,777</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Balance at September 30, 2012 (unaudited)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,218,140</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">m.</TD><TD STYLE="text-align: justify">Basic and diluted net earnings
                                                                 per share:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Basic net
earnings per share is computed based on the weighted average number of shares of Common Stock outstanding during each year. Diluted
net earnings per share is computed based on the weighted average number of shares of Common Stock outstanding during each year,
plus dilutive potential Common Stock considered outstanding during the year, in accordance with ASC topic 260, &ldquo;Earnings
Per Share&rdquo; (&ldquo;ASC 260&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The total
weighted average number of shares related to the outstanding warrants and options excluded from the calculations of diluted net
earnings per share due to their anti-dilutive effect was 754,062 and 3,953,972 for the period ended December 31, 2011 and three
months ended September 30, 2012 (Unaudited), respectively.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">n.</TD><TD STYLE="text-align: justify">Severance pay:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 84pt; text-align: justify; text-indent: -27.3pt"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Since inception
date, all of the subsidiary&rsquo;s employees who are entitled to receive Severance pay in accordance with the applicable law
in Israel are included under section 14 of the Israeli Severance Compensation Law. Under this section, they are entitled only
to monthly deposits, at a rate of 8.33% of their monthly salary, made on their behalf with insurance companies. Payments in accordance
with section 14 release the subsidiary from any future severance payments in respect of those employees. Deposits under section
14 are not recorded as an asset in the Company&rsquo;s balance sheet.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">o.</TD><TD STYLE="text-align: justify">Warrants:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in"><FONT STYLE="color: black">The
Company accounts for certain warrants to investors and service providers which include down round protection as a liability according
to the provisions of ASC 815-40, &ldquo;Derivatives and Hedging - Contracts in Entity&rsquo;s Own Equity&rdquo;, (&ldquo;ASC 815&rdquo;)
which provides new two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed
to an issuer&rsquo;s own stock and thus able to qualify to be a derivative financial instrument. The Company measures the warrants
at fair value by using </FONT>Binomial option-pricing model<FONT STYLE="color: black"> in each reporting period until they are
exercised or expired, with changes in the fair values being recognized in the Company&rsquo;s statement of operations as financial
income or expense. For more information refer to Note 8e.</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 2:-</TD><TD STYLE="text-align: justify">SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt; text-align: left">p.</TD><TD STYLE="text-align: justify">Accounting for stock-based compensation:</TD>
</TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">The Company accounts for stock-based
compensation in accordance with ASC 718, &ldquo;Compensation - Stock Compensation&rdquo; (&ldquo;ASC 718&rdquo;). ASC 718 requires
companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value
of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods
in the Company&rsquo;s consolidated statement of operations.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">The Company recognizes compensation
expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the
awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The Company
estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model. The option-pricing model
requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option
term. Expected volatility was calculated based upon historical volatilities of similar entities in the related sector index. The
expected option term represents the period that the Company&rsquo;s stock options are expected to be outstanding and <FONT STYLE="color: black">is
determined based on the simplified method</FONT> until sufficient historical exercise data will support using expected life assumptions.
The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically
not paid dividends and has no foreseeable plans to pay dividends.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The fair
value of the shares of Common Stock underlying the options and warrants had been determined by the Company&rsquo;s management
with assistance of an independent valuation firm by applying of market approach using recent third-party transactions in the equity
of the Company. Because there has been no public market for the Common Stock, management has determined fair value of the Common
Stock at the time of grant of options by considering a number of objective and subjective factors. The fair value of the underlying
shares of Common Stock shall be determined by management until such time as the Common Stock is listed on an established stock
exchange, national market system or other quotation system.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The Company
applies ASC 505-50, &ldquo;Equity-Based Payments to Non-Employees&rdquo; with respect to options and warrants issued to non-employees.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 2:-</TD><TD STYLE="text-align: justify">SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 84.95pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.6pt"></TD><TD STYLE="width: 28.35pt">q.</TD><TD STYLE="text-align: justify">Unaudited Interim Financial Information:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 84.95pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 84.95pt; text-align: justify; text-indent: 0in">The accompanying
consolidated balance sheet as of September 30, 2012, consolidated statements of operations and consolidated statements of cash
flows for the nine months ended September 30, 2012 are unaudited. These unaudited interim consolidated financial statements have
been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. In the opinion
of management, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary
for a fair presentation of our consolidated financial position as of September 30, 2012, our consolidated results of operations
and our consolidated cash flows for the nine months ended September 30, 2012. Results for the nine months ended September 30,
2012, are not necessarily indicative of the results that may be expected for the year ended December 31, 2012.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 3:-</TD><TD STYLE="text-align: justify">OTHER ACCOUNTS RECEIVABLE AND
                                                                 PREPAID EXPENSES</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 88%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.8in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">September&nbsp;30,</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">December&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Prepaid expenses</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">35,172</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,060</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Government authorities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">53,652</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,604</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">88,824</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,664</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 4:-</TD><TD STYLE="text-align: justify">PROPERTY AND EQUIPMENT, NET</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 88%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.8in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">September&nbsp;30,</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">December&nbsp;31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt">Computers and peripheral equipment</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">42,297</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">16,800</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Office furniture and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,693</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,546</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Leasehold improvement</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,382</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,381</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">57,372</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">23,727</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accumulated depreciation:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Computers and peripheral equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,502</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">463</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Office furniture and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">472</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Leasehold improvement</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">278</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">24</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,252</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">504</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Property and equipment, net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">50,120</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">23,223</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 4:-</TD><TD STYLE="text-align: justify">PROPERTY AND EQUIPMENT, NET (Cont.)</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: 0in">Depreciation
expenses from August 11, 2011 (inception date) until December 31, 2011 and for nine months period ended September 30, 2012 amounted
to $504 and $6,748 (unaudited), respectively.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 5:-</TD><TD STYLE="text-align: justify">OTHER ACCOUNTS PAYABLE AND ACCRUED
                                                                 EXPENSES</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 88%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.8in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">September&nbsp;30</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">December&nbsp;31</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Employees and payroll accruals</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">81,520</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">20,486</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Accrued expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">275,559</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">67,827</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">357,079</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">88,313</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 6:-</TD><TD STYLE="text-align: justify">COMMITMENTS AND CONTINGENT LIABILITIES</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt">The facilities and motor vehicles of the Company
are leased under several operating lease agreements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify">The Company signed a lease
agreement in Israel for its offices for a period of 24 months beginning November 10, 2011 and scheduled to expire on October 31,
2013. During 2012 the Company entered into additional lease agreement in Israel for additional offices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify">On November 13, 2011 the Company
entered into a motor vehicle lease agreement for a period of 36 months. During 2012, in light of the recruitment of additional
employees the Company entered into additional two motor vehicle lease agreement for a period of 36 months. As of September 30,
2012 the Company maintains four lease cars.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify">As of December 31, 2011, the
future minimum aggregate lease commitments under non-cancelable operating lease agreement are as&nbsp;follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: 2.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 88%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.8in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left">Year&nbsp;ended&nbsp;December&nbsp;31,</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Facilities</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Motor <BR>vehicles</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">73,428</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">11,797</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">85,225</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69,584</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,541</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80,125</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,512</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,208</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,720</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">2015</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,094</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,094</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">147,618</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">36,546</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">184,164</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify">Facility and motor vehicle
lease expenses for the period since August 11, 2011 (inception date) until December 31, 2011 were $4,763 and $6,858, respectively.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 7:-</TD><TD STYLE="text-align: justify">TAXES ON INCOME</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">a.</TD><TD STYLE="text-align: justify">The Company and its subsidiary
                                                                 are separately taxed under the domestic tax laws of the state
                                                                 of incorporation of each entity.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">b.</TD><TD STYLE="text-align: justify">Tax rates applicable to Ltd.:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">Taxable
income of Israeli company is subject to tax at the rate of 24% in 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify">On December 5, 2011, the Israeli
                                                               Parliament (the Knesset) passed the Law for Tax Burden Reform (Legislative
                                                               Amendments), 2011 (&ldquo;the Law&rdquo;) which, among others,
                                                               cancels effective from 2012, the scheduled progressive reduction
                                                               in the corporate tax rate. The Law also increases the corporate
                                                               tax rate to 25% in 2012. In view of this increase in the corporate
                                                               tax rate to 25% in 2012, the real capital gains tax rate and the
                                                               real betterment tax rate were also increased accordingly.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 100pt; text-align: justify; text-indent: -14.95pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">c.</TD><TD STYLE="text-align: justify">Net operating loss carry-forward:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Ltd. has
accumulated net operating losses for Israeli income tax purposes as of December 31, 2011 in the amount of approximately $70,278.
The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">As of December
31, 2011, the Company had a loss carry forward of approximately $275,824. If not utilized, the loss carry forward will expire
commencing in 2031.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Utilization
of U.S. loss carryforwards may be subject to substantial annual limitation due to the &ldquo;change in ownership&rdquo; provisions
of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of losses
before utilization.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">d.</TD><TD STYLE="text-align: justify">Deferred income taxes:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
purposes and the amounts used for income tax purposes. Significant components of the Company&rsquo;s deferred tax assets are as
follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December&nbsp;31, <BR>2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Deferred tax assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; text-align: left; padding-bottom: 1pt">Net operating loss carry forward</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 10%; border-bottom: Black 1pt solid; text-align: right">127,196</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -8.5pt; padding-left: 11.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Deferred tax assets before valuation allowance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">127,196</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(127,196</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -8.5pt; padding-left: 11.35pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net deferred tax asset</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 7:-</TD><TD STYLE="text-align: justify">TAXES ON INCOME (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">In assessing
the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the
deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation
of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized.
Temporary differences are immaterial. Based on consideration of these factors, the Company recorded a full valuation allowance
at December 31, 2011 and September 30, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">e.</TD><TD STYLE="text-align: justify">Loss before taxes on income consists
                                                                 of the following:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;months <BR>ended <BR>September&nbsp;30,
    <BR>2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Period&nbsp;from <BR>August&nbsp;11,
    <BR>2011 <BR>(inception <BR>date)&nbsp;to <BR>December&nbsp;31, <BR>2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Period&nbsp;from</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>August&nbsp;11,&nbsp;2011</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(inception&nbsp;date)</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>to&nbsp;September</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>30,&nbsp;<FONT STYLE="color: black">2012</FONT></B></P></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; font-weight: normal">Domestic</TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">$</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">2,740,453</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">$</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">259,957</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">$</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">3,000,410</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; padding-bottom: 1pt">Foreign</TD><TD STYLE="font-weight: normal; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: right">1,753,815</TD><TD STYLE="padding-bottom: 1pt; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: right">125,392</TD><TD STYLE="padding-bottom: 1pt; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: right">1,879,207</TD><TD STYLE="padding-bottom: 1pt; font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-weight: normal; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: normal; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: normal; text-align: right">4,494,268</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: normal; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: normal; text-align: right">385,349</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: normal; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: normal; text-align: right">4,879,617</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: normal; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">f.</TD><TD STYLE="text-align: justify">The main reconciling item between
                                                                 the statutory tax rate of the Company and the effective tax rate
                                                                 is the recognition of valuation allowance in respect of deferred
                                                                 taxes relating to accumulated net operating losses carried forward
                                                                 due to the uncertainty of the realization of such deferred taxes.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 8:-</TD><TD STYLE="text-align: justify">STOCKHOLDERS&rsquo; EQUITY (DEFICIT)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">a.</TD><TD STYLE="text-align: justify">Composition of stock capital:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September&nbsp;30, <BR>2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December&nbsp;31, <BR>2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Authorized, <BR>Issued&nbsp;and <BR>Outstanding</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Authorized, <BR>Issued&nbsp;and <BR>Outstanding</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of&nbsp;shares</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%">Stock of $0.0001 par value:</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 9pt">Common Stock</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,262,747</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,830,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></P>

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    <!-- Field: /Page -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 8:-</TD><TD STYLE="text-align: justify">STOCKHOLDERS&rsquo; EQUITY (DEFICIT)
                                                                (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The Common
Stock entitles its holders thereof the right to one vote for each share of Common Stock held of record by such holder with respect
to all matters on which holders of Common Stock are entitled to vote, to receive dividends according to Board of Directors decision,
to participate in the balance of the Company&rsquo;s assets remaining after liquidation, dissolution or winding up, ratably in
proportion to the number of shares of Common Stock held by them. The Common Stock has no pre-emptive or similar rights and is
not subject to redemption rights and carries no subscription or conversion rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">b.</TD><TD STYLE="text-align: justify">At inception date, the Company
                                                                 issued 6,500,000 shares of Common Stock to its founders and management
                                                                 team.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">c.</TD><TD STYLE="text-align: justify">At inception date, the Company
                                                                 issued 2,000,000 shares of Common Stock to accredited investors
                                                                 for total amount of $10,000.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">d.</TD><TD STYLE="text-align: justify">On October 27, 2011, subject
                                                                 to the private placement (see note 8e) and upon the first closing
                                                                 the Company issued 1,000,000 shares of Common Stock to its founders
                                                                 and management team in consideration of transfer of certain intellectual
                                                                 property rights to the Company.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">e.</TD><TD STYLE="text-align: justify">During 2011, the Company entered
                                                                 into private placement process in which units composed of 50,000
                                                                 shares of the Common Stock and 50,000 warrants to purchase 50,000
                                                                 shares of Common Stock were offered to third party accredited
                                                                 investors, at an exercise price of $1.50 per share. The warrants
                                                                 expire on October 27, 2016.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify">Under the above-mentioned private
                                                               placement, until December 31, 2011, the Company raised funds in
                                                               a total amount of $<FONT STYLE="text-transform: uppercase">1,091,877</FONT>,
                                                               net of issuance cost. In consideration the Company issued <FONT STYLE="text-transform: uppercase">1,330,000
                                                               </FONT>of Common Stock and warrants to purchase<FONT STYLE="text-transform: uppercase">
                                                               1,330,000</FONT> shares of Common Stock.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt"><FONT STYLE="text-transform: uppercase">&nbsp;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify">During the three-month period ended
                                                               March 31, 2012 the Company raised additional funds in a total amount
                                                               of $<FONT STYLE="text-transform: uppercase">915,845</FONT>, net
                                                               of issuance cost. In consideration the Company issued 1,131,000
                                                               shares and 1,131,000 warrants.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt; margin-left: 0in; text-indent: 0in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="color: black">The
                                                               exercise price and the number of shares to be issued upon exercise
                                                               of the warrants are subject to weighted average adjustment for
                                                               dilution in accordance with ASC 815. The warrants are classified
                                                               as liability and </FONT>the fair value of the warrants was measured
                                                               using the Binomial option-pricing model as described below.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">According
to the private placement documents, the Company, on a commercially reasonable efforts basis, is required to file a registration
statement covering the sale of the shares of Common Stock included in the units sold and underlying Common Stock upon the exercise
of the warrants included in the units sold (the &ldquo;Registrable Shares&rdquo;) within 60 days of the final closing of the offering
and to cause such registration statement to become effective within 150 days after such filing. The final closing occurred on
March 30, 2012.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 8:-</TD><TD STYLE="text-align: justify">STOCKHOLDERS&rsquo; EQUITY (DEFICIT)
                                                                (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Failure
to comply with the above registration requirements (the &ldquo;Registration Failure&rdquo;), or to maintain the effectiveness
and use thereof for a period no less than the date that the investors are able to sell 100% of their Registrable Shares (the &ldquo;Effectiveness
Failure&rdquo;) in a single day on any day during a consecutive three month period, shall trigger certain liquidated damages.
In the event that a Registration Failure or an Effectiveness Failure, the Company shall pay to each Investor, as liquidated damages,
an amount equal to one percent per month (prorated for each day of non-compliance) of the purchase price paid by such Investor
which shall continue for and be paid each month until the Registration Failure or Effectiveness Failure is cured, up to a maximum
amount of ten percent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">In contemplation
of the above private placement offering, the Company engaged an exclusive placement agent to assist in selling the units, for
which was compensated by a cash fee and a non-accountable expense allowance as certain percentage of the gross proceeds raised
at each closing, and 964,400 warrants of which half are exercisable at an exercise price of $1.50 per share and half are exercisable
at an exercise price of $1.00 per share immediately upon issuance and have a term equal to the earlier of seven years or three
years after the Common Stock becomes publicly-traded. The number and exercise price of these warrants are also subject to dilutive
issuance and therefore classified as liability and re-measured using the Binominal option-pricing model as well.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">In
estimating the warrants&rsquo; fair value, the Company used the following assumptions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">Investors
warrants:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Issuance <BR>date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September&nbsp;30, <BR>2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December <BR>31,&nbsp;2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 43%; text-align: left">Risk-free interest rate (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 16%; text-align: right">1.2</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0.47</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 15%; text-align: right">0.78</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected volatility (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected life (in years) (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.07</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.79</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected dividend yield (4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Fair value:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.39</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.92</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.38</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">Placement
agent warrants:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 141.75pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 82%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.2in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Issuance <BR>date</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September&nbsp;30, <BR>2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December <BR>31,&nbsp;2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left">Risk-free interest rate (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.86</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.39</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">0.53</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected volatility (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70.54</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Expected life (in years) (3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.93</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.5</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3.71</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected dividend yield (4)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Fair value:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP>Warrants</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.31-0.32</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.78-0.89</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD><TD NOWRAP STYLE="text-align: right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.29-0.32</TD><TD NOWRAP STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 8:-</TD><TD STYLE="text-align: justify">STOCKHOLDERS&rsquo; EQUITY (DEFICIT)
                                                                (Cont.)</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 85.05pt"></TD><TD STYLE="width: 28.35pt">(1)</TD><TD STYLE="text-align: justify">Risk-free interest rate - based
                                                                   on yield rates of non-index linked U.S. Federal Reserve treasury
                                                                   bonds.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 85.05pt"></TD><TD STYLE="width: 28.35pt">(2)</TD><TD STYLE="text-align: justify">Expected volatility - was calculated
                                                                   based on actual historical stock price movements of companies
                                                                   in the same industry over a term that is equivalent to the
                                                                   expected term of the option.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 85.05pt"></TD><TD STYLE="width: 28.35pt">(3)</TD><TD STYLE="text-align: justify">Expected life - the expected
                                                                   life was based on the maturity date of the warrants.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 85.05pt"></TD><TD STYLE="width: 28.35pt">(4)</TD><TD STYLE="text-align: justify">Expected dividend yield - was
                                                                   based on the fact that the Company has not paid dividends to
                                                                   its shareholders in the past and does not expect to pay dividends
                                                                   to its shareholders in the future.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">As a result
of the anti-dilution protection in the private placement documents and the price per share in the August SPA that is described
in Note 8f below, the exercise price of $1.50 was adjusted to approximately $1.42 per share and additional warrants to purchase
138,648 and 27,166 shares of Common Stock were granted to the investors and placement agent, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">The Company
measured these warrant at fair value in total amount of $664,363 and $3,218,140 as of December 31, 2011 and September 30, 2012
(unaudited), respectively. Issuance expenses that were allocated to the component of the warrants, amounted to $156,097 and $257,360,
as of December 31, 2011 and September 30, 2012 (unaudited), respectively, were expensed immediately and are included as part of
financial expenses in the consolidated statements of operations.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: 0in">As of December
31, 2011 and September 30, 2012, the Company re-measured the warrant component. Consequently, during the periods ended December&nbsp;31,
2011 and September 30, 2012 <FONT STYLE="color: black">(unaudited)</FONT>, the Company recorded $(<FONT STYLE="color: black">15,867)
</FONT>and $(2,006,777), respectively, as financial expenses, net as a result of a change in the Company&rsquo;s warrant value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: left; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">f.</TD><TD STYLE="text-align: justify">During August 2012, the Company
                                                                 entered into securities purchase agreement (&ldquo;SPA&rdquo;)
                                                                 to raise capital by means of units, at a price of $1.00 per unit,
                                                                 composed of 1,500,036 shares of the Common Stock, par value of
                                                                 $0.0001 per share, and 1,500,036 warrants to purchase 1,500,036
                                                                 shares of Common Stock were offered to third party accredited
                                                                 investors, at an exercise price of $1.00 per share. The warrants
                                                                 expiration date for 100% of the warrants is within one year from
                                                                 the date of effectiveness of the Company&rsquo;s registration
                                                                 in OTCBB (&ldquo;Effective Date&rdquo;) and if not exercised
                                                                 until then, 50% of the warrants will be expired and the remaining
                                                                 will be outstanding for additional year. The warrants contain
                                                                 standard anti-dilution protection clauses and therefore classified
                                                                 as equity.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 8:-</TD><TD STYLE="text-align: justify">STOCKHOLDERS&rsquo; EQUITY (DEFICIT)
                                                                (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify">Subject to the SPA the investment
                                                               amount of $1,500,036 shall be funded in three tranches for which
                                                               the first tranche of $500,014 will occur on the date of the signing
                                                               on the SPA, the second and third tranches will occur within 90
                                                               and 180 days following the Effective Date, each in aggregate amount
                                                               of $500,011.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify">Under the above mentioned SPA,
                                                               through the period of three months ended September 30, 2012 the
                                                               Company raised funds in a total amount of $<FONT STYLE="text-transform: uppercase">498,157</FONT>,
                                                               net of issuance cost. In consideration the Company issued <FONT STYLE="text-transform: uppercase">500,014
                                                               </FONT>shares of Common Stock and warrants to purchase<FONT STYLE="text-transform: uppercase">
                                                               500,014</FONT> shares of Common Stock.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">g.</TD><TD STYLE="text-align: justify">During September 2012, the Company
                                                                 commenced a private placement transaction to accredited investors
                                                                 of up to 1,833,333 shares of Common Stock, at $1.50 per share,
                                                                 for gross proceeds of up to $2,750,000.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify">In addition, in connection with
                                                               the above private placement warrants, equal to 10% of the shares
                                                               issued as a result of the aforesaid private placement shall be
                                                               issued as a finder fee to purchase shares of Common Stock, with
                                                               an exercise price equal to $1.50 per share and term of three years
                                                               from the date of the Company&rsquo;s closing on the investment
                                                               amount by the applicable investor. The warrants contain standard
                                                               anti-dilution protection clauses and therefore classified as equity.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt"></TD><TD STYLE="text-align: justify">As of September 30, 2012 the Company
                                                               has issued 801,733 shares of Common Stock in such private placement
                                                               for total consideration of $1,050,074, net of issuance cost, which
                                                               was recorded as receivable on account of shares which was paid
                                                               in October 2012. Consequently, 80,173 warrants were issued as a
                                                               finder fee.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">h.</TD><TD STYLE="text-align: justify">Stock options plans:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 84.45pt"></TD><TD STYLE="width: 36.05pt">1.</TD><TD STYLE="text-align: justify">On January&nbsp;23, 2012, an
                                                                  equity incentive plan (the &ldquo;2012 Plan&rdquo;) was adopted
                                                                  by the Board of Directors of the Company and approved by a majority
                                                                  of the Company&rsquo;s stockholders, under which options to
                                                                  purchase up to 2,860,000 shares of Common Stock, par value of
                                                                  $0.0001 each, have been reserved. Under the Plan, options to
                                                                  purchase Common Stock may be granted to employees, advisors,
                                                                  directors, consultants and service providers of the Company
                                                                  or any affiliate, each option granted can be exercised to one
                                                                  share of Common Stock. The vesting schedule and other terms
                                                                  and conditions will be determined as the Board of Directors
                                                                  of the Company or a designated committee thereof shall deem
                                                                  appropriate and set forth in the option agreement for each grantee.
                                                                  No option shall be exercisable after the expiration of ten years
                                                                  from the date it was granted or the date set forth at the option
                                                                  agreement, as earlier.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 84.45pt"></TD><TD STYLE="width: 36.05pt">2.</TD><TD STYLE="text-align: justify">On January&nbsp;23, 2012, the
                                                                  2012 Israeli equity sub plan (the &ldquo;Sub Plan&rdquo;) was
                                                                  adopted by the Board of Directors of the Company, which is set
                                                                  forth the terms for the grant of stock awards to Israeli employees
                                                                  or Israeli non-employees. The Sub Plan was adopted in accordance
                                                                  with the amended sections 102 and 3(i) of Israel&rsquo;s Income
                                                                  Tax Ordinance. The Sub Plan is part of the 2012 Plan and subject
                                                                  to the same terms and conditions.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 8:-</TD><TD STYLE="text-align: justify">STOCKHOLDERS&rsquo; EQUITY (DEFICIT)
                                                                (Cont.)</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 84.45pt"></TD><TD STYLE="width: 36.05pt">3.</TD><TD STYLE="text-align: justify">On June 22, 2012 the Company&rsquo;s
                                                                  Compensation Committee granted total options to purchase 2,100,000
                                                                  Common Stock of the Company. 320,000, 230,000 and 1,550,000
                                                                  options were granted to employees, consultants and directors,
                                                                  respectively. The exercise prices for such options are ranged
                                                                  from $0.001 to $0.52 per share, with vesting to occur in up
                                                                  to 2 years.</TD></TR></TABLE>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 120.5pt; text-align: justify; text-indent: 0in">The following
table presents the weighted-average assumptions used to estimate the fair values of the options granted in the period presented:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.7in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;months <BR>ended <BR>September&nbsp;30,</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Volatility</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">49.9%-75.1%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">0.37%-0.96%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">Dividend yield</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 12%; text-align: center">0%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected life (years)</TD><TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">2.5-5</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 56.7pt 0pt 0; text-align: justify; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 120.5pt; text-align: justify; text-indent: 0in">Weighted
average fair value of options granted during the nine months period ended September 30, 2012 is $0.52.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 120.5pt; text-align: justify; text-indent: 0in">As of September
30, 2012, the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was
$624,005, which is expected to be recognized over a weighted average period of approximately 1.71 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 120.5pt; text-align: justify; text-indent: 0in">The total
compensation cost related to all of the Company&rsquo;s equity-based awards, recognized during nine month period ended September
30, 2012, was comprised as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 75%; font: 10pt Times New Roman, Times, Serif; margin-left: 1.7in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine months <BR>ended <BR>September 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%; font-weight: normal; text-align: left">Research and development</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 12%; font-weight: bold; text-align: right">139,783</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">General and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">341,265</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-align: left; padding-bottom: 2.5pt">Total stock-based compensation expenses</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">481,048</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 8:-</TD><TD STYLE="text-align: justify">STOCKHOLDERS&rsquo; EQUITY (DEFICIT)
                                                                (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 84.45pt"></TD><TD STYLE="width: 36.05pt">4.</TD><TD STYLE="text-align: justify">On March 2012, the Company entered
                                                                  into employment agreement with its chief executive officer (&ldquo;CEO&rdquo;)
                                                                  and was approved by the Board in which the Company will grant
                                                                  options to purchase shares of Common Stock
                                                                  equal to three percent of the issued and outstanding capital
                                                                  stock of the Company, following to the final closing of the
                                                                  private offering, but not less than 500,000 options with exercise
                                                                  price of $1.00 per share.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 120.5pt; text-align: justify; text-indent: 0in">Since the
final closing of the private offering was on March 30, 2012, the trigger of the above options to be vested has been occurred and
therefore the Company accounted for these options under ASC 718, &ldquo;Compensation - Stock Compensation&rdquo;. The Company
recognized full compensation cost related to the 547,392 options that have been granted to the CEO in total amount of $26,141.
The compensation cost was recorded as part of general and administrative expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 120.5pt; text-align: justify; text-indent: 0in">On June
22, 2012, the Board approved to reduce the exercise price from $1.00 to $0.52 per share and change the vesting schedule by extending
the vesting period of 210,000 options vested as of March 31, 2013, which were previously granted to the Company&rsquo;s CEO, as
fully vested. The Company accounted for the exercise price reduction and the extension of options&rsquo; terms pursuant to ASC
718 as a modification. Accordingly, additional compensation was calculated by the Company as the fair value of the modified award
in excess of the fair value of the original award measured immediately before its terms have been modified based on current circumstances.
The total incremental compensation cost related to this modification was $76,186. As of September 30, 2012, the Company recognized
$11,039 of these compensation costs which were recorded as part of general and administrative expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 9:-</TD><TD STYLE="text-align: justify">SELECTED STATEMENTS OF OPERATIONS
                                                                DATA</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">a.</TD><TD STYLE="text-align: justify">Financial expenses, net:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;month <BR>ended <BR>September&nbsp;30, <BR>2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Period&nbsp;from <BR>August&nbsp;11,&nbsp;2011 <BR>(inception&nbsp;date) <BR>to&nbsp;December&nbsp;31, <BR>2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Period&nbsp;from <BR>August&nbsp;11,&nbsp;2011 <BR>(inception&nbsp;date) <BR>to&nbsp;September&nbsp;30, <BR>2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unaudited</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Financial expenses:</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; font-weight: normal; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Bank charges</TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">1,860</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">298</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: normal">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: normal; text-align: right">2,158</TD><TD STYLE="width: 1%; font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-indent: -0.1in; padding-left: 16.2pt">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Foreign currency adjustments losses</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">57</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">9,358</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">9,415</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-indent: -0.1in; padding-left: 16.2pt">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Issuance cost related to warrants to investors and service provider</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">101,263</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">156,097</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">257,360</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-indent: -0.1in; padding-left: 16.2pt">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Issuance cost related to common shares to founders</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">-</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">750</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">750</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-indent: -0.1in; padding-left: 16.2pt">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal">&nbsp;</TD>
    <TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: right">&nbsp;</TD><TD STYLE="font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Revaluation of&nbsp; warrants to investors and service provider, net</TD><TD STYLE="font-weight: normal; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: right">2,006,777</TD><TD STYLE="padding-bottom: 1pt; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="font-weight: normal; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: right">(15,867</TD><TD STYLE="padding-bottom: 1pt; font-weight: normal; text-align: left">)</TD><TD STYLE="font-weight: normal; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: normal; text-align: right">1,990,910</TD><TD STYLE="padding-bottom: 1pt; font-weight: normal; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: normal; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,109,957</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">150,636</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,260,593</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<!-- Field: Page; Sequence: 117; Value: 5 -->
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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 9:-</TD><TD STYLE="text-align: justify">SELECTED STATEMENTS OF OPERATIONS
                                                                DATA (Cont.)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.7pt"></TD><TD STYLE="width: 28.35pt">b.</TD><TD STYLE="text-align: justify">Net earnings per share:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 113.4pt; text-align: justify; text-indent: -28.35pt">The
following table sets forth the computation of basic and diluted net earnings per share:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 88%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.8in">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Nine</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>months</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ended</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>September</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>30,&nbsp;<FONT STYLE="color: black">2012</FONT></B></P></TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Period&nbsp;from</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>August&nbsp;11,&nbsp;2011</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(inception&nbsp;date)&nbsp;to</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>December&nbsp;31,&nbsp;<FONT STYLE="color: black">2011</FONT></B></P></TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Unaudited</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Numerator:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: normal; text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; font-weight: normal; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Numerator for basic and diluted net earnings per share - loss available to holders of Common Stock</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 12%; font-weight: bold; text-align: right">4,494,268</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 12%; font-weight: bold; text-align: right">385,349</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Denominator:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Denominator for basic net earnings per share - weighted average number of shares</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,676,809</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,499,507</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Effect of dilutive securities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Consultant options and investors and placement agent warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Denominator for diluted net earnings per share - adjusted weighted average number of shares</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,676,809</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,499,507</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85.05pt; text-align: justify; text-indent: -28.35pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 56.7pt">NOTE 10:-</TD><TD STYLE="text-align: justify">SUBSEQUENT EVENTS</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85pt; text-align: justify; text-indent: -28.1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.9pt"></TD><TD STYLE="width: 28.1pt">a.</TD><TD STYLE="text-align: justify">On October 5, 2012, the Company
                                                                entered into consulting agreement in which strategic advisory
                                                                consultancy services will be rendered to the Company in return
                                                                to 500,000 shares of Common Stock, of which 250,000 were issued at the aforementioned
                                                                date and additional 20,833 shares of Common Stock per month in
                                                                arrears during the first eleven months of the agreement term and
                                                                20,837 shares of Common Stock in the final month of the agreement
                                                                term, for a total of 250,000 additional shares of Common Stock.
                                                                The agreement will expire on October 5, 2013.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 85pt; text-align: justify; text-indent: -28.1pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 56.9pt"></TD><TD STYLE="width: 28.1pt">b.</TD><TD STYLE="text-align: justify">During October 2012, the Company
                                                                issued 993,276 shares of Common Stock for total consideration of
                                                                $1,334,404, net of issuance cost, as part of the private placement
                                                                transaction described in Note 8g. Consequently, 99,328 warrants
                                                                were issued as a finder fee and the receivable on account of shares
                                                                recorded in the accompanying balance sheets was paid.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>You should rely only on the information
contained in this document. We have not authorized anyone to provide you with information that is different. This document may
only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of
this document.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Additional risks and uncertainties
not presently known or that are currently deemed immaterial may also impair our business operations. The risks and uncertainties
described in this document and other risks and uncertainties which we may face in the future will have a greater impact on those
who purchase our common stock. These purchasers will purchase our common stock at the market price or at a privately negotiated
price and will run the risk of losing their entire investment.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B><img src="tpg121.jpg"></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LABSTYLE INNOVATIONS CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>10,596,855 Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;],&nbsp;2013</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART II</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>ITEM 13.&nbsp;&nbsp;OTHER EXPENSES
OF ISSUANCE AND DISTRIBUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our estimated expenses in connection with
the issuance and distribution of the securities being registered are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 82%; text-align: left">SEC Registration Fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">2,168.12</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounting Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">65,000.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Legal Fees and Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75,000.00</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Miscellaneous Fees and Expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">20,000.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">$152,168.12</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 14.&nbsp;&nbsp;INDEMNIFICATION OF OFFICERS AND DIRECTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Section 145 of the Delaware General Corporation
Law (the &ldquo;DGCL&rdquo;) provides, in general, that a corporation incorporated under the laws of the State of Delaware, as
we are, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another enterprise, against expenses (including attorneys&rsquo; fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding
if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person&rsquo;s
conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses
(including attorneys&rsquo; fees) actually and reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter
as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably
entitled to indemnity for such expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our certificate of incorporation and bylaws
provide that we will indemnify our directors, officers, employees and agents to the extent and in the manner permitted by the
provisions of the DGCL, as amended from time to time, subject to any permissible expansion or limitation of such indemnification,
as may be set forth in any stockholders&rsquo; or directors&rsquo; resolution or by contract. In addition, our director and officer
indemnification agreements with each of our directors and officers provide, among other things, for the indemnification to the
fullest extent permitted or required by Delaware law, provided that no indemnitee will be entitled to indemnification in connection
with any claim initiated by the indemnitee against us or our directors or officers unless we join or consent to the initiation
of the claim, or the purchase and sale of securities by the indemnitee in violation of Section 16(b) of the Securities Exchange
Act of 1934, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Any repeal or modification of these provisions
approved by our stockholders will be prospective only and will not adversely affect any limitation on the liability of any of
our directors or officers existing as of the time of such repeal or modification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We are also permitted to apply for insurance
on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether or not the DGCL
would permit indemnification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 15.&nbsp;&nbsp;RECENT SALES OF UNREGISTERED SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with our formation, on August 11, 2011, we accepted a subscription from nine (9) investors (including Adam Stern, Piper
Venture Partners, LLC, Pavilion Capital Partners, LLC, Discretionary Investment Trust, Spencer Trask Investment Partners, LLC,
Millennium MSO, Inc., Capital Growth Investment Trust, FEQ Realty, LLC, and Michael J. Garnick) who collectively subscribed for
2,000,000 shares of restricted common stock for an aggregate purchase price of $10,000. No underwriting discounts or commissions
were paid in connection with the sale of the securities. The sale and issuance of these securities was exempt from registration
under the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;) in reliance on Section 4(2) of the Securities Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 30, 2012, we consummated the final closing of a private placement transaction with aggregate forty-five (45) investors whereby
such investors collectively purchased 2,461,000 shares of our common stock and warrants to purchase 2,461,000 shares of our common
stock at the exercise of $1.50 for total consideration of $2,461,000. In connection with such private placement transaction, Spencer
Trask was granted warrants to purchase (i) 482,200 shares of common stock at the exercise price of $1.00 per share and (ii) 482,200
shares of common stock at the exercise price of $1.50 per share. The $1.50 exercise price was adjusted to approximately $1.42 per
share due to a certain anti-dilutive issuance and additional warrants to purchase 138,648 shares of common stock and<FONT STYLE="font-family: Times New Roman, Times, Serif">
</FONT>additional warrants to purchase 27,166 shares of common stock were granted to such investors and Spencer Trask, respectively.
The exercise price of the warrants should be reduced to $1.30 and the total of additional warrants will be granted due to the due
to a certain anti-dilutive protection should be 379,774 for the investors and 74,412 for Spencer Trask. The sale and issuance of
the securities granted to Spencer Trask are exempt from registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, as transaction by an issuer not involving a public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August 31, 2012, we consummated a private placement transaction with 13 accredited investors, including existing stockholders of
our company. Pursuant to this financing, we issued an aggregate of 500,014 shares of our common stock at a price equal to $1.00
per share (for gross proceeds of $500,014) and issued warrants to purchase an aggregate of 500,014 shares of our common stock with
an exercise price of $1.00 per share. In addition, the investors in this round financing irrevocably committed to purchase an additional
1,000,022 shares of common stock in the aggregate at $1.00 per share and warrants to purchase an aggregate of 1,000,022 shares
of our common stock with an exercise price of $1.00 per share, for gross proceeds of $1,000,022. Such purchases shall take place
in two tranches, the first on the date (which we refer to as the Funding Trigger Date) as of which both: (i) a registration statement
covering the shares of our common stock issued and underlying warrants issued in our August 2012 Private Placement has been declared
effective by the Securities and Exchange Commission and (ii) we have received a ticker symbol for our common stock and caused our
common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (consisting
of 500,011 shares and 500,011 warrants), and the second the 180<SUP>th</SUP> day following the Funding Trigger Date (also consisting
of 500,011 shares and 500,011 warrants). To evidence this irrevocable commitment, each investor executed a promissory note in our
favor to fund for their pro rata portion of the additional investments as of the foregoing dates. We expect, therefore, that the
total gross proceeds from this round of financing will be $1,500,036, not including any potential warrant exercises. No placement
agents were utilized in connection with such financing. One-half of the warrants issued hereto have an exercise period ending on
the first anniversary means the date that our company has received a ticker symbol for our common stock and caused our common stock
to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (which we refer to as
the Warrant Effective Date), and the exercise period for the remaining one-half of the warrants ends on the second anniversary
of the Warrant Effective Date. The sale and issuance of these securities was exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act, as transaction by an issuer not involving a public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October 17, 2012, we consummated a final closing of a separate private placement transaction with 44 accredited investors, including
existing stockholders of our company. Pursuant to this financing, we issued an aggregate of 1,795,009 shares of our common stock
at a price equal to $1.50 per share (for gross proceeds of $2,692,513). We utilized the services of four FINRA member broker-dealers
as finders for this private placement, including Spencer Trask, and we paid commissions to such finders equal to 10% of the funds
they each raised in cash and 10% in warrants. We issued warrants to such brokers-dealers, which allow them to purchase aggregate
179,502 shares of common stock. The sale and issuance of these securities was exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act, as transaction by an issuer not involving a public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 16.&nbsp;&nbsp;EXHIBITS AND FINANCIAL STATEMENT SCHEDULES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; border-bottom: windowtext 1pt solid; font-weight: bold">Exhibit&nbsp;No.</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 89%; border-bottom: windowtext 1pt solid; font-weight: bold">Description</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">3.1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>Certificate of Incorporation*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>3.2</TD>
    <TD>&nbsp;</TD>
    <TD>Bylaws*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.1</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Warrant issued to investors in the Company&rsquo;s 2011-2012 private placement*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.2</TD>
    <TD>&nbsp;</TD>
    <TD>Warrant for shares of common stock ($1.00 exercise price) issued to Spencer Trask Ventures, Inc.*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.3</TD>
    <TD>&nbsp;</TD>
    <TD>Warrant for shares of common stock ($1.42 exercise price) issued to Spencer Trask Ventures, Inc.*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.4</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Warrant issued to investors in the Company&rsquo;s August 2012 private placement*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.5</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Finder Warrant issued in connection with the Company&rsquo;s October 2012 private placement*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>4.6</TD>
    <TD>&nbsp;</TD>
    <TD>2012 Equity Incentive Plan of the Company*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>5.1</TD>
    <TD>&nbsp;</TD>
    <TD>Opinion of Ellenoff Grossman &amp; Schole LLP**</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.1</TD>
    <TD>&nbsp;</TD>
    <TD>Placement Agency Agreement, dated September 8, 2011, between the Company and Spencer Trask Ventures, Inc.*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.2</TD>
    <TD>&nbsp;</TD>
    <TD>Finder&rsquo;s Agreement, dated October 27, 2011, between the Company and Spencer Trask Ventures, Inc.*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.3</TD>
    <TD>&nbsp;</TD>
    <TD>Right of First Refusal Letter Agreement, dated October 27, 2011, between the Company and Spencer Trask Ventures, Inc.*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.4</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Subscription Agreement for the Company&rsquo;s 2011-2012 private placement*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.5</TD>
    <TD>&nbsp;</TD>
    <TD>Investors Rights Agreement, dated October 27, 2011, between the Company and its stockholders*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.6</TD>
    <TD>&nbsp;</TD>
    <TD>Employment Agreement, dated March 15, 2012, between the Company and Oren Fuerst*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.7</TD>
    <TD>&nbsp;</TD>
    <TD>Employment Agreement, dated March 15, 2012, between LabStyle Israel and Shilo Ben Zeev*</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%">10.8</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 89%">Employment Agreement, dated March 18, 2012, between LabStyle Israel and Mordechi (Motty) Hershkowitz*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.9</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment to Employment Agreement, dated August 8, 2012, between the Company and Oren Fuerst*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.10</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment to Employment Agreement, dated August 8, 2012, between the Company and Shilo Ben Zeev*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.11</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment to Employment Agreement, dated August 8, 2012, between the Company and Mordechi (Motty) Hershkowitz*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.12</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Securities Purchase Agreement for the Company&rsquo;s August 2012 private placement*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.13</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Promissory Note issued by the investors the Company&rsquo;s August 2012 private placement to the Company*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.14</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Subscription Agreement for the Company&rsquo;s October 2012 private placement*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>10.15</TD>
    <TD>&nbsp;</TD>
    <TD>Consulting Agreement, dated October 5, 2012, between the Company and SLD Capital Corp.*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>21.1</TD>
    <TD>&nbsp;</TD>
    <TD>List of Subsidiaries of the Company*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>23.1</TD>
    <TD>&nbsp;</TD>
    <TD>Consent of Kost Forer Gabbay &amp; Kasierer, a member of Ernst &amp; Young Global*</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>23.2</TD>
    <TD>&nbsp;</TD>
    <TD>Consent of Ellenoff Grossman &amp; Schole LLP (included in Exhibit 5.1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>24.1</TD>
    <TD>&nbsp;</TD>
    <TD>Power of Attorney (included on the signature page of this Registration Statement)*</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">*</TD><TD STYLE="text-align: justify">Filed herewith.</TD>
</TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">**</TD><TD STYLE="text-align: justify">To be filed by amendment.</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>ITEM 17.&nbsp;&nbsp;UNDERTAKINGS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The undersigned registrant hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;To file, during any period in which offers or sales are being made, a post-effective amendment to this registration
statement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 20.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the &ldquo;Calculation of Registration Fee&rdquo; table in the effective registration statement;
and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 20.1pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;That, for the purpose of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;To remove from registration by means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser,
each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (&sect;230.430A of
this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to
such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of
the registration statement or made in any such document immediately prior to such date of first use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to
any purchaser in the initial distribution of the securities:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser<FONT STYLE="color: black">:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Tel Aviv, Israel on January 16 2013<FONT STYLE="color: black">.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">LABSTYLE INNOVATIONS CORP.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 4%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 46%; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>By:</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Oren Fuerst</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Name: Oren Fuerst</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Title: Chief Executive Officer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>By:</TD>
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Mordechi Hershkowitz</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Name: Mordechi (Motty) Hershkowitz</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Title: Chief Financial Officer, Treasurer and Secretary</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>(Principal Financial and Accounting Officer)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">KNOW ALL MEN BY THESE
PRESENTS, that we, the undersigned officers and directors LabStyle Innovations Corp., a Delaware corporation (the &ldquo;Company&rdquo;),
do hereby constitute and appoint Oren Fuerst, Shilo Ben Zeev and Mordechi (Motty) Hershkowitz, and each of them, as his or her
true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and
other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the
registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended, which relates to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite
and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the
dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 30%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Person</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 46%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Capacity</TD>
    <TD STYLE="width: 2%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 20%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Date</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid; text-align: left; text-indent: 0in"><FONT STYLE="font-size: 10pt; font-weight: normal">/s/ Oren Fuerst.</FONT></TD>
    <TD STYLE="text-align: left; text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="font-weight: normal">Chairman of the Board and Chief Executive Officer</FONT></TD>
    <TD STYLE="text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt; font-weight: normal">January 16, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="font-size: 10pt; font-weight: normal">Oren Fuerst.</FONT></TD>
    <TD STYLE="text-align: left; text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: 0in"><FONT STYLE="font-weight: normal">(Principal Executive Officer)</FONT></TD>
    <TD STYLE="text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-indent: 0in">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-indent: 0in">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Shilo Ben Zeev</TD>
    <TD>&nbsp;</TD>
    <TD>President, Chief Operating Officer and Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">January 16, 2013</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Shilo Ben Zeev</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Mordechi Hershkowitz</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Financial Officer, Treasurer and Secretary</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">January 16, 2013</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Mordechi (Motty) Hershkowitz</TD>
    <TD>&nbsp;</TD>
    <TD>(Principal Financial and Accounting Officer)</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ David Weintraub</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">January 16, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>David Weintraub</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Malcolm Hoenlein</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">January 16, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Malcolm Hoenlein</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Nahum D. Melumad</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">January 16, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Nahum D. Melumad</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: windowtext 1pt solid">/s/ Adam K. Stern</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">January 16, 2013</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Adam K. Stern</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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{"company-data": {"conformed-name": "LabStyle Innovations Corp.", "cik": "0001533998", "assigned-sic": "3841", "irs-number": "452973162", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-186054", "film-number": "13531947"}, "business-address": {"street1": "40 EAST MAIN STREET", "city": "NEWARK", "state": "DE", "zip": "19711", "phone": "646-259-3321"}, "mail-address": {"street1": "40 EAST MAIN STREET", "city": "NEWARK", "state": "DE", "zip": "19711"}}
As filed
with the Securities and Exchange Commission on January 16, 2013
Registration
No. 333-
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
LabStyle
Innovations Corp.
(Exact Name
of Registrant as Specified in its Charter)
Delaware
3841
45-2973162
(State
        or other jurisdiction of
incorporation
        or organization)
Primary
        Standard Industrial
Classification
        Code Number)
(I.R.S.
        Employer
Identification
        No.)
40 E. Main
Street, Suite 759
Newark, DE
19711
Telephone:
(646) 259-3321
Fax Number:
(646) 349-3180
(Address,
including zip code, and telephone number,
including
area code, of principal executive offices)
Oren Fuerst,
Ph.D.
Chief Executive
Officer
LabStyle
Innovations Corp.
40 E. Main
Street, Suite 759
Newark, DE 
19711
Telephone:
(646) 259-3321
Fax Number:
(646) 349-3180
(Address,
including zip code, and telephone number,
including
area code, of agent for service)
Copies to:
Lawrence
A. Rosenbloom, Esq.
Ellenoff
Grossman & Schole LLP
150 East
42nd Street, 11th Floor
New York,
New York 10017
Telephone:
(212) 370-1300
Fax Number:
(212) 370-7889
Approximate
date of proposed sale to public: As soon as practicable on or after the effective date of this registration statement.
If any of the
securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933 check the following box.
¨
If this Form
is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering.
¨
If this Form
is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form
is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting
company" in Rule 12b-2 of the Exchange Act. (Check one):
Large
    accelerated filer
¨
Accelerated filer
¨
Non-accelerated
    filer
¨
Smaller reporting company
x
(Do not check if a smaller reporting company)
Calculation
of Registration Fee
Title of Each Class of
Securities to Be Registered
Amount to Be
Registered
Proposed
Maximum
Offering Price
per Share(1)
Proposed
Maximum
Aggregate
Offering Price
Amount of
Registration
Fee
Shares of common stock sold in private placement
(2)
2,461,000
$
1.50
$
3,691,500
$
503.52
Shares of common stock underlying warrants sold in private placement
(3)
2,461,000
$
1.50
$
3,691,500
$
503.52
Additional shares of common stock underlying warrants due to anti-dilution adjustment
(4)
379,774
$
1.50
$
569,661
$
77.70
Shares of common stock sold in private placement
(5)
1,500,036
$
1.50
$
2,250,054
$
306.90
Shares of common stock underlying warrants sold in private placement
(6)
1,500,036
$
1.50
$
2,250,054
$
306.90
Shares of common stock sold in private placement
(7)
1,795,009
$
1.50
$
2,692,513
$
367.26
Shares of common stock issued or issuable pursuant to consulting agreement
(8)
500,000
$
1.50
$
750,000
$
102.30
Total
10,596,855
$
15,895,282
$
2,168.12
(1)
No market
                                                             presently exists of our common stock. The selling stockholders will
                                                             be required to offer their shares at $1.50 per share until our common
                                                             stock is listed for quotation on the OTC Bulletin Board or OTCQB
                                                             Market. Assuming such listing is obtained, offers may be made at
                                                             prevailing market prices or at privately negotiated prices.
(2)
Represents
                                                             shares of common stock purchased pursuant to our private placement
                                                             which had its final closing on March 30, 2012 (the "2011-2012
                                                             Private Placement").
(3)
Represents
                                                             shares of common stock issuable upon the exercise of warrants issued
                                                             in the 2011-2012 Private Placement. Pursuant to Rule 416, there are
                                                             also being registered such indeterminable additional securities as
                                                             may be issued to prevent dilution as a result of stock splits, stock
                                                             dividends or similar transactions. Proposed maximum offering price
                                                             per share is based on the exercise price of the warrant in accordance
                                                             with Rule 457(g).
(4)
Represents
                                                             (i) an additional 138,648 shares of common stock underlying the warrants
                                                             held by the selling stockholders from the 2011-2012 Private Placement
                                                             as a result of an adjustment of the warrant exercise price arising
                                                             out of the first closing of our private placement which closed on
                                                             August 29, 2012 (the "August 2012 Private Placement")
                                                             and (ii) an additional 241,126, shares of common stock underlying
                                                             the warrants held by the selling stockholders from the 2011-2012
                                                             Private Placement as a result of a future adjustment of the warrant
                                                             exercise price arising out of the expected second and third closing
                                                             of the August 2012 Private Placement.
(5)
Represents
                                                             shares of common stock purchased or to be purchased pursuant to the
                                                             August 2012 Private Placement.
(6)
Represents
                                                             shares of common stock issuable upon the exercise of warrants at
                                                             exercise price per share of $1.00 held by the selling stockholders,
                                                             which warrants were issued or will be issued as part of the August
                                                             2012 Private Placement. Pursuant to Rule 416, there are also being
                                                             registered such indeterminable additional securities as may be issued
                                                             to prevent dilution as a result of stock splits, stock dividends
                                                             or similar transactions. Proposed maximum offering price per share
                                                             is based on the exercise price of the warrant in accordance with
                                                             Rule 457(g).
(7)
Represents
                                                             shares of common stock purchased pursuant to our private placement
                                                             which had its final closing on October 17, 2012.
(8)
Represents
                                                             shares of common stock issued or to be issued pursuant to a consulting
                                                             agreement between our company and SLD Capital Corp.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange
Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Preliminary
    Prospectus
Subject to Completion, dated
    January 16, 2013
Labstyle
Innovations Corp
.
10,596,855
Shares
Common Stock
This prospectus
relates to the offer for sale of an aggregate of up to an aggregate of 10,596,855 shares of common stock, par value $.0001 per
share, of LabStyle Innovations Corp. by the selling stockholders named herein. We are not offering any securities pursuant to
this prospectus. The shares of common stock offered by the selling stockholders includes: (i) 750,018 shares of common stock underlying
warrants with exercise price of $1.00 per share which expire on the first anniversary of the date that our company has received
a ticker symbol for our common stock and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board,
OTCQB Market or similar trading system (which we refer to as the Warrant Effective Date); (ii) 750,018 shares of common stock
underlying warrants with exercise price of $1.00 per share which expire on the second anniversary of the Warrant Effective Date;
and (iii) 2,840,774 shares of common stock underlying warrants which expire on October 27, 2016 and which have a current exercise
price of $1.42 per share (which is expected to be reduced to $1.30 following full funding of our August 2012 Private Placement
as described herein).
Our common stock
is not presently traded on any market or securities exchange, and we have not applied for listing or quotation on any exchange.
We are seeking sponsorship for the trading of our common stock on the OTC Bulletin Board and/or OTCQB Market upon the effectiveness
of the registration statement of which this prospectus forms a part. The 10,596,855 shares of our common stock can be sold
by selling security holders at a fixed price of $1.50 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB
Market and thereafter at prevailing market prices or privately negotiated prices. There can be no assurance that a market
maker will agree to file the necessary documents with the Financial Industry Regulatory Authority (referred to herein as FINRA),
nor can we provide assurance that our shares will actually be quoted on the OTC Bulletin Board and/or OTCQB Market or, if quoted,
that a viable public market will materialize or be sustained.
Following the
effectiveness of the registration statement of which this prospectus forms a part, the sale and distribution of securities offered
hereby may be effected in one or more transactions that may take place on the OTC Bulletin Board and/or OTCQB Market, including
ordinary brokers' transactions, privately negotiated transactions or through sales to one or more dealers for resale of
such securities as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices
or at negotiated prices. Usual and customary or specifically negotiated brokerage fees or commissions may be paid by the selling
stockholders. The selling stockholders and intermediaries through whom such securities are sold may be deemed "underwriters"
within the meaning of the Securities Act of 1933, as amended, with respect to the securities offered hereby, and any profits realized
or commissions received may be deemed underwriting compensation.
We are an
"emerging growth company" under the federal securities laws and will be subject to reduced public company reporting
requirements. Investing in our common stock is highly speculative and involves a significant degree of risk. See "Risk Factors"
beginning on page 8 of this prospectus for a discussion of information that should be considered before making a decision to purchase
our common stock.
Neither the
Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date
of this prospectus is ________________, 2013.
TABLE OF
CONTENTS
Page
Prospectus Summary
1
Risk Factors
9
Cautionary Note Regarding Forward-Looking Statements
33
Use of Proceeds
34
Dividend Policy
34
Management's Discussion and Analysis of Financial Condition and Results of Operations
35
Business
40
Management
57
Executive Compensation
63
Principal Stockholders
69
Certain Relationships and Related Party Transactions
71
Description of Securities
73
Selling Stockholders
78
Plan of Distribution
85
Market For Common Equity and Related Stockholder Matters
88
Legal Matters
88
Experts
88
Disclosure of Commission Position of Indemnification for Securities Act Liabilities
88
Where You Can Find Additional Information
89
Index to Financial Statements
F-1
You should
rely only on the information contained in this prospectus. We have not authorized any other person to provide you with information
different from or in addition to that contained in this prospectus. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not
permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover
of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
For investors
outside the United States
: We have not done anything that would permit this offering or possession or distribution of this
prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to
inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.
In this prospectus,
we rely on and refer to information and statistics regarding our industry. We obtained this statistical, market and other industry
data and forecasts from publicly available information. While we believe that the statistical data, market data and other industry
data and forecasts are reliable, we have not independently verified the data.
PROSPECTUS
SUMMARY
This summary
highlights information contained in other parts of this prospectus. Because it is a summary, it does not contain all of the information
that you should consider in making your investment decision. Before investing in our common stock, you should read the entire
prospectus carefully, including our consolidated financial statements and the related notes included in this prospectus and the
information set forth under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
When used
herein, unless the context requires otherwise, references to the "Company," "we," "our" and
"us" refer to LabStyle Innovations Corp., a Delaware corporation, collectively with its wholly-owned subsidiary, LabStyle
Innovation Ltd., an Israeli corporation, which we sometimes refer to herein as LabStyle Israel.
Our Company
We were formed
in August, 2011 as a Delaware corporation to exploit a new proprietary technology that is seeking to bring laboratory testing
capabilities to consumers in a distinctive, easy to use and affordable way through the use of smartphones such as iPhones.
We are initially
applying our technology to address the diabetic self-monitoring of blood glucose, or SMBG, market. Diabetes is a disease where
insufficient levels, or a total absence, of the hormone insulin produce high levels of glucose in the bloodstream, which can lead
to long term adverse effects on a patient's blood vessels, which can lead to heart attack, stroke, high blood pressure,
blindness, kidney disease and nerve damage. As part of controlling blood sugar, many patients must self monitor their blood glucose
levels using home testing kits (called glucometers) and treat high and low blood sugar episodes accordingly to avoid the complications
from the disease.
Our first
product, Dario
TM
, is a fully integrated, all-in-one SMBG device consisting of a lancet to obtain a blood sample,
disposable test strip cartridge and a glucose reader adaptor to hold the strip and interface with the smartphone, combined
with a smartphone application and internet-based data services. Roughly the size of a pack of gum, we believe that Dario has
the potential to replace stand alone glucose meters and their kits (lancing , lancets and strips vials) which are the
current market standard, most of which have the necessary testing components separated from one another in what we believe is
a cumbersome design. Moreover, all but a few glucometers lack an interface with a smartphone, and none will have the
software applications associated with Dario, each of which we believe will distinguish Dario as an alternative in
the marketplace.
We expect to
launch Dario in the SMBG market after obtaining all applicable regulatory approvals. We began the regulatory approval process
in Europe in 2012, and will commence such process in the United States in 2013. Such approvals will need to be obtained prior
to the anticipated commercial launch of Dario which is anticipated in 2013, first in Europe and subsequently in the United States.
Our
proprietary technology (incorporated into Dario) provides a novel body-fluid testing apparatus for performing metered
measurement of samples utilizing: (i) a lancing device to obtain a test sample (blood in the case of Dario); and (ii) an
adaptor
specifically designed to connect a strip
designed to absorb the sample, which then produces an electric signal
indicating the level of the substance tested for in the sample. The adaptor is then connected to a smartphone via the
headphone jack, which allows the test signal to be transmitted to the smartphone, which will then utilize our software to
obtain and display the test result on the device. This is coupled with a set of software features available via a smartphone
application as well as internet-based services.
1
Although
we are initially targeting only the large and growing SMBG market, we believe our invention has the potential to cover dozens
of laboratory tests (including blood, urine and saliva) that could potentially be undertaken using a smartphone, including
blood coagulation, cholesterol, HIV and others.
Our Financial
Condition
As of September
30, 2012, our assets, liabilities and cumulative deficit were, respectively, $2,063,752 (including $820,017 in cash or cash equivalents),
$3,795,488 and $4,879,617. We have not yet generated any revenues from our operations. We currently have no sources of recurring
revenue and are therefore dependent upon external sources for financing our operations. There can be no assurance that we will
generate revenues or that we will be able to obtain the necessary financing to continue our operations.
As a result,
our independent registered public accounting firm has expressed in its auditors' report on the financial statements included
as part of this prospectus a substantial doubt regarding our ability to continue as a going concern. If we do not commence revenue
generation or are unable to otherwise fund our business with outside capital, we likely would be unable to further our business
plan. If we cannot continue as a going concern, our stockholders would lose their entire investment in our company.
However, from
August through October 2012, we raised in an aggregate of $3,192,539 (before issuance costs) in private placement transactions
and received irrevocable commitments from investors for an additional funding of $1,000,022 which funding is required to occur
in two tranches: (i) on the 90
th
day following the date (which we refer to as the Funding Trigger Date) as of which
both: (A) a registration statement covering the shares of our common stock issued and underlying warrants issued in our August
2012 Private Placement has been declared effective by the Securities and Exchange Commission and (B) we have received a ticker
symbol for our common stock and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB
Market or similar trading system and (ii) on the 180
th
day following the Funding Trigger Date. In addition, we may
receive additional funding from the exercise of outstanding warrants. According to our management's estimates, based on
our budget and the assumption that initial commercial sales will commence during our anticipated timeframes, we believe that we
will have sufficient resources to continue our activity at least until the end of 2013. However, if we are not able to commercially
launch Dario or meeting our commercial sales targets, and if we are unable to obtain additional capital resources, we will not
be able to continue activities beyond the end of 2013.
Our Initial
Product — Dario
TM
Overview
Our first product,
Dario, will target the large and growing SMBG market. Dario is an all-in-one device that includes the glucose reader which
is connected to a smartphone via the phone jack, along with a lancing device (a reusable blood-sampling device, when loaded with
the disposable lancet) and an integrated, disposable cartridge for test strips. We believe Dario's design is novel and highly
distinctive and is both functional but also conveys what we believe will be the modern, technology-driven appeal of Dario. We
believe that Dario's design will offer features that are similar to or superior to the most advanced meters in the market
while having a smaller form factor than even the compact meters in the market.
2
Because of the
product's integration with the smartphone, Dario will allow test results to be sent and integrated with web-based medical
repositories through our Dario smartphone application and, we anticipate, also through web-based services. We believe that Dario's
ease of use will cause prospective users to adopt the product, which could lead to increased blood glucose monitoring by patients.
In short, Dario will epitomize our product motto —
"Glucose Monitoring for the Mobile Age
TM
."
The Dario application for Apple has been accepted by Apple for inclusion in the AppStore.
We have finalized
the commercial design for Dario, which will combine in one device the lancing mechanism, disposable strip cartridge and glucose
monitor and attached plug (which plug will have a small form factor for insertion into the smartphone audio jack). We have created
Dario prototypes based on this design and, in October 2012, used these to successfully conclude a 61 patient clinical usability
trial required for approvals for Dario in Europe and the United States. We have been advised by our regulatory consultants that
this study should be sufficient in order to obtain regulatory approvals in the EU and the U.S.
In addition,
we have developed both the critical software that will enable Dario to integrate with the iPhone platform, as well as the backend
test result data collection component of the Dario system, and these will be in place to support the anticipated commercial launch
of Dario, although we expect to refine and augment such software and systems over time. Also, we have agreements or work order
arrangements in place with commercial scale manufacturers for the both the Dario devices and the associated test strips in order
to support our anticipated launches for the product. Please see "Business—Manufacturing."
The SMBG
Market
We will initially
be focusing on launching Dario during 2013, first in the European Union and subsequently in the United States. The diabetes and
SMBG markets worldwide and in these submarkets are substantial and growing.
The  World
Health Organization currently estimates that approximately 350 million patients have diabetes worldwide, and research firm
Frost & Sullivan estimated in 2011 that the worldwide diabetic population is expected to rise to 438 million by 2030,
corresponding to 7.8 per cent of the adult population. In Europe, the diabetic population was approximately 52.6 million in
2011 according to Frost & Sullivan, and there were approximately 25.8 million diabetics in the U.S. in 2011 according to
the American Diabetes Association.
Since blood
glucose self monitoring is a key part of managing diabetes, the market for SMBG products required to service these many patients
is also large.
According to research firm Visiongain, the global SMBG market was $9.7 billion
in 2011 and the global market for
diabetes monitoring devices
is expected
to be $27.42 billion by 2022. The
Enterprise Analysis Corporation has estimated that the global market for SMBG testing
supplies was $1.7 billion in 1994. By 2000, the market had reached approximately $3.8 billion, and by 2008, worldwide sales of
these products climbed to $8.8 billion.
It has been estimated that the U.S. accounts for
40% of the SMBG market, or approximately $3.9 billion, and Frost & Sullivan estimate that Europe accounted for
$3.97
billion in this market in 2011
.
Key factors
driving market growth include an increasing diabetic population, growing patient awareness, technological advancements, and an
increasing number of patients adopting blood glucose self-monitoring. In addition, the affordable cost of blood glucose test strips,
together with the continuing evolution towards more frequent daily blood glucose monitoring, are also expected to contribute to
market growth. As such, SMBG represents a large market that has grown significantly over the past 30 years and is expected to
continue to grow.
3
Our
initial market focus will be on younger, insulin-dependent diabetics (predominantly Type 1 patients), who are the heaviest
users of glucose test strips. Although these patients represent a small subset for the over diabetes market (as Type 1
diabetics only account for approximately 10% of all diabetic patients), we believe these patients will more readily adopt new
mobile phone-based technologies. We plan to gradually broaden our marketing efforts toward the older population, where
non-insulin dependent Type 2 diabetes is even more prevalent, and patients with "pre-diabetes" (a growing
healthcare problem whereby patients exhibit some, but not all, of the diagnostic criteria for diabetes). Although our plan
will initially focus on insulin-dependent (in particular, Type 1 patients), diabetes patients who test themselves up to 10 times a
day, we anticipate Dario's ease of use and the lack of need for a special glucometer and lancing device will be of
major appeal to the even larger Type 2 diabetes population, who typically check their blood glucose levels once or twice a
day. Following anticipated initial market launches in both the European and U.S. markets, we plan to explore launching Dario
in additional large markets such as Brazil and India, possibly through marketing collaborations.
While we expect
to collaborate with the medical community to showcase what we expect will be Dario's clinical equivalence and usability
superiority, Dario will mainly be marketed directly to the target users. Instead of using traditional retail channels to market
our products, we plan to primarily offer Dario devices, strips and related software directly to consumers over the Internet. We
plan to offer Dario at prices that are competitive to those of the current SMBG kits.
Dario Revenue
Model
Our revenues
are expected to be derived from sales of Dario devices (which will be priced similarly to blood glucose monitors in the marketplace)
and principally from the recurring sale of our test strips. Our customers will also receive access to our smartphone application,
which will incorporate tools to help diabetic patients manage their disease. Importantly, our revenue model will be driven by
the fact that only our test strips, purchased through us and our partners, will be able to be utilized with the Dario device and
software, so it is our expectation that we will be the sole source for Dario compatible test strips.
In addition
to device and test strip related revenue, we anticipate generating revenue in the future from our ability to offer Dario's
subscribers additional products and services based on personalized recommendations, such as location-based, low-sugar food recommendations
and the ability to send alerts to caregivers and family and friends.
Prior
Financings and Key Relationships
To date, we
have raised an aggregate of $5,663,539 (before capital raising related expenses) through the sale of our common stock and warrants
to purchase common stock to investors pursuant to private placement transactions described below. We also have irrevocable commitments
arising out of one such private placement for an additional $1,000,022 in funding as described below.
On August 11,
2011, in connection with our formation, we closed a private placement of 2,000,000 shares of our common stock to an aggregate
of 9 accredited investors for an aggregate purchase price of $10,000. Such shares are not being registered for public resale pursuant
to the registration statement of which this prospectus forms a part.
4
Our 2011-2012 Private Placement
On October 27,
2011, we conducted the initial closing of a private placement offering (which we refer to herein as our 2011-2012 Private Placement)
of an aggregate of 2,461,000 shares of our common stock at a purchase price of $1.00 per share and warrants to purchase an aggregate
of 2,461,000 shares of our common stock with an exercise price of $1.50 per share, which warrants are exercisable at any time
within five (5) years from October 27, 2011. The $1.50 exercise price was adjusted to $1.42 per share due to the August 2012 Private
Placement described below and the number of shares of common stock underlying such warrants was adjusted upward by 138,648 shares.
The exercise price of the such warrants as well as the number of shares subject to such warrants is expected to reduced to $1.30
and 379,774, respectively, accordingly following completing the second and third tranches of the August 2012 Private Placement
as described below.
The final closing
of the 2011-2012 Private Placement occurred on March 30, 2012. There were a total of 45 accredited investors in the 2011-2012
Private Placement. Spencer Trask Ventures, Inc. (who we refer to herein as Spencer Trask), acted as the placement agent for the
2011-2012 Private Placement. The gross proceeds to us from the 2011-2012 Private Placement were $2.461 million. Pursuant to the
registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued in the 2011-2012 Private Placement for public resale by the selling stockholders named herein
and their assigns.
As part of
its compensation for acting as placement agent for the 2011-2012 Private Placement, we issued two warrants to Spencer Trask,
each to purchase 482,200 shares of common stock with an exercise price of, respectively, $1.00 and $1.50 per share
(subsequently adjusted downward to $1.42 and expected to further reduced to $1.30). Such warrants contain a "cashless
exercise" feature and are exercisable at any time prior to the earlier of: (i) March 30, 2019 or (ii) three years
following the date that our common stock becomes publicly traded. We are not registering the shares of common stock
underlying the warrants issued to Spencer Trask for public resale. Due to the August 2012 Private Placement described below,
the shares underlying Spencer Trask's warrants were increased by 27,166 shares, and the exercise price is currently
$1.42.
Our August
2012 Private Placement
On August 31,
2012, we consummated a private placement transaction (which we refer to as the August 2012 Private Placement) with 13 accredited
investors, including existing stockholders of our company. Pursuant to this financing, we issued an aggregate of 500,014 shares
of our common stock at a price equal to $1.00 per share (for gross proceeds of $500,014) and issued warrants to purchase an aggregate
of 500,014 shares of our common stock with an exercise price of $1.00 per share.
In addition,
the investors in the August 2012 Private Placement irrevocably committed to purchase an additional 1,000,022 shares of common
stock in the aggregate at $1.00 per share and warrants to purchase an aggregate of 1,000,022 shares of our common stock with an
exercise price of $1.00 per share, for gross proceeds of $1,000,022. Such purchases shall take place in two tranches, the first
on the 90
th
day following the Funding Trigger Date (consisting of 500,011 shares and 500,011 warrants), and the second
the 180
th
day following the Funding Trigger Date (also consisting of 500,011 shares and 500,011 warrants). To evidence
this irrevocable commitment, each investor executed a promissory note in our favor to fund for their pro rata portion of the additional
investments as of the foregoing dates. We expect, therefore, that the total gross proceeds from the August 2012 Private Placement
will be $1,500,036, not including any potential warrant exercises. No placement agents were utilized in connection with the August
2012 Private Placement.
One-half of
the warrants issued in the August 2012 Private Placement have an exercise period ending on the first anniversary means the date
that our company has received a ticker symbol for our common stock and caused our common stock to be eligible for trading on the
Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (which we refer to as the Warrant Effective Date), and
the exercise period for the remaining one-half of the warrants ends on the second anniversary of the Warrant Effective Date.
5
Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued or to be issued in the August 2012 Private Placement for public resale by the selling stockholders
named herein and their assigns.
Our October
2012 Private Placement
On October 17,
2012, we consummated a final closing of a separate private placement transaction (which we refer to as the October 2012 Private
Placement) with 44 accredited investors, including existing stockholders of our company. Pursuant to this financing, we issued
an aggregate of 1,795,009 shares of our common stock at a price equal to $1.50 per share (for gross proceeds of $2,692,513). We
utilized the services of four FINRA member broker-dealers as finders for this private placement, including Spencer Trask, and
we paid commissions to such finders equal to 10% of the funds they each raised in cash and warrants to purchase an aggregate of
179,502 shares of our common stock. Such finder warrants contain a "cashless exercise" feature and are exercisable
at any time prior to October 16, 2015. We are not registering the shares of common stock underlying the finder warrants for public
resale.
Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock issued in the October
2012 Private Placement for public resale by the selling stockholders named herein and their assigns.
Founders
Shares
In connection
with our formation in August 2011 and the contribution of intellectual property to our company in October 2011, our founders (including
an affiliate of Dr. Oren Fuerst, Dr. David Weintraub and Shilo Ben Zeev, each of whom are executives and/or directors of our company)
received an aggregate of 7,500,000 shares of common stock for nominal consideration.
Spencer
Trask Ventures, Inc. and its Related Parties
In
connection with the 2,000,000 share private placement which we undertook at our formation on August 11, 2011, Spencer Trask Investment
Partners, LLC, an affiliate of Spencer Trask, purchased 700,000 shares of our common stock, and Adam K. Stern, a former affiliate
of Spencer Trask and also now a director of our company, both individually and through two entities controlled by him, purchased
700,000 shares of our common stock.
Pursuant
to the terms of a placement agent agreement, dated September 8, 2011, between us and Spencer Trask entered into in connection
with our 2011-2012 Private Placement, Spencer Trask appointed Adam K. Stern as a member of our board of directors for a two-year
term from October 27, 2011. His successor during such two year period, if any, will be chosen by Spencer Trask, subject to our
reasonable approval.
We also entered
into a Right of First Refusal Agreement with Spencer Trask on October 27, 2011 which provides that, for a period of two (2) years
from March 30, 2012, Spencer Trask has the irrevocable preferential right of first refusal (i) to purchase for its own account
or to act as agent for any proposed private offering of securities (equity or debt) by us and (ii) to purchase or sell such securities
on terms no less favorable than we can obtain elsewhere. In addition, on October 27, 2011, we entered into a non-exclusive Finder's
Fee Agreement with Spencer Trask which provides that if we or any of our affiliates enter into any of certain transactions enumerated
in the Finder's Agreement (including financing transactions and business combinations or similar arrangements) with any
party introduced to us by Spencer Trask, directly or indirectly at any time prior to the date which is four (4) years after March
30, 2012, then we shall pay or cause to be paid to Spencer Trask certain cash finder's fees.
6
In addition,
on August 20, 2012, we entered into another non-exclusive finder's agreement with Spencer Trask in connection with the October
2012 Private Placement under which we paid to Spencer Trask (i) a cash fee equal to 10% of the consideration actually paid to
us by its investors in such private placement and (ii) a warrant to purchase shares of common stock equal to 10% of the number
of shares of common stock purchased by its investors in such private placement. See "Certain Relationships and Related Party
Transactions."
Corporate
Information
We
were incorporated under the laws of the State of Delaware on August 11, 2011. We maintain an address at
40 E. Main Street,
Suite 759,
Newark, Delaware 19711 and our telephone number is (646) 259-3321.
We
have one wholly-owned subsidiary, LabStyle Innovation Ltd., that was incorporated in Israel on September 14, 2011, with its offices
at Menachem Begin 7, Ramat Gan (29
th
Floor).
7
The Offering
Common Stock
    Outstanding
14,583,522 shares (1)
Common Stock Offered by Selling Stockholders
10,596,855 shares (2)
Use of Proceeds
We will not receive any proceeds from the sale of the common stock
    by the selling stockholders.  We would, however, receive proceeds upon the exercise of the warrants held by the selling
    stockholders which, if such warrants are exercised in full, would be approximately $5,193,042.  Proceeds, if any, received
    from the exercise of such warrants will be used for working capital and general corporate purposes.  No assurances can
    be given that any of such warrants will be exercised.
Quotation of Common Stock:
Our common stock is not presently traded on any market or securities
    exchange, and we have not applied for listing or quotation on any exchange.  We are seeking sponsorship for the trading
    of our common stock on the OTC Bulletin Board and/or OTCQB Market upon the effectiveness of the registration statement of
    which this prospectus forms a part.  The 10,596,855 shares of our common stock can be sold by selling security holders
    at a fixed price of $1.50 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB Market and thereafter
    at prevailing market prices or privately negotiated prices.  There can be no assurance that a market maker will
    agree to file the necessary documents with FINRA, nor can we provide any assurance that our shares will actually be quoted
    on the OTC Bulletin Board and/or OTCQB Market or, if quoted, that a viable public market will materialize.
Risk
    Factors
An investment in our company is highly speculative and involves
    a significant degree of risk. See     "Risk     Factors"     and     other     information included     in this
    prospectus     for a     discussion     of     factors     you should     carefully consider     before     deciding to
    invest in shares     of our     common     stock.
(1)	     Excludes: (i) shares underlying
warrants to purchase an aggregate of 2,840,774 of shares of our common stock (taking into account an anti-dilution adjustment)
issued in our 2011-2012 Private Placement, (ii) shares underlying warrants to purchase an aggregate of 1,500,036 of shares of
our common stock issued in our August 2012 Private Placement and (iii) shares underlying warrants an aggregate of 1,218,314 shares
of our common stock held by Spencer Trask and certain FINRA member selling agents that participated in our 2011-2012 Private Placement
and October 2012 Private Placement.
(2)	     Includes: (i) shares underlying
warrants to purchase an aggregate of 2,840,774 of shares of our common stock (taking into account an anti-dilution adjustment)
issued in our 2011-2012 Private Placement, (ii) shares underlying warrants to purchase an aggregate of 1,500,036 shares of our
common stock issued in our August 2012 Private Placement, (iii) 1,000,022 shares of as yet unissued common stock in connection
with our August 2012 Private Placement, and (iv) 500,000 shares of common stock issued or to be issued to a consultant.
8
RISK FACTORS
Investing
in our common stock is highly speculative and involves a significant degree of risk. You should carefully consider the following
factors and other information in this prospectus before making a decision to invest in our common stock. Additional risks
and uncertainties that we are unaware of may become important factors that affect us. If any of the following events occur,
our business, financial conditions and operating results may be materially and adversely affected. In that event, the
trading price of our common stock may decline, and you could lose all or part of your investment.
Risks Related
to our Company and our Business
We
were formed in August 2011 and are thus subject to the risks associated with new businesses.
We
were formed in August 2011. As such, we are a development stage, "start-up" company with no history of
revenue-generating operations, and our only assets consist of cash raised in our previous private placements and the
intellectual property contributed to us by our founders on October 27, 2011 and subsequently developed by us. We have only
a short operating history by which you can assess our company and our prospects. We are, and expect for the foreseeable
future to be, subject to all the risks and uncertainties inherent in a new business and the development and sale of new
medical devices. As a result, we still must establish many functions necessary to operate a business, including finalizing
our managerial and administrative structure, continuing product and technology development, assessing and commencing
our marketing activities, implementing financial systems and controls and personnel recruitment.
Accordingly,
you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies
in their pre-revenue generating stages, particularly those in the medical device field. Potential investors should carefully consider
the risks and uncertainties that a new company with a no operating history will face. In particular, potential investors should
consider that there is a significant risk that we will not be able to:
·
implement or execute our current business plan, or that our business plan is sound;
·
maintain our anticipated management and advisory team;
·
raise sufficient funds in the capital markets to effectuate our business plan;
·
determine that the processes and technologies that we have developed
are commercially viable;
and/or
·
attract, enter into or maintain contracts with, and retain customers.
If
we cannot execute any one of the foregoing, our business may fail, in which case you would lose the entire amount of your investment
in our company.
Given
our lack of revenue and cash flow, we will need to raise additional capital, which may be unavailable to us or, even if consummated,
may cause dilution or place significant restrictions on our ability to operate.
As of September
30, 2012, we had cash and cash equivalents of $820,017. According to our management's estimates, based on these funds plus
additional funds raised during October 2012, and further based on our budget and the assumption that initial commercial sales
will commence during our anticipated timeframes, we believe that we will have sufficient resources to continue our activity at
least until the end of 2013. However, if we are not able to commercially launch Dario or meeting our commercial sales targets,
and if we are unable to obtain additional capital resources, we will not be able to continue activities beyond the end of 2013.
9
Since we might
be unable to generate sufficient, if any, revenue or cash flow to fund our operations for the foreseeable future, we will likely
need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations. We may
also need additional funding for developing products and services, increasing our sales and marketing capabilities, promoting
brand identity, and acquiring complementary companies, technologies and assets, as well as for working capital requirements and
other operating and general corporate purposes. Moreover, the registration of the common stock issued in this offering for resale
and regulatory compliance arising out of being a publicly registered company will dramatically increase our costs.
Other than the
irrevocable commitment of investor in our August 2012 Private Placement to fund an additional $1,000,000 to our company following
effectiveness of the registration statement of which this prospectus is a part, we do not currently have any arrangements or credit
facilities in place as a source of funds, and there can be no assurance that we will be able to raise sufficient additional capital
on acceptable terms, or at all. If such financing is not available on satisfactory terms, or is not available at all, we may be
required to delay, scale back or eliminate the development of business opportunities and our operations and financial condition
may be materially adversely affected.
If we raise
additional capital by issuing equity securities, the percentage ownership of our existing stockholders may be reduced, and accordingly
these stockholders may experience substantial dilution. We may also issue equity securities that provide for rights, preferences
and privileges senior to those of our common stock.
Debt financing,
if obtained, may involve agreements that include liens on our assets, covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, could increase our expenses and require that our assets be provided as a security
for such debt. Debt financing would also be required to be repaid regardless of our operating results.
If
we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our
technologies or candidate products, or to grant licenses on terms that are not favorable to us.
Funding
from any source may be unavailable to us on acceptable terms, or at all. If we do not have sufficient capital to fund our operations
and expenses, we may not be able to achieve or maintain competitiveness, which could lead to the failure of our business and the
loss of your investment.
We
have not generated revenue and may not generate revenue in the manner in which we anticipate. Further, we expect to incur losses
for the foreseeable future.
To date, we
have not generated revenue since our initial product, Dario, has not received regulatory approvals and is thus not ready for commercial
sale. Although we expect to launch Dario in 2013, no assurances can be given that we will be able to do so in accordance with
such time frame or at all. Because of the various risks and uncertainties associated with developing, obtaining regulatory approvals
and marketing Dario, we are unable to predict with any certainty the extent of any future revenues, cash flows, profits or losses
or when we will generate positive cash flow or become profitable, if at all. We expect that we will continue to incur significant
and increasing operating losses for the foreseeable future as we attempt to initiate and then expand our sales. These losses,
among other things, will have an adverse effect on our stockholders' equity and working capital. Failure to generate revenue
or achieve profitability would materially adversely affect the value of our company and our ability to establish and grow our
business.
10
We can
not accurately predict the volume or timing of any future sales, making the timing of any revenues difficult to predict.
We may be faced
with lengthy customer evaluation and approval processes associated with our products. Consequently, we may incur substantial expenses
and devote significant management effort and expense in developing customer adoption of our products, which may not result in
revenue generation. As such, we can not accurately predict the volume or timing of any future sales.
Our independent
registered public accounting firm has expressed in its report to our audited financial statements a substantial doubt about our
ability to continue as a going concern
.
We are an early
stage company, and the development and commercialization of our product is uncertain and expected to require substantial expenditures.
We have not yet generated any revenues from our operations to fund our activities, and are therefore dependent upon external sources
for financing our operations. There is a risk that we will be unable to obtain necessary financing to continue our operations
on terms acceptable to us or at all. As a result, our independent registered public accounting firm has expressed in its auditors'
report on the financial statements included as part of this prospectus a substantial doubt regarding our ability to continue as
a going concern. Our financial statements do not include any adjustments that might result from the outcome of the uncertainty
regarding our ability to continue as a going concern. If we cannot continue as a going concern, our stockholders may lose their
entire investment in the common stock.
We expect to derive substantially
all of our revenues from our principal technology, which leaves us subject to the risk of reliance on such technology.
We expect to
derive substantially all of our revenues from sales of products derived from our principal technology. Our initial product utilizing
this technology is Dario. As such, any factor adversely affecting sales of Dario, including the product release cycles, regulatory
issues, market acceptance, product competition, performance and reliability, reputation, price competition and economic and market
conditions, would likely harm our operating results. We may be unable to develop other products utilizing our technology, which
would likely lead to the failure of our business.
Moreover, if
patent protection is not available for our principal technology, the viability of Dario and any other products that may be derived
from such technology would likely be adversely impacted to a significant degree, which would materially impair our prospects.
Certain
of our executive officers and directors may become subject to conflicts of interests given their association with other biotechnology
or medical device businesses.
Certain of our
directors and officers, including Dr. Fuerst and Mr. Stern, are, or may become, in their individual capacities, officers, directors,
controlling shareholders and/or partners of or advisors to other entities engaged in a variety of businesses, including in the
biotechnology or medical device sector. Thus, there is a risk that these individuals may become subject to conflicts of interest
relating to our business given their participation with such other businesses, including, among other things, conflicts relating
to time, effort and corporate opportunities. We do not presently have a formal policy for resolving such conflicts of interest
should they arise, and the inability to resolve such conflicts should they arise could have an adverse effect on our business.
11
Our
future performance will depend on the continued engagement of key members of our management team, some of whom are rendering service
on a part-time basis.
Our future performance
depends to a large extent on the continued services of members of our current management and other key personnel including, in
particular, Dr. Oren Fuerst, our Chairman of the board of directors and Chief Executive Officer, Shilo Ben Zeev, our President
and Chief Operating Officer and Mordechi (Motty) Hershkowitz, our Chief Financial Officer. In the event that we lose the continued
services of such key personnel for any reason, this could have a material adverse affect on our business, operations and prospects.
Moreover, Dr.
Fuerst is not contractually required to spend a minimum amount of his business time on our company's affairs. There is therefore
a risk that other obligations could distract Dr. Fuerst and any of our other part time employees from our business, which could
have a negative impact on our ability to effectuate our business plans.
If we
are not able to attract and retain highly skilled managerial, scientific and technical personnel, we may not be able to implement
our business model successfully.
We believe that
our management team must be able to act decisively to apply and adapt our business model in the rapidly changing markets in which
we will compete. In addition, we will rely upon technical and scientific employees or third party contractors to effectively establish,
manage and grow our business. Consequently, we believe that our future viability will depend largely on our ability to attract
and retain highly skilled managerial, sales, scientific and technical personnel. In order to do so, we may need to pay higher
compensation or fees to our employees or consultants than we currently expect and such higher compensation payments would have
a negative effect on our operating results. Competition for experienced, high-quality personnel is intense and we cannot assure
that we will be able to recruit and retain such personnel. We may not be able to hire or retain the necessary personnel to implement
our business strategy. Our failure to hire and retain such personnel could impair our ability to develop new products and manage
our business effectively.
We will be subject to
the risk of reliance on third parties to conduct our clinical trial work.
We depend on
independent clinical investigators to conduct our clinical trials. Contract research organizations may also assist us in the collection
and analysis of data. These investigators and contract research organizations will not be our employees and we will not be able
to control, other than by contract, the amount of resources, including time that they devote to products that we develop. If independent
investigators fail to devote sufficient resources to or clinical trials, or if their performance is substandard, it will delay
the approval or clearance and commercialization of any products that we develop. Further, the U.S. Food and Drug Administration
(or FDA) and other regulatory bodies around the world require that we comply with standards, commonly referred to as good clinical
practice, for conducting, recording and reporting clinical trials to assure that data and reported results are credible and accurate
and that the rights, integrity and confidentiality of trial subjects are protected. If our independent clinical investigators
and contract research organizations fail to comply with good clinical practice, the results of our clinical trials could be called
into question and the clinical development of our product candidates could be delayed. Failure of clinical investigators or contract
research organizations to meet their obligations to us or comply with federal regulations could adversely affect the clinical
development of our product candidates and harm our business.
12
We will rely on third parties
to manufacture and supply our product candidates.
We do not own
or operate manufacturing facilities for clinical or commercial production of Dario. We lack the resources and the capability to
manufacture Dario on a commercial scale. If our future manufacturing partners are unable to produce our products in the amounts
that we require, we may not be able to establish a contract and obtain a sufficient alternative supply from another supplier on
a timely basis and in the quantities we require. We expect to depend on third-party contract manufacturers for the foreseeable
future.
Dario requires,
and our future product candidates, if any, likely will require precise, high quality manufacturing. Any of our contract manufacturers
will be subject to ongoing periodic unannounced inspection by the FDA and other non-U.S. regulatory authorities to ensure strict
compliance with quality system regulations, including current good manufacturing practices and other applicable government regulations
and corresponding standards. If our contract manufacturers fail to achieve and maintain high manufacturing standards in compliance
with quality system regulations, we may experience manufacturing errors resulting in patient injury or death, product recalls
or withdrawals, delays or interruptions of production or failures in product testing or delivery, delay or prevention of filing
or approval of marketing applications for our products, cost overruns or other problems that could seriously harm our business.
Any performance
failure on the part of our contract manufacturers could delay clinical development or regulatory clearance or approval of our
product candidates or commercialization of our future product candidates, depriving us of potential product revenue and resulting
in additional losses. In addition, our dependence on a third-party for manufacturing may adversely affect our future profit margins.
Our ability to replace an existing manufacturer may be difficult because the number of potential manufacturers is limited and
the FDA must approve any replacement manufacturer before it can begin manufacturing our product candidates. Such approval would
require additional non-clinical testing and compliance inspections. It may be difficult or impossible for us to identify and engage
a replacement manufacturer on acceptable terms in a timely manner, or at all.
Supply problems could
harm our business
.
Our initial
product, Dario, will primarily be marketed via the Internet, directly to consumers. Our ability to generate sales of Dario will
depend on our ability to:
·
procure
                                                                                                             components such as
                                                                                                             strips and adaptors
                                                                                                             on a timely basis
                                                                                                             from a limited number
                                                                                                             of suppliers and
                                                                                                             manufactures;
·
assemble
                                                                                                             and ship products
                                                                                                             to consumers on a
                                                                                                             timely basis with
                                                                                                             appropriate quality
                                                                                                             control;
·
develop
                                                                                                             online distribution
                                                                                                             and shipment processes;
                                                                                                             and
·
manage
                                                                                                             inventory and develop
                                                                                                             processes to deliver
                                                                                                             customer support.
Our inability
to achieve any of the foregoing could significantly impair our ability to operate our business.
13
We anticipate
that in the future we will generally commit to purchase component parts from suppliers based on sales forecasts of our products.
If we cannot change or be released from these non-cancelable purchase commitments, and if orders for our products do not materialize,
we could incur significant costs related to the purchase of excess components which could become obsolete before we can use them.
Additionally, a delay in production of the components or inaccuracy in our sales forecast could materially adversely impact our
operating results if we are unable to timely ship ordered products or provide replacement parts under warranty or maintenance
contracts.
If Dario
fails to satisfy current or future customer requirements, we may be required to make significant expenditures to redesign the
product, and we may have insufficient resources to do so.
Dario is being
designed to address an evolving marketplace and must comply with current and evolving customer requirements in order to gain market
acceptance. There is a risk that Dario will not meet anticipated customer requirements or desires. If we are required to redesign
our products to address customer demands or otherwise modify our business model, we may incur significant unanticipated expenses
and losses, and we may be left with insufficient resources to engage in such activities. If we are unable to redesign our products,
develop new products or modify our business model to meet customer desires or any other customer requirements that may emerge,
our operating results would be materially adversely affected and our business might fail.
Failure in our online marketing
efforts could significantly impact our ability to generate sales.
In many of our
principal target markets, we plan to primarily utilize online marketing in order to create awareness to Dario. Our management
believes using online advertisement through affiliate networks and a variety of other pay-for-performance methods will be superior
for marketing and generating sales of Dario versus utilizing traditional, expensive retail channels. However, there is a risk
that our marketing strategy could fail. Because we don't plan to use a traditional retail sales force or to substantially
rely on diabetic's healthcare providers to educate our customers about Dario, we cannot predict the level of success, if
any, that we may achieve by marketing Dario via Internet. The failure of our online marketing efforts would significantly and
negatively impact our ability to generate sales.
We expect that our Dario smartphone
application, which is key to our business model, will be available via Apple's iOS and subsequently Google's Android
platforms. If we are unable to achieve or maintain a good relationship with each of Apple and Google or if the Apple App Store
or the Google Play Store were unavailable for any prolonged period of time, our business will suffer.
A key component
of the Dario offering will be an iPhone or Android application which will incorporate tools to help diabetic patients manage their
disease. We expect that this application will be available via Apple's iOS and subsequently Google's Android platforms.
If we are unable to make our Dario application available through these platforms, or if there is any deterioration in our relationship
with either Apple or Google after our application is available, our business would be materially harmed.
We will be subject
to each of Apple's and Google's standard terms and conditions for application developers, which govern the promotion,
distribution and operation of games and other applications on their respective storefronts. Each of Apple and Google has broad
discretion to change its standard terms and conditions, including changes which could require us to pay to have our Dario application
available for downloading. In addition, these standard terms and conditions can be vague and subject to changing interpretations
by Apple or Google. We may not receive any advance warning of such changes. In addition, each of Apple and Google have the right
to prohibit a developer from distributing its applications on its storefront if the developer violates its standard terms and
conditions. In the event that either Apple or Google ever determines that we are in violation of its standard terms and conditions,
including by a new interpretation, and prohibits us from distributing our Dario application on its storefront, it would materially
harm our business.
14
Additionally,
we will rely on the continued function of the Apple App Store and the Google Play Store as digital storefronts where our Dario
application may be obtained. There have been occasions in the past when these digital storefronts were unavailable for short periods
of time or where there have been issues with the in-app purchasing functionality within the storefront. In the event that either
the Apple App Store or the Google Play Store is unavailable or if in-app purchasing functionality within the storefront is non-operational
for a prolonged period of time, it would have a material adverse effect on the ability of our customers to secure the Dario application,
which would materially harm our business.
As we
plan to conduct business internationally, we will be susceptible to risks associated with international relationships.
We intend to
operate our business internationally in addition to in the United States, initially in Europe and subsequently in markets including,
but not limited to, Brazil and India. The international operation of our business will require significant management attention,
which could negatively affect our business if it diverts their attention from their other responsibilities. In the event that
we are unable to manage the complications associated with international operations, our business prospects could be materially
and adversely affected. In addition, doing business with foreign customers subjects us to additional risks that we do not generally
face in the United States. These risks and uncertainties include:
·
management, communication and integration problems resulting from cultural differences and geographic
dispersion;
·
localization of products and services, including translation of foreign languages;
·
longer accounts receivable payment cycles and difficulties in collecting accounts receivable;
·
difficulties supporting international operations;
·
changes in economic and political conditions;
·
impact of trade protection measures;
·
complying with import or export licensing requirements;
·
exchange rate fluctuations;
·
competition from companies with international operations, including large international competitors
and entrenched local companies;
·
potentially adverse tax consequences, including foreign tax systems and restrictions on the repatriation
of earnings;
·
maintaining and servicing computer hardware in distant locations;
·
keeping current and complying with a wide variety of foreign laws and legal standards, including local
labor laws;
·
securing or maintaining protection for our intellectual property; and
15
·
reduced or varied protection for intellectual property rights, including the ability to transfer such
rights to third parties, in some countries.
The occurrence
of any or all of these risks could adversely affect our international business and, consequently, our results of operations and
financial condition.
We expect to be exposed to
fluctuations in currency exchange rates, which could adversely affect our results.
Because we expect
to conduct a material portion of our business outside of the United States but report our financial results in U.S. Dollars, we
face exposure to adverse movements in currency exchange rates. Our foreign operations will be exposed to foreign exchange rate
fluctuations as the financial results are translated from the local currency into U.S. Dollars upon consolidation. If the U.S.
Dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions will result in increased
revenue, operating expenses and net income. Similarly, if the U.S. Dollar strengthens against foreign currencies, the translation
of these foreign currency denominated transactions will result in decreased revenue, operating expenses and net income. As exchange
rates vary, sales and other operating results, when translated, may differ materially from our or the capital market's expectations.
Non-U.S. governments often
impose strict price controls, which may adversely affect our future profitability.
We intend to
seek approval to market Dario and our future product candidates, if any, in both the U.S. and in non-U.S. jurisdictions. If we
obtain approval in one or more non-U.S. jurisdictions, we will be subject to rules and regulations in those jurisdictions relating
to our products. In some countries, particularly countries of the European Union, each of which has developed its own rules and
regulations, pricing may be subject to governmental control under certain circumstances. In these countries, pricing negotiations
with governmental authorities can take considerable time after the receipt of marketing approval for a medical device candidate.
To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the
cost-effectiveness of our product to other available products.
If reimbursement of our product candidates is unavailable
or limited in scope or amount, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability.
Our device,
software and associated business processes may contain undetected errors, which could limit our ability to provide our services
and diminish the attractiveness of our service offerings.
Our device,
software or our business processes may contain undetected errors, defects or bugs. As a result, our customers or end users may
discover errors or defects in our devices, software or the systems we design, or the products or systems incorporating our designs
and intellectual property may not operate as expected. We may discover significant errors or defects in the future that we may
not be able to fix. Our inability to fix any of those errors could limit our ability to provide our products, impair the reputation
of our brand and diminish the attractiveness of our product offerings to our customers.
In addition,
we may utilize third party technology or components in our products and we rely on those third parties to provide support services
to us. Failure of those third parties to provide necessary support services could materially adversely impact our business.
16
As our operating subsidiary
is in Israel, we will be faced with the risks associated with doing business in that country.
Our operating
subsidiary, along with its management team and our research and development facilities, is located in Israel. Although substantially
all of our sales will be made to consumers outside Israel and the manufacturing of Dario will be based primarily on parts made
in other countries, we are and will nonetheless be directly influenced by the political, economic and military conditions affecting
Israel. For example,
major hostilities involving Israel (such as the November 2012 hostilities
between Israel and Hamas in the Gaza Strip) or the interruption or curtailment of trade between Israel and its present trading
partners could have a material adverse effect on our existing business relationships and on our operating results and financial
condition. Furthermore, several countries restrict business with Israeli companies, which may impair our ability to create new
business relationships or to be, or become, profitable.
Risks Related
to Our Intellectual Property
The failure
to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete
effectively.
In
order for our business to be viable and to compete effectively, we need to develop and maintain, and we will heavily rely on,
a proprietary position with respect to our technologies and intellectual property. We filed a Patent Cooperation Treaty (or
PCT) application for a "smartphone based glucose and other body fluids content monitor" in May
2011 (PCT/IL2012/000369) which incorporates two U.S. provisional applications submitted in the preceding year. The PCT covers
the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of body
fluids and has subsequently been converted into several national phase patent applications. We also plan to obtain numerous Web domains.
With respect to PCT/IL2011/000369 for two U.S. provisional patent applications, we claimed the patent priority dates of
September 5, 2010 for patent application no. 61/332,778 and November 1, 2011 for patent application no.
61/431,449).
However,
our patents have not been granted by a patent office. In addition, there are significant risks associated with our actual or proposed
intellectual property. The risks and uncertainties that we face with respect to our pending patent and other proprietary rights
principally include the following:
·
pending patent applications we have filed or will file may not result in issued patents or may take
longer than we expect to result in issued patents;
·
we may be subject to interference proceedings;
·
we may be subject to opposition proceedings in foreign countries;
·
any patents that are issued to us may not provide meaningful protection;
·
we may not be able to develop additional proprietary technologies that are patentable;
·
other companies may challenge patents licensed or issued to us;
·
other companies may have independently developed and/or patented (or may in the future independently
develop and patent) similar or alternative technologies, or duplicate our technologies;
·
other companies may design around technologies we have licensed or developed; and
17
·
enforcement of patents is complex, uncertain and very expensive.
We cannot be
certain that patents will be issued as a result of any of our pending or future applications, or that any of our patents, once
issued, will provide us with adequate protection from competing products. For example, issued patents may be circumvented or challenged,
declared invalid or unenforceable, or narrowed in scope. In addition, since publication of discoveries in scientific or patent
literature often lags behind actual discoveries, we cannot be certain that we were the first to make our inventions or to file
patent applications covering those inventions.
It is also possible
that others may have or may obtain issued patents that could prevent us from commercializing our products or require us to obtain
licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. As to those patents
that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement,
and we may be unable to do so.
In addition
to patents and patent applications, we depend upon trade secrets and proprietary know-how to protect our proprietary technology.
We require our employees, consultants, advisors and collaborators to enter into confidentiality agreements that prohibit the disclosure
of our confidential information to any other parties. We will also require our employees and consultants to disclose and assign
to us their ideas, developments, discoveries and inventions. These agreements may not, however, provide adequate protection for
our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure in violation of
these agreements.
Costly
litigation may be necessary to protect our intellectual property rights and we may be subject to claims alleging the violation
of the intellectual property rights of others.
We may face
significant expense and liability as a result of litigation or other proceedings relating to patents and intellectual property
rights of others. In the event that another party has also filed a patent application or been issued a patent relating to an invention
or technology claimed by us in pending applications, we may be required to participate in an interference proceeding declared
by the United States Patent and Trademark Office to determine priority of invention, which could result in substantial uncertainties
and costs for us, even if the eventual outcome was favorable to us. We, or our licensors, also could be required to participate
in interference proceedings involving issued patents and pending applications of another entity. An adverse outcome in an interference
proceeding could require us to cease using the technology, substantially modify it or to license rights from prevailing third
parties.
The cost to
us of any patent litigation or other proceeding relating to our licensed patents or patent applications, even if resolved in our
favor, could be substantial, especially given our early stage of development. Our ability to enforce our patent protection could
be limited by our financial resources, and may be subject to lengthy delays. A third party may claim that we are using inventions
claimed by their patents and may go to court to stop us from engaging in our normal operations and activities, such as research,
development and the sale of any future products. Such lawsuits are expensive and would consume significant time and other resources.
There is a risk that a court will decide that we are infringing the third party's patents and will order us to stop the
activities claimed by the patents. In addition, there is a risk that a court will order us to pay the other party damages for
having infringed their patents.
Moreover, there
is no guarantee that any prevailing patent owner would offer us a license so that we could continue to engage in activities claimed
by the patent, or that such a license, if made available to us, could be acquired on commercially acceptable terms. In addition,
third parties may, in the future, assert other intellectual property infringement claims against us with respect to our services,
technologies or other matters.
18
International patent protection
is particularly uncertain, and if we are involved in opposition proceedings in foreign countries we may have to expend substantial
sums and management resources.
Patent and other
intellectual property law outside the United States is even more uncertain than in the United States and is continually undergoing
review and revisions in many countries. Further, the laws of some foreign countries may not protect our intellectual property
rights to the same extent as the laws of the United States. For example, certain countries do not grant patent claims that are
directed to business methods and processes. In addition, we may have to participate in opposition proceedings to determine the
validity of our foreign patents or our competitors' foreign patents, which could result in substantial costs and diversion
of our efforts.
Risks Related
to Our Industry
We face
intense competition in the self monitoring blood glucose markets and we may not be able to compete in our industry.
With our first
product, Dario, we expect compete directly and primarily with large pharmaceutical and medical device companies: Abbott Laboratories,
Bayer Healthcare Division, Johnson & Johnson LifeScan, Roche Diagnostics and Sanofi. The first four of these companies have
more than 90% combined market shares of the SMBG business and strong research and development capacity for next generation products.
Their dominant market position since the late 1990s and significant control over the market could significantly limit our ability
to introduce Dario or effectively market and generate sales of the product. We will also compete with numerous second-tier and
third-tier competitors.
We are a "start-up"
company with no meaningful history of operations, and most of our competitors have long histories and strong reputations within
the industry. They have significantly greater financial and human resources than we do. They also have more experience and capabilities
in researching and developing testing products, obtaining regulatory approvals, manufacturing and marketing those products than
we do. There is a significant risk that we may be unable to overcome the advantages held by our competition, and our inability
to do so could lead to the failure of our business and the loss of your investment.
Competition
in the SMBG markets is extremely intense, which can lead to, among other things, price reductions, longer selling cycles, lower
product margins, loss of market share and additional working capital requirements. To succeed, we must, among other critical matters,
gain consumer acceptance for Dario and potential future products incorporating our principal technology and offer better strategic
concepts, technical solutions, prices and response time, or a combination of these factors, than those of other competitors. If
our competitors offer significant discounts on certain products, we may need to lower our prices or offer other favorable terms
in order to compete successfully. Moreover, any broad-based changes to our prices and pricing policies could make it difficult
to generate revenues or cause our revenues, if established, to decline. Some of our competitors may bundle certain software products
at low prices for promotional purposes or as a long-term pricing strategy. These practices could significantly reduce demand for
Dario or potential future products or constrain prices we can charge. Moreover, if our competitors develop and commercialize products
that are more effective or desirable than Dario or the other products that we may develop, we may not convince our customers to
use our products. Any such changes would likely reduce our commercial opportunity and revenue potential and could materially adversely
impact our operating results.
19
It may be difficult for us
to establish market acceptance of Dario, which would significantly impair our viability.
We are faced
with the risk that the marketplace will not be receptive to Dario over competing products and that we will be unable to compete
effectively. Failure of our products to achieve market acceptance could have a material adverse effect on our business, financial
condition and results of operations. Factors that could affect our ability to establish Dario or any potential future products
include:
·
the development of products or platforms and design and methodology services, which could result in
a shift of customer preferences away from our products and services and significantly decrease revenue;
·
the increase use of improved diabetes drugs that could encourage certain diabetics to test less often,
resulting in less usage of self-monitoring test device for certain types of diabetics;
·
the challenges of developing (or acquiring externally-developed) technology solutions that are adequate
and competitive in meeting the requirements of next-generation design challenges;
·
the significant number of current competitors in SMBG market who have significantly greater name recognition
and more recognizable trademarks and who have established relationships with diabetics healthcare providers and payors; and
·
intense competition to attract acquisition targets, which may make it more difficult for us to acquire
companies or technologies at an acceptable price or at all.
If we are unable to establish market
acceptance of Dario, our business would likely fail and you would lose your investment in our company.
If we
fail to respond quickly to technological developments our products may become uncompetitive and obsolete.
The SMBG market
and other markets in which we plan to compete experience rapid technology developments, changes in industry standards, changes
in customer requirements and frequent new product introductions and improvements. If we are unable to respond quickly to these
developments, we may lose competitive position, and our products or technologies may become uncompetitive or obsolete, causing
revenues and operating results to suffer. To compete, we must develop or acquire new products and improve our existing products
and processes on a schedule that keeps pace with technological developments and the requirements for products addressing a broad
spectrum and designers and designer expertise in our industries. We must also be able to support a range of changing customer
preferences. For instance, as non-invasive technologies become more readily available in the market, we may be required to adopt
our platform to accommodate the use of non-invasive or continuous blood glucose sensors. We cannot guarantee that we will be successful
in any manner in these efforts.
The regulatory approval process
is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of Dario
or our future product candidates, if any.
The research,
testing, manufacturing, labeling, approval, selling, marketing and distribution of medical devices are subject to extensive regulation
by the FDA and non-U.S. regulatory authorities, which regulations differ from country to country. See "Business –
Government Regulation."
20
We are not permitted
to market our product candidates in the United States until we receive a clearance letter under the 510(k) premarket notification
process, or approval of a Section 515 premarket approval (or PMA) from the FDA, depending on the nature of the device. We have
not submitted an application or premarket notification for or received marketing clearance or approval for any of our product
candidates. Obtaining approval of any premarket approval can be a lengthy, expensive and uncertain process. While the FDA normally
reviews and clears a premarket notification in three months, there is no guarantee that our products will qualify for this more
expeditious regulatory process, which is reserved for Class I and II devices, nor is there any assurance that, even if a device
is reviewed under the 510(k) premarket notification process, the FDA will review it expeditiously or determine that the device
is substantially equivalent to a lawfully marketed non-premarket approval device. If the FDA fails to make this finding, then
we cannot market the device. In lieu of acting on a premarket notification, the FDA may seek additional information or additional
data which would further delay our ability to market the product. In addition, failure to comply with FDA, non-U.S. regulatory
authorities or other applicable U.S. and non-U.S. regulatory requirements may, either before or after product clearance or approval,
if any, subject us to administrative or judicially imposed sanctions, including:
·
restrictions on the products, manufacturers or manufacturing process;
·
adverse inspectional observations (Form 483), warning letters or non-warning letters incorporating
inspectional observations;
·
civil and criminal penalties;
·
injunctions;
·
suspension or withdrawal of regulatory clearances or approvals;
·
product seizures, detentions or import bans;
·
voluntary or mandatory product recalls and publicity requirements;
·
total or partial suspension of production;
·
imposition of restrictions on operations, including costly new manufacturing requirements; and
·
refusal to clear or approve pending applications or premarket notifications.
The FDA can
delay, limit or deny clearance or approval of a medical device candidate for many reasons, including:
·
a medical device candidate may not be deemed safe or effective, in the case of a premarket approval
application;
·
a medical device candidate may not be deemed to be substantially equivalent to a lawfully marketed
non-premarket approval device in the case of a 510(k) premarket notification;
·
FDA officials may not find the data from pre-clinical studies and our Dario clinical trial (or any
future trials) sufficient;
21
·
the FDA might not approve our third-party manufacturer's processes or facilities; or
·
the FDA may change its clearance or approval policies or adopt new regulations.
We may be unable to complete
required clinical trials, or we may experience significant delays in completing such clinical trials, which could significantly
delay our targeted product launch timeframe and impair our viability and business plan.
The completion
of any future clinical trials for Dario or other trials that we may be required to undertake in the future could be delayed, suspended
or terminated for several reasons, including:
·
our failure or inability to conduct the clinical trial in accordance with regulatory requirements;
·
sites participating in the trial may drop out of the trial, which may require us to engage new sites
for an expansion of the number of sites that are permitted to be involved in the trial;
·
patients may not enroll in, remain in or complete, the clinical trial at the rates we expect; and
·
clinical investigators may not perform our clinical trial on our anticipated schedule or consistent
with the clinical trial protocol and good clinical practices.
If our clinical
trial is delayed it will take us longer to ultimately commercialize Dario and generate revenues. Moreover, our development costs
will increase if we have material delays in our clinical trial or if we need to perform more or larger clinical trials than planned.
We may be faced with similar risks in connection with future trials we conduct.
Our failure to meet or maintain
necessary or potential regulatory requirements, in relevant target markets, could hurt our ability to distribute and market our
products.
Dario or our
potential future products may fall under the regulatory purview of various centers at the FDA as described above and similar health
authorities in foreign regions or countries where we intend to do business, such as in the European Union. The FDA's 510(k)
clearance process may take from three to twelve months, or longer, and may or may not require human clinical data. The premarket
approval process may take from eleven months to three years, or even longer, and will likely require significant supporting human
clinical data.
In addition,
on July 21, 2011, the FDA issued a draft guideline for comment related to mobile medical applications (which we refer to herein
as the Guideline). Under the Guideline, the FDA plans to apply its regulatory oversights to certain types of mobile medical devices.
We anticipate that Dario will be subject to the FDA's regulatory oversights and enforcement actions. Delays in obtaining
the regulatory clearance or approval from the FDA or its equivalents in foreign market could adversely affect our revenues and
profitability. We cannot predict whether or when we will be permitted to commercialize Dario.
22
We may also
become subject to numerous post-marketing regulatory requirements, which include labeling regulations and medical device reporting
regulations, which may require us to report to different regulatory agencies if our devices cause or contribute to a death or
serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury. In addition, these
regulatory requirements may change in the future in a way that adversely affects us. If we fail to comply with present or future
regulatory requirements that are applicable to us, we may be subject to enforcement action by regulatory agencies, which may include,
among others, any of the following sanctions:
·
untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
·
customer notification, or orders for repair, replacement or refunds;
·
voluntary or mandatory recall or seizure of our current or future products;
·
imposing operating restrictions, suspension or shutdown of production;
·
refusing our requests for 510(k) clearance or pre-market approval of new products, new intended uses or modifications to Dario
or future products;
·
rescinding 510(k) clearance or suspending or withdrawing pre-market approvals that have already been granted; and
·
criminal prosecution.
The occurrence
of any of these events may have a material adverse effect on our business, financial condition and results of operations.
If we or our manufacturers
fail to comply with the FDA's Quality System Regulation or any applicable state equivalent, our operations could be interrupted
and our operating results could suffer.
Under the Guideline,
the FDA strongly recommends that manufacturers of mobile medical applications follow the FDA's Quality System Regulation.
We, our manufacturers and suppliers are also subject to the regulations of foreign jurisdictions regarding the manufacturing process
if we market our products overseas. If our affiliates, our manufacturers or suppliers are found to be in significant non-compliance
or fail to take satisfactory corrective action in response to adverse QSR inspectional findings, the FDA could take enforcement
actions against us and our manufacturers which could impair our ability to produce our products in a cost-effective and timely
manner in order to meet our customers' demands. Accordingly, our operating results could suffer.
Healthcare policy changes,
including ongoing efforts to reform the U.S. healthcare system, may have a material adverse effect on us.
Dario utilizes
a standard electrochemical glucose testing method and is expected to benefit from existing regulatory approvals worldwide for
traditional, non-disposable monitors, test-strips and lancets, in order to have a more rapid pathway to market. However, the SMBG
markets have experienced downward pressure on product pricing because the Federal and state governments have made various cost
containment efforts on health care expenditures. Furthermore, the industry faces uncertainty brought by the Patient Protection
and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 and of any potential healthcare reform that
could impact tax and reimbursement rates. The implementation of these laws or the adoption of healthcare reform proposals in the
future could thus impose limitations on the prices we will be able to charge for our products, or the amounts of reimbursement
available for our products from governmental agencies or third-party payors. These limitations could have a material adverse effect
on our financial position and results of operations.
23
We anticipate
that legislation could change access to health care products, increase rebates, reduce prices or the rate of price increases,
or cap reimbursement rates for medical devices. We also anticipate that legislation could impose sales or excise tax on the medical
device manufacturing sector. Any change on medical device taxation and downward trending reimbursement rates would directly impact
all aspects of our industry, including our operations and the demand for our products. To the extent such cost containment efforts
are not offset by the growth of diabetics population, greater patient access to healthcare and other factors, our future revenues
and operating income would be reduced.
We may be subject to federal,
state and foreign healthcare fraud and abuse laws and regulations.
Many federal,
state and foreign healthcare laws and regulations apply to the SMBG business and medical devices. We may be subject to certain
federal and state regulations, including the federal healthcare programs' Anti-Kickback Law, the federal Health Insurance
Portability and Accountability Act of 1996, and other federal and state false claims laws. The medical device industry has been
under heightened scrutiny as the subject of government investigations and enforcement actions involving manufacturers who allegedly
offered unlawful inducements to potential or existing customers in an attempt to procure their business, including arrangements
with physician consultants. If our operations or arrangements are found to be in violation of such governmental regulations, we
may be subject to civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs and the curtailment
of our operations. All of these penalties could adversely affect our ability to operate our business and our financial results.
Product liability suits, whether
or not meritorious, could be brought against us due to an alleged defective product or for the misuse of Dario or our potential
future products. These suits could result in expensive and time-consuming litigation, payment of substantial damages, and an increase
in our insurance rates.
If Dario or
any of our future products are defectively designed or manufactured, contain defective components or are misused, or if someone
claims any of the foregoing, whether or not meritorious, we may become subject to substantial and costly litigation. Misusing
our devices or failing to adhere to the operating guidelines or the device producing inaccurate meter readings could cause significant
harm to patients, including death. In addition, if our operating guidelines are found to be inadequate, we may be subject to liability.
Product liability claims could divert management's attention from our core business, be expensive to defend and result in
sizable damage awards against us. We presently have no insurance against such claims, and even if we are able to obtain such insurance
(of which no assurances can be given), we may not have sufficient insurance coverage for all future claims. Any product liability
claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing
continuing coverage, could harm our reputation in the industry and could reduce revenue. Product liability claims in excess of
our insurance coverage would be paid out of cash reserves harming our financial condition and adversely affecting our results
of operations.
If we are found to have violated
laws protecting the confidentiality of patient health information, we could be subject to civil or criminal penalties, which could
increase our liabilities and harm our reputation or our business.
Part of our
business plan includes the storage and potential monetization of medical data of users of Dario. There are a number of federal
and state laws protecting the confidentiality of certain patient health information, including patient records, and restricting
the use and disclosure of that protected information. In particular, the U.S. Department of Health and Human Services promulgated
patient privacy rules under the Health Insurance Portability and Accountability Act of 1996 (which we refer to herein as HIPAA).
These privacy rules protect medical records and other personal health information by limiting their use and disclosure, giving
individuals the right to access, amend and seek accounting of their own health information and limiting most use and disclosures
of health information to the minimum amount reasonably necessary to accomplish the intended purpose. We may face difficulties
in holding such information in compliance with applicable law. If we are found to be in violation of the privacy rules under HIPAA,
we could be subject to civil or criminal penalties, which could increase our liabilities, harm our reputation and have a material
adverse effect on our business, financial condition and results of operations.
24
Risks Related
to the Ownership of Our Common Stock
Our majority stockholders
will control our company for the foreseeable future, including the outcome of matters requiring shareholder approval.
Our founders,
officers and directors collectively have an approximately 61.56% beneficial ownership of our company. As a result, such individuals
will have the ability, acting together, to control the election of our directors and the outcome of corporate actions requiring
shareholder approval, such as: (i) a merger or a sale of our Company, (ii) a sale of all or substantially all of our assets, and
(iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant
effect in delaying, deferring or preventing an action that might otherwise be beneficial to our other shareholders and be disadvantageous
to our shareholders with interests different from those individuals. Certain of these individuals also have significant control
over our business, policies and affairs as officers or directors of our company. Therefore, you should not invest in reliance
on your ability to have any control over our company. See "Principal Stockholders."
An investment in our company
should be considered illiquid.
An investment
in our company requires a long-term commitment, with no certainty of return. Because we do not plan to become an SEC reporting
company by the traditional means of conducting an initial public offering of our common stock, we may be unable to establish a
liquid market for our common stock. Moreover, we do not expect security analysts of brokerage firms to provide coverage of our
company in the near future. In addition, investment banks may be less likely to agree to underwrite primary or secondary offerings
on behalf of our company or its stockholders in the future than they would if we were to become a public reporting company by
means of an initial public offering of common stock. If all or any of the foregoing risks occur, it would have a material adverse
effect on our company.
No public market for our common
stock currently exists, and an active trading market may not develop or be sustained following this offering.
As we are in
our early stages, an investment in our company will likely require a long-term commitment, with no certainty of return. There
is no public market for our common stock, and even if we become a publicly-listed company, of which no assurances can be given,
we cannot predict whether an active market for our common stock will ever develop in the future.  In the absence of an active
trading market:
·
Investors
                                                                                                             may have difficulty
                                                                                                             buying and selling
                                                                                                             or obtaining market
                                                                                                             quotations;
·
Market
                                                                                                             visibility for shares
                                                                                                             of our common stock
                                                                                                             may be limited; and
·
A
                                                                                                             lack of visibility
                                                                                                             for shares of our
                                                                                                             common stock may
                                                                                                             have a depressive
                                                                                                             effect on the market
                                                                                                             price for shares
                                                                                                             of our common stock.
25
Assuming we
can find market makers to establish quotations for our common stock, we expect that our common stock will be quoted on the OTC
Bulletin Board (known as the OTCBB) or OTCQB market operated by OTC Markets Group, Inc.  These markets are relatively unorganized,
inter-dealer, over-the-counter markets that provide significantly less liquidity than NASDAQ or the NYSE MKT (formerly known as
the NYSE AMEX).  No assurances can be given that our common stock, even if quoted on such markets, will ever trade on such
markets, much less a senior market like NASDAQ or NYSE MKT. In this event, there would be a highly illiquid market for our common
stock and you may be unable to dispose of your common stock at desirable prices or at all. Moreover, there is a risk that our
common stock could be delisted from the OTCBB/OTCQB, in which case it might be listed on the so called "Pink Sheets",
which is even more illiquid than the OTC Bulletin Board.
The lack of
an active market impairs your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.
The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability
to raise capital to continue to fund operations by selling shares and may impair our ability to acquire additional intellectual
property assets by using our shares as consideration.
We may not qualify for OTC
Bulletin Board inclusion, and therefore you may be unable to sell your shares.
We believe that,
at sometime following the effectiveness of this registration statement of which this prospectus forms a part, our common stock
will become eligible for quotation on the OTC Bulletin Board and/or OTCQB Market, which we refer to herein as the OTCBB/OTCQB.
No assurances can be given, however, that this eligibility will be granted. OTCBB/OTCQB eligible securities include securities
not listed on a registered national securities exchange in the U.S. and that are also required to file reports pursuant to Section
13 or 15(d) of the Securities Act of 1933, as amended (which we refer to herein as the Securities Act), and require that we be
current in its periodic securities reporting obligations.
Among other
matters, in order for our common stock to become OTCBB/OTCQB eligible, a broker/dealer member of FINRA, must file a Form 211 with
FINRA and commit to make a market in our securities once the Form 211 is approved by FINRA. As of the date of this prospectus,
a Form 211 has not been filed with FINRA by any broker/dealer. If for any reason our common stock does not become eligible for
quotation on the OTCBB/OTCQB or a public trading market does not develop, purchasers of shares of our common stock may have difficulty
selling their shares should they desire to do so. If we are unable to satisfy the requirements for quotation on the OTCBB/OTCQB,
any quotation of in our common stock would be conducted in the "pink" sheets market. As a result, a purchaser of our
common stock may find it more difficult to dispose of, or to obtain accurate quotations as to the price of their shares. The above-described
rules may materially adversely affect the liquidity of our securities. See "Plan of Distribution."
Even if our common stock becomes
publicly-traded and an active trading market develops, the market price our common stock may be significantly volatile.
Even if our
securities become publicly-traded and even if an active market for our common stock develops, of which no assurances can be given,
the market price for our common stock may be volatile and subject to wide fluctuations in response to factors including the following:
·
actual
                                                                                                             or anticipated fluctuations
                                                                                                             in our quarterly
                                                                                                             or annual operating
                                                                                                             results;
·
changes
                                                                                                             in financial or operational
                                                                                                             estimates or projections;
26
·
conditions in markets generally;
·
changes in the economic performance or market valuations of companies similar to ours; and
·
general economic or political conditions in the United States or elsewhere.
In particular,
the market prices of technology companies like ours have been highly volatile due to factors, including, but not limited to:
·
any delay or failure to conduct a clinical trial for our product or receive approval from the FDA and other regulatory agents;
·
developments or disputes concerning our product's intellectual property rights;
·
our or our competitors' technological innovations;
·
changes in market valuations of similar companies;
·
announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital
commitments, new technologies, or patents; and
·
failure to complete significant transactions or collaborate with vendors in manufacturing our product.
The securities
market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance
of particular companies.  These market fluctuations may also materially and adversely affect the market price of shares of
our common stock.
Our common stock may be considered
a "penny stock," and thereby be subject to additional sale and trading regulations that may make it more difficult
to sell.
Our common stock,
which we expect will be quoted for trading on OTCBB/OTCQB, may be considered to be a "penny stock" if it does not
qualify for one of the exemptions from the definition of "penny stock" under Section 3a51-1 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Our common stock may be a "penny stock" if it meets one
or more of the following conditions: (i) the stock trades at a price less than $5 per share; (ii) it is not traded on a "recognized"
national exchange; (iii) it has a price less than $5 per share; or (iv) is issued by a company that has been in business less
than three years with net tangible assets less than $5 million.
The principal
result or effect of being designated a "penny stock" is that securities broker-dealers participating in sales of our
common stock will be subject to the "penny stock" regulations set forth in Rules 15g-2 through 15g-9 promulgated under
the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with
a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least
two business days before effecting any transaction in a penny stock for the investor's account. Moreover, Rule 15g-9 requires
broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny
stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning his
or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience
as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy
of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment
experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders
of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.
27
FINRA sales practice requirements
may also limit your ability to buy and sell our common stock, which could depress the price of our shares.
FINRA rules
require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending
that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers,
broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status and
investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability
such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell
our shares, have an adverse effect on the market for our shares, and thereby depress our share price.
You may face significant restrictions
on the resale of your shares due to state "blue sky" laws.
Each state has
its own securities laws, often called "blue sky" laws, which (1) limit sales of securities to a state's residents
unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting
requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there
must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer
must also be registered in that state.
We do not know
whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration
will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock. We have not yet applied
to have our securities registered in any state and will not do so until we receive expressions of interest from investors resident
in specific states after they have viewed this prospectus. There may be significant state blue sky law restrictions on the ability
of investors to sell, and on purchasers to buy, our securities. You should therefore consider the resale market for our common
stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.
Because certain of our executive
officers and directors reside outside of the United States, it may be difficult for you to enforce your rights based on the United
States federal securities laws or otherwise against such officers and directors in the United States or to enforce judgments of
United States courts against them in Israel.
Certain of our
executive officers and directors reside outside of the United States in Israel. It may therefore be difficult for investors in
the United States to enforce their legal rights based on the civil liability provisions of the United States federal securities
laws or otherwise against such persons in the courts of either the United States or Israel, and even if civil judgments are obtained
in courts of the United States, to enforce such judgments in Israeli courts.
28
Our compliance with complicated
U.S. regulations concerning corporate governance and public disclosure will result in additional expenses. Moreover, our ability
to comply with all applicable laws, rules and regulations is uncertain given our management's relative inexperience with
operating U.S. public companies.
Assuming we
become a regularly reporting company, we will be faced with expensive and complicated and evolving disclosure, governance and
compliance laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley
Act and the Dodd-Frank Act. New or changing laws, regulations and standards are subject to varying interpretations in many cases
due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided
by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts to comply with evolving laws,
regulations and standards of a U.S. public company are likely to continue to result in increased general and administrative expenses
and a diversion of management time and attention from revenue-generating activities to compliance activities.
Moreover, our
executive officers have little experience in operating a U.S. public company, which makes our ability to comply with applicable
laws, rules and regulations uncertain. Our failure to company with all laws, rules and regulations applicable to U.S. public companies
could subject us or our management to regulatory scrutiny or sanction, which could harm our reputation and stock price.
As an "emerging growth
company" under applicable law, we will be subject to lessened disclosure requirements, which could leave our stockholders
without information or rights available to stockholders of more mature companies.
For as long
as we remain an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 (which we
refer to herein as the JOBS Act), we have elected to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not "emerging growth companies" including, but not limited
to:
·
not
                                                                                                             being required to
                                                                                                             comply with the auditor
                                                                                                             attestation requirements
                                                                                                             of Section 404 of
                                                                                                             the Sarbanes-Oxley
                                                                                                             Act;
·
taking
                                                                                                             advantage of an extension
                                                                                                             of time to comply
                                                                                                             with new or revised
                                                                                                             financial accounting
                                                                                                             standards.
·
reduced
                                                                                                             disclosure obligations
                                                                                                             regarding executive
                                                                                                             compensation in our
                                                                                                             periodic reports
                                                                                                             and proxy statements;
                                                                                                             and
·
exemptions
                                                                                                             from the requirements
                                                                                                             of holding a nonbinding
                                                                                                             advisory vote on
                                                                                                             executive compensation
                                                                                                             and shareholder approval
                                                                                                             of any golden parachute
                                                                                                             payments not previously
                                                                                                             approved;.
We expect to
take advantage of these reporting exemptions until we are no longer an "emerging growth company." Because of these
lessened regulatory requirements, our stockholders would be left without information or rights available to stockholders of more
mature companies.
29
Because we have elected to
use the extended transition period for complying with new or revised accounting standards for an "emerging growth company"
our financial statements may not be comparable to companies that comply with public company effective dates.
We have
elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1)
of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As a result of this
election, our financial statements may not be comparable to companies that comply with public company effective dates.
Consequently, our financial statements may not be comparable to companies that comply with public company effective dates.
Because our financial statements may not be comparable to companies that comply with public company effective dates,
investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public
companies, which may have a negative impact on the value and liquidity of our common stock.
There
may be limitations on the effectiveness of our internal controls, and a failure of our control systems to prevent error or fraud
may materially harm our company.
Proper systems
of internal controls over financial accounting and disclosure are critical to the operation of a public company. As we are a start-up
company, we are at the very early stages of establishing, and we may be unable to effectively establish such systems, especially
in light of the fact that we expect to operate as a publicly reporting company. This would leave us without the ability to reliably
assimilate and compile financial information about our company and significantly impair our ability to prevent error and detect
fraud, all of which would have a negative impact on our company from many perspectives.
Moreover, we
do not expect that disclosure controls or internal control over financial reporting, even if established, will prevent all error
and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance
that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there
are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud,
if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely impact us.
We may be unable to complete
our analysis of our internal controls over financial reporting in a timely manner, or these internal controls may not be determined
to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
We may be required,
pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by our management on, among other things, the effectiveness
of our internal control over financial reporting for the first fiscal year beginning after the effective date of the registration
statement of which this prospectus is a part. This assessment will need to include disclosure of any material weaknesses identified
by our management in our internal control over financial reporting, as well as a statement that our independent registered public
accounting firm has issued an opinion on our internal control over financial reporting.
We are in the
very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform
the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation
in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal
control over financial reporting, we will be unable to assert that our internal controls are effective.
30
If we are unable
to assert that our internal control over financial reporting is effective, or if our independent registered public accounting
firm is unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy
and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to
investigation or sanctions by the SEC.
We will also
be required to disclose changes made in our internal control and procedures on a quarterly basis. However, our independent registered
public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting
pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC, or the
date we are no longer an "emerging growth company" as defined in the recently enacted JOBS Act, if we take advantage
(as we expect to do) of the exemptions contained in the JOBS Act. We will remain an "emerging growth company" for
up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any
June 30 before that time, we would cease to be an "emerging growth company" as of the following December 30.
Our independent
registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial
reporting until the later of the year following our first annual report required to be filed with the SEC, or the date we are
no longer an "emerging growth company." At such time, our independent registered public accounting firm may issue
a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
Our remediation efforts may not enable us to avoid a material weakness in the future. Any of the foregoing occurrences, should
they come to pass, could negatively impact the public perception of our company, which could have a negative impact on our stock
price.
Anti-takeover provisions in
our charter documents and Delaware law could discourage, delay or prevent a change in control of our Company and may affect the
trading price of our common stock.
We are a Delaware
corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change
in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years
after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders.
In addition, our certificate of incorporation and bylaws may discourage, delay or prevent a change in our management or control
over us that stockholders may consider favorable. Our certificate of incorporation and bylaws:
·
authorize
                                                                                                             the issuance of "blank
                                                                                                             check" preferred
                                                                                                             stock that could
                                                                                                             be issued by our
                                                                                                             board of directors
                                                                                                             to thwart a takeover
                                                                                                             attempt;
·
provide
                                                                                                             that vacancies on
                                                                                                             our board of directors,
                                                                                                             including newly created
                                                                                                             directorships, may
                                                                                                             be filled only by
                                                                                                             a majority vote of
                                                                                                             directors then in
                                                                                                             office;
·
provide
                                                                                                             that special meetings
                                                                                                             of stockholders may
                                                                                                             only be called by
                                                                                                             our Chairman and/or
                                                                                                             President, our board
                                                                                                             of directors or a
                                                                                                             super-majority (66
                                                                                                             2/3%) of our stockholders;
·
place
                                                                                                             restrictive requirements
                                                                                                             (including advance
                                                                                                             notification of stockholder
                                                                                                             nominations and proposals)
                                                                                                             on how special meetings
                                                                                                             of stockholders may
                                                                                                             be called by our
                                                                                                             stockholders;
31
·
do
                                                                                                             not provide stockholders
                                                                                                             with the ability
                                                                                                             to cumulate their
                                                                                                             votes; and
·
provide
                                                                                                             that only a super-majority
                                                                                                             of our stockholders
                                                                                                             (66 2/3%) may amend
                                                                                                             our bylaws.
We do not currently intend
to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achieve a return on your investment
will depend on appreciation in the price of our common stock.
We have never
declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends to holders of our common stock
in the foreseeable future. Consequently, investors must rely on sales of their common stock after price appreciation, which may
never occur, as the only way to realize any future gains on their investments. There is no guarantee that shares of our common
stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.
Upon dissolution
of our company, you may not recoup all or any portion of your investment.
In the event
of a liquidation, dissolution or winding-up of our company, whether voluntary or involuntary, the proceeds and/or assets of our
company remaining after giving effect to such transaction, and the payment of all of our debts and liabilities will be distributed
to the stockholders of common stock on a pro rata basis. There can be no assurance that we will have available assets to pay to
the holders of common stock, or any amounts, upon such a liquidation, dissolution or winding-up of our Company. In this event,
you could lose some or all of your investment.
32
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus
contains "forward-looking statements," which include information relating to future events, future financial performance,
financial projections, strategies, expectations, competitive environment and regulation. Words such as "may," "should,"
"could," "would," "predicts," "potential," "continue," "expects,"
"anticipates," "future," "intends," "plans," "believes," "estimates,"
and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements
should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance
or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management's
good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important
factors that could cause such differences include, but are not limited to:
·
our
                                                                                                             lack of operating
                                                                                                             history;
·
our
                                                                                                             current and future
                                                                                                             capital requirements
                                                                                                             and our ability to
                                                                                                             satisfy our capital
                                                                                                             needs;
·
our
                                                                                                             ability to manufacture,
                                                                                                             market and sell Dario;
·
our
                                                                                                             ability to complete
                                                                                                             required clinical
                                                                                                             trials of our product
                                                                                                             and obtain approval
                                                                                                             from the FDA or other
                                                                                                             regulatory agents
                                                                                                             in different jurisdictions;
·
our
                                                                                                             ability to maintain
                                                                                                             or protect the validity
                                                                                                             of our patents and
                                                                                                             other intellectual
                                                                                                             property;
·
our
                                                                                                             ability to retain
                                                                                                             key executive members;
·
our
                                                                                                             ability to internally
                                                                                                             develop new inventions
                                                                                                             and intellectual
                                                                                                             property;
·
interpretations
                                                                                                             of current laws and
                                                                                                             the passages of future
                                                                                                             laws; and
·
acceptance
                                                                                                             of our business model
                                                                                                             by investors.
The foregoing
does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk
factors that we are faced with that may cause our actual results to differ from those anticipate in our forward-looking statements.
Please see "Risk Factors" for additional risks which could adversely impact our business and financial performance.
Moreover, new
risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess
the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to
differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are
based on information available to us on the date of this prospectus. Except to the extent required by applicable laws or rules,
we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus.
33
USE OF
PROCEEDS
We will not
receive any of the proceeds from the sale of the common stock by the selling stockholders named in this prospectus. All proceeds
from the sale of the common stock will be paid directly to the selling stockholders.
We would, however,
receive proceeds upon the exercise of the warrants held by the selling stockholders which, if such warrants are exercised in full
(and assuming no "cashless" exercise features are utilized and assuming that the second and third tranches of our
August 2012 Private Placement are completed), would be approximately $5,193,042. Proceeds, if any, received from the exercise
of such warrants will be used for working capital and general corporate purposes. No assurances can be given that any of such
warrants will be exercised.
DIVIDEND
POLICY
We have never
paid any cash dividends on our common stock. We anticipate that we will retain funds and future earnings to support operations
and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable
future following this offering. Any future determination to pay dividends will be at the discretion of our board of directors
and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors
deems relevant. In addition, the terms of any future debt or credit financings may preclude us from paying dividends.
34
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Prospective
investors should read the following discussion and analysis of our financial condition and results of operations together with
our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus.
Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information
with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
See "Cautionary Note Regarding Forward-Looking Statements." You should review the "Risk Factors" section
of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results
described in or implied by the forward-looking statements contained in the following discussion and analysis
.
Overview
We were formed
in August 2011 as a Delaware corporation to exploit a new proprietary technology that is seeking to bring laboratory testing capabilities
to consumers in a distinctive, easy to use and affordable way through the use of smartphones.
The first market
we expect to address utilizing the technology is the diabetic self-monitoring of blood glucose, or SMBG, market. Our first product,
Dario
TM
, is a fully integrated, disposable strip/adaptor/lancing device that with a smartphone such as an iPhone,
which we believe has the potential to replace the need for separate self-powered glucose meters, lancing devices and test strips
vials, which are the current standard kits used by diabetes patients. Because of the product's integration with the smartphone,
Dario will allow test results to be sent and integrated with web-based medical repositories through our Dario smartphone application.
Critical Accounting Policies
Our
financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted
in the United States (or GAAP). Our fiscal year ends December 31.
This
Management's Discussion and Analysis of Financial Condition and Results of Operations discuss our financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation
of these financial statements requires making estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues
and expenses for the reporting periods. On an ongoing basis, we evaluate such estimates and judgments. We base our estimates on
historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions.
While all the
accounting policies impact the financial statements, certain policies may be viewed to be critical. Our management believes that
the accounting policies which involve more significant judgments and estimates used in the preparation of our consolidated financial
statement include warrants liability and stock-based compensation.
35
Warrant liability
.
The fair value of the liability for warrants issued in connection with our financings to date was calculated using the Binomial
model. We accounted for these warrants according to the provisions of ASC 815, "Derivatives and Hedging - Contracts in Entity's
Own Equity" and, based on the anti-dilution protections contained in the warrants, we classified them as liabilities, measured
at fair value each reporting period until they will be exercised or expired, with changes in the fair values being recognized
in our statement of operations as financial income or expense.
Stock-Based
Compensation.
We account for stock-based compensation in accordance with ASC 718 "Compensation- stock compensation".
ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing
model.
The value of
the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in
our consolidated income statements.
We recognize
compensation expenses for the value of awards granted based on the straight line method over the requisite service period of each
of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates. The term "forfeitures" is distinct
from "cancellations" or "expirations" and represents only the unvested portion of the surrendered option.
Ultimately, the actual expenses recognized over the vesting period will only be for those shares that vest.
We selected
the Black-Scholes option pricing model as the most appropriate fair value method for stock-option awards and value restricted
stock based on the market value of the underlying shares at the date of grant. The option-pricing model requires a number of assumptions,
of which the most significant are the expected stock price volatility and the expected option term. The computation of expected
volatility is based upon historical volatilities of similar entities in the related sector index. The risk-free interest rate
assumption is the implied yield currently available on United States treasury zero-coupon issues with a remaining term equal to
the expected life term of our options. We determined the expected life of the options according to the simplified method, average
of vesting and the contractual term of the options.
Our net loss
includes stock-based compensation costs in the amount of $0 and $481,048 during inception and period ended December 31, 2011
and the nine months ended September 30, 2012, respectively. As of September 30, 2012, the total amount of unrecognized stock-based
compensation expense was $624,005, which will be recognized over a weighted average period of 1.71 years.
We apply ASC
718 and ASC 505-50 "Equity-Based Payments to Non-Employees", with respect to options and warrants issued to non-employees.
ASC 718 requires the use of option valuation models to measure the fair value of the options and warrants at the measurement date.
In connection
with options granted to non-employees for services during inception and period ended December 31, 2011 and the nine months ended
September 30, 2012, respectively, and our determination of the fair value of our common shares, we have recorded stock-based compensation
expense of approximately $0 and $108,225, respectively, which represents the fair value of non-employee options grant. At the
end of each financial reporting period prior to vesting, the value of these options, as calculated using the Black-Scholes option
pricing model, was re-measured using the then current fair value of our common shares.
36
Extended
Transition Period for "Emerging Growth Companies."
We have elected to use the extended transition period for complying
with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Act of 2012 (known as the JOBS
Act). This election allows us to delay the adoption of new or revised accounting standards that have different effective dates
for public and private companies until those standards apply to private companies. As a result of this election, our financial
statements may not be comparable to companies that comply with public company effective dates. Consequently, our financial statements
may not be comparable to companies that comply with public company effective dates. Because our financial statements may not be
comparable to companies that comply with public company effective dates, investors may have difficulty evaluating or comparing
our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value
and liquidity of our common stock.
Results of Operations
Period ended December 31,
2011 and Nine Months Ended September 30, 2012
Revenues
For the period
from our inception on August 11, 2011 to September 30, 2012, we did not generate any revenues from operations.
Cost of Revenues
For the period
from our inception on August 11, 2011 to September 30, 2012, we did not generate any cost of revenues from operations.
Research
and Development Expenses
Our research
and development expenses during inception and period ended December 31, 2011 and the nine months ended September 30, 2012 were
$77,895 and $1,012,087, respectively, which include mainly payroll and payroll related expenses, travels and product development.
There were no comparable expenses during the prior year and quarter ended December 31, 2010 and September 30, 2011, respectively.
Marketing
and pre-production costs
Our marketing
and pre-production costs incurred during inception and period ended December 31, 2011 and the nine months ended September 30,
2012 were $0 and $128,171, respectively, which include mainly payment to our Production Manager and related travels and payment
for several marketing matters, include, among others, our website and branding activities. There were no comparable expenses during
the prior year and quarter ended December 31, 2010 and September 30, 2011, respectively.
General and
Administrative Expenses
Our general
and administrative expenses during inception and period ended December 31, 2011 and the nine months ended September 30, 2012 were
$156,818 and $1,244,053 respectively, which include mainly payroll and payroll related expenses and professional, legal and accounting
fees. There were no comparable expenses during the prior year and quarter ended December 31, 2010 and September 30, 2011, respectively.
37
Finance Expenses,
net
Our finance
expenses during inception and period ended December 31, 2011 and the nine months ended September 30, 2012 were $150,636 and $2,109,957
respectively, which include mainly Revaluation of warrants to investors and service provider and Issuance cost related to warrants
to investors and service provider. There were no comparable expenses during the prior year and quarter ended December 31, 2010
and September 30, 2011, respectively.
Net loss
Net loss from
inception and period ended December 31, 2011 was $385,349, and our net loss for the nine months ended September 30, 2012 was $4,494,268,
resulting in an aggregate net loss since inception of $4,879,617.
Plan of Operation
We expect generate
revenues within the next 12 months which reflect our goal to launch our product in 2013. Through our Israeli subsidiary, LabStyle
Innovation Ltd., our plan of operations is to continue the development of our product and technology.
We expect to
incur a minimum of approximately $3.5 million in expenses in order to effectuate our business for the next 12 months. During such
period, we expect (subject to obtaining regulatory approvals) to commercially launch Dario, first in Europe and then in the United
States. In support of this goal, we estimate that such $3.5 million in expenses will be utilized to fund the following activities:
·
continued
                                                                                                             product development
                                                                                                             and related activities
                                                                                                             (including costs
                                                                                                             associated with our
                                                                                                             now completed clinical
                                                                                                             trial and costs of
                                                                                                             application development
                                                                                                             and data storage
                                                                                                             capabilities as well
                                                                                                             as any necessary
                                                                                                             design modifications);
·
continued
                                                                                                             work on registration
                                                                                                             of our patents;
·
initial
                                                                                                             production, marketing
                                                                                                             and sales of Dario
                                                                                                             and test strips;
·
regulatory
                                                                                                             matters;
·
professional
                                                                                                             fees associated with
                                                                                                             being a publicly
                                                                                                             reporting company;
                                                                                                             and
·
general
                                                                                                             and administrative
                                                                                                             matters.
Liquidity and Capital Resources
Since our inception,
we have generated significant losses and expect to continue to generate losses for the foreseeable future. There are no assurances
that we will be able to obtain an adequate level of financing needed for our near term requirements or the long-term development
and commercialization of our products. These conditions raise substantial doubt about our ability to continue as a "going
concern".
38
As of September
30, 2012 we had approximately $820,000 in cash and cash equivalents. During the fourth quarter of 2012, we raised in an aggregate
of approximately $2.4 million net in private placement transactions. In addition, as part of our August 2012 Private Placement
we received irrevocable commitments from investors for an additional $1 million in funding, which funding will occur half during
the 90 day period following the declaration of effectiveness of the registration statement of which this prospectus is a part
and half during the 180 day period following the declaration of effectiveness of the registration statement of which this prospectus
is a part. Excluded in these calculations is any funds we may receive from the exercise of outstanding warrants.
According to
our management's estimates, based on our budget and the assumption that initial commercial sales will commence during our
anticipated timeframes, we believe that we will have sufficient resources to continue our activity at least until the end of 2013.
However, if we are not able to commercially launch Dario or meeting our commercial sales targets, and if we are unable to obtain
additional capital resources, we will not be able to continue activities beyond the end of 2013.
Readers are
advised that available resources may be consumed more rapidly than currently anticipated, resulting in the need for additional
funding sooner than expected. Should this occur during 2013, we will need to seek additional capital to fund (i) further development
and, if needed, testing of our initial product and its related application and data storage components, (ii) our efforts to obtain
regulatory approvals necessary to be able to commercially launch such product, (iii) expenses which will be required in order
to start production of our product, (iv) sales and marketing efforts and (v) general working capital. Such funding may be unavailable
to us on acceptable terms, or at all.
Off-Balance Sheet Arrangements
As of September
30, 2012, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
39
BUSINESS
Overview
We were formed
in August, 2011 as a Delaware corporation to exploit a new technology that is seeking to bring laboratory testing capabilities
to consumers in user friendly way through the use of smartphones.
We are
initially applying our technology to address the diabetic self-monitoring of blood glucose, or SMBG, market. Our first
product, Dario
TM
, is a fully integrated, disposable strip/adaptor device combined with a smartphone such as an
iPhone, which we believe has the potential to replace the need for stand alone, self-powered glucose meters, which are the
current standard of care. Dario also comes with a related smartphone application and offers web-based services for diabetic patients.
We have finalized
the commercial design for Dario, which will combine in one device the lancing mechanism, disposable strip cartridge and glucose
monitor and attached plug (which plug will have a small form factor for insertion into the smartphone audio jack). We have created
Dario prototypes based on this design and successfully concluded a clinical trial (with more than 60 patients) required for approvals
for Dario in Europe and the United States in 2012. We began the regulatory approval process in Europe in 2012, and will commence
such process in the United States in 2013. Such approvals will need to be obtained prior to the anticipated commercial launch
of Dario, which launch is anticipated in 2013, first in Europe and subsequently in the United States.
In addition,
we have developed both the critical software that will enable Dario to integrate with the iPhone platform, as well as the backend
test result data collection component of the Dario system, and these will be in place to support the anticipated commercial launch
of Dario, although we expect to refine and augment such software and systems over time. The Dario application for Apple has been
accepted by Apple for inclusion in the AppStore. Also, we have an agreement in place with the manufacturer of our test strips
and are presently negotiating agreements with third parties to undertake commercial scale manufacturing of Dario devices in order
to support our anticipated launches for the product.
Our Technology
Our founders
have worked since the first half of 2010 to develop our principal technology, for which broad patent protection, with a combination
of two U.S. provisional patent application and International PCT patent application, was applied for in 2011. We are converting
the PCT into national phase applications in the jurisdictions in which we are targeting the commercial launch of Dario.
By using smartphones
(which are used by millions of people around the world) as the heart of the test device, we believe that patients will more readily
perform on-the-go testing, leading to increased usage and better healthcare management. In addition, the integration with the
smartphone enables the data to be seamlessly integrated into a comprehensive data management program which incorporates features
such as a results and trends log, community and alerts features and personalized lifestyle change recommendations. In short, Dario
will epitomize our product motto —
"Glucose Monitoring for the Mobile Age
TM
."
Although we
are initially targeting the SMBG market with our first product Dario, we believe our invention has the potential to cover dozens
of laboratory tests (including blood, urine and saliva tests) that could potentially be undertaken using a smartphone, including,
among others, blood coagulation, cholesterol and HIV tests.
40
Our Initial Product – Dario
We believe that
the diabetic SMBG market presents the most attractive initial application for our proprietary technology as there are millions
of potential diabetic users of a smartphone-enabled glucose monitoring technology. As such, our first product, Dario, will seek
to revolutionize the way diabetic patients around the world manage their disease.
Roughly
the size of a pack of gum, Dario is an all-in-one device that includes the glucose reader which is connected to a smartphone
via the phone jack, along with a lancing device (a reusable blood-sampling device, when loaded with the disposable lancet)
and an integrated, disposable cartridge for test strips. We believe that Dario
TM
has the potential to replace
stand alone glucose meters which are the current market standard, most of which have the necessary testing components
separated from one another in what we believe is a cumbersome design. Moreover, all but a few glucometers lack an interface
with a smartphone, and none will have the software applications and web-based services associated with Dario, each of which
we believe will distinguish Dario as an alternative in the marketplace.
Our revenues
are expected to be derived from sales of Dario devices (which will be priced similarly to blood glucose monitors in the marketplace)
and principally from the recurring sale of our test strips. Our customers will also receive access to our Dario smartphone application,
which will incorporate tools to help diabetic patients manage their disease. Importantly, our revenue model will be driven by
the fact that only our test strips, purchased through us, will be able to be utilized with the Dario adaptor and software, so
it is our expectation that we will be the sole source for Dario compatible test strips.
In addition
to test strip related revenue, we anticipate generating revenue in the future from our ability to offer Dario's subscribers
additional products and services based on personalized recommendations, such as location-based, low-sugar food recommendations
and the ability to send alerts to caregivers and family and friends.
We believe the
following features of our Dario product and the manner in which we plan to market and distribute our product will help position
Dario to gain users and drive revenue growth:
·
Look
                                                                                                             and Feel
. While
                                                                                                             utilizing the same
                                                                                                             state of the art
                                                                                                             electro-chemical,
                                                                                                             blood-based measurement
                                                                                                             techniques as standard
                                                                                                             glucose monitors
                                                                                                             and offers familiar
                                                                                                             usability, Dario
                                                                                                             is easily integrated
                                                                                                             with the patient's
                                                                                                             own smartphone and
                                                                                                             offers a distinctive
                                                                                                             look and feel. Furthermore,
                                                                                                             unlike the market
                                                                                                             standards, Dario
                                                                                                             has an integrated
                                                                                                             lancing device and
                                                                                                             disposable strip
                                                                                                             cartridge. This eliminates
                                                                                                             the need for a separate
                                                                                                             glucose monitor,
                                                                                                             lancing device and
                                                                                                             strip bottle and,
                                                                                                             we believe, will
                                                                                                             make Dario the glucose
                                                                                                             device with among
                                                                                                             the smallest footprint
                                                                                                             in the market. Furthermore,
                                                                                                             Dario will have smartphone
                                                                                                             applications incorporating
                                                                                                             software tools to
                                                                                                             help diabetic patients
                                                                                                             manage their disease.
·
Large
                                                                                                             Market of Potential
                                                                                                             Users
. Our reliance
                                                                                                             on diabetics within
                                                                                                             the massive smartphone
                                                                                                             market gives us an
                                                                                                             established potential
                                                                                                             user-base. In the
                                                                                                             U.S., Nielsen reports
                                                                                                             that 55 percent of
                                                                                                             new cell phone buyers
                                                                                                             purchased a smartphone
                                                                                                             as their new handset,
                                                                                                             an increase from
                                                                                                             34 percent one year
                                                                                                             ago. Of all U.S.
                                                                                                             mobile users, 38
                                                                                                             percent now own a
                                                                                                             smartphone, and smartphones
                                                                                                             are increasingly
                                                                                                             becoming the choice
                                                                                                             of the typical phone
                                                                                                             user. In many countries
                                                                                                             (including the U.S.),
                                                                                                             smartphones are also
                                                                                                             typically heavily
                                                                                                             subsidized by the
                                                                                                             cellular providers
                                                                                                             through discounted
                                                                                                             pricing associated
                                                                                                             with related plan
                                                                                                             subscriptions, enabling
                                                                                                             Dario to benefit
                                                                                                             from the extensive
                                                                                                             marketing by cellular
                                                                                                             companies of these
                                                                                                             devices. We believe
                                                                                                             that it is reasonable
                                                                                                             to assume that the
                                                                                                             percentage of smartphone
                                                                                                             users with diabetes
                                                                                                             mirrors that of the
                                                                                                             general population.
41
·
Marketing
                                                                                                             and Distribution
.
                                                                                                             Our planned Internet-based,
                                                                                                             direct-to-consumer
                                                                                                             marketing and distribution
                                                                                                             will seek to reduce
                                                                                                             the reliance on traditional
                                                                                                             retail channels.
                                                                                                             We believe that our
                                                                                                             direct to consumer,
                                                                                                             online distribution
                                                                                                             plan, coupled with
                                                                                                             the fact that our
                                                                                                             Dario adapter is
                                                                                                             integrated in one
                                                                                                             unit with a lancing
                                                                                                             device and strip
                                                                                                             cartridge (which
                                                                                                             we believe will be
                                                                                                             viewed as favorable
                                                                                                             by customers) may
                                                                                                             enable a rapid ramp
                                                                                                             up of our revenue.
                                                                                                             This approach is
                                                                                                             also designed to
                                                                                                             effectively create
                                                                                                             brand awareness with
                                                                                                             a significantly reduced
                                                                                                             use of our capital
                                                                                                             resources versus
                                                                                                             the amounts required
                                                                                                             via the traditional,
                                                                                                             offline retail channels.
·
"Expanding
                                                                                                             the Pie"
.
                                                                                                             Our goal is to obtain
                                                                                                             significant market
                                                                                                             share using technological
                                                                                                             innovations and by
                                                                                                             expanding the total
                                                                                                             SMBG market size
                                                                                                             "pie"
                                                                                                             through offering
                                                                                                             a user-friendly device
                                                                                                             that utilizes an
                                                                                                             existing platform
                                                                                                             and installed potential
                                                                                                             user base (smartphones
                                                                                                             and smartphone users,
                                                                                                             respectively). We
                                                                                                             will endeavor to
                                                                                                             use the user friendly
                                                                                                             nature of Dario to
                                                                                                             expand the total
                                                                                                             SMBG market size
                                                                                                             by convincing existing
                                                                                                             diabetes patients
                                                                                                             to test their glucose
                                                                                                             levels more frequently
                                                                                                             and by convincing
                                                                                                             the "nontesting"
                                                                                                             population to adopt
                                                                                                             glucose monitoring.
·
Competitive
                                                                                                             Cost of Good Sold.
Based on our
                                                                                                             market research and
                                                                                                             discussions with
                                                                                                             our test strip manufacturer,
                                                                                                             we believe that our
                                                                                                             anticipated outsourced
                                                                                                             manufacturing cost
                                                                                                             of the test strips
                                                                                                             will be similar to
                                                                                                             our estimate of our
                                                                                                             competitors"
                                                                                                             cost for existing
                                                                                                             single-use disposable
                                                                                                             strips. We believe
                                                                                                             the manufacturing
                                                                                                             costs of our Dario
                                                                                                             device will be competitive
                                                                                                             or lower than those
                                                                                                             of the leading glucometers.
·
Opportunities
                                                                                                           for Commercialization
                                                                                                           Partnerships.
Recent
                                                                                                           pharmaceutical company
                                                                                                           entrants into the SMBG
                                                                                                           market (such as Perigo
                                                                                                           and Sanofi) are licensing
                                                                                                           and/or acquiring technologies,
                                                                                                           seeking differentiation,
                                                                                                           thereby providing us
                                                                                                           with opportunities
                                                                                                           for more rapid commercialization
                                                                                                           through partnerships.
                                                                                                           Therefore, we will
                                                                                                           explore the possibility
                                                                                                           of entering into commercialization
                                                                                                           agreements, including
                                                                                                           an upfront payment,
                                                                                                           supply agreement and
                                                                                                           royalty payments, with
                                                                                                           strategic partners.
Currently
there are a few new market entrants in the SMBG space that are attempting to utilize computer or smartphone connectivity, including
the Bayer Contour and the recently introduced Sanofi IBGStar and GlucoDock (which is currently only available outside of the U.S.).
Both devices, however, are traditional, free-standing glucose monitors that require connection to a computer or smartphone via
the USB Port (the Contour) or the dock connecting port (IBGstar and GlucoDock). Furthermore, none of these devices offer the integration
of an all-in-one unit that includes a lancing device and strip cartridge.
Thus,
we believe Dario will bring an entirely new dynamic to the SMBG device market. We believe that our business model for Dario is
clean and simple — sales of proprietary glucose test strips (the disposable component) directly to consumers, leveraging
an installed base of mobile phones. The entire mechanism consists of a small and simple adaptor combined with a strip which is
connected to the smartphone's headphone jack, with the strip test results being read by the smartphone.
42
Background
on Diabetes
Diabetes is a chronic disease that arises when
the pancreas does not produce enough (or ceases to produce) insulin, or when the body cannot effectively use the insulin it produces.
Insulin is a hormone made by the pancreas that enables cells to take in glucose from the blood and use it for energy. Failure
to produce insulin, or of insulin to act properly, or both, leads to raised glucose (sugar) levels in the blood (hyperglycemia),
which can be detected with a blood test. Excess glucose in the blood has been shown to cause damage to blood vessels and is thus
associated with long-term damage to the body and failure of various organs and tissues, including the retina and the kidneys.
There are three main types of diabetes:
Type
1 diabetes
is sometimes called insulin-dependent, or juvenile, diabetes. It is caused by an auto-immune reaction where
the body's defense system attacks the insulin-producing cells located in a person's pancreas. The reason why this
occurs is not fully understood. People with Type 1 diabetes produce very little or no insulin. The disease can affect people of
any age, but usually occurs in children or young adults. People with this form of diabetes need injections of insulin every day
in order to control the levels of glucose in their blood. Type 1 diabetes patients constitute approximately 10% of the overall
number of patients, but are much more extensive users of SMBG, as these diabetics need to measure their glucose levels 4-10 times
day (versus the typical once or twice a day for Type 2 diabetic patient). The vast majority of Type 1 diabetes patients are insulin
dependent.
Type
2 diabetes
is sometimes called adult-onset diabetes and accounts for at least 90% of all cases of diabetes. It is characterized
by insulin resistance and relative insulin deficiency, either of which may be present at the time that diabetes becomes clinically
manifest. The diagnosis of Type 2 diabetes usually occurs after the age of 40 but can occur earlier, especially in populations
with high diabetes prevalence. Type 2 diabetes can remain undetected for many years and the diagnosis is often made from associated
complications or incidentally through an abnormal blood or urine glucose test. It is often, but not always, associated with obesity,
which itself can cause insulin resistance and lead to elevated blood glucose levels, which can cause the same long-term damage
as occurs in Type 1 diabetes. A growing portion of the Type 2 diabetes patients are insulin dependent or use insulin as part of
their treatment.
Gestational
diabetes (GDM)
is a form of diabetes consisting of high blood glucose levels during pregnancy. It develops
in one in 25 pregnancies worldwide and is associated with complications in the time period immediately before and after birth.
GDM usually disappears after pregnancy but women with GDM and their offspring are at an increased risk of developing Type 2 diabetes
later in life. Approximately half of women with a history of GDM go on to develop Type 2 diabetes within five to ten years after
delivery.
We
also believe we will be able to target patients with
pre-diabetes
,
also called metabolic syndrome. Metabolic syndrome
is a combination of medical disorders that increase the risk of developing cardiovascular disease and diabetes. Studies have shown
that pre-diabetes affects more than 20% of the population in the Western world, and its prevalence increases with age. This population
is typically prescribed with periodic lab-based glucose level testing (which requires a doctor visit, significantly reducing the
compliance level) and typically does not involve the utilization of self monitoring glucose devices.
The Diabetic and SMBG Markets
and the Dario Solution
Diabetes is
a growing epidemic for which no cure exists, but for which treatments (including a regimen of frequent blood glucose testing)
are available. The World Health Organization estimates that there are approximately 350 million people with diabetes worldwide
(mostly Type 2 diabetes). In Europe, the diabetic population was approximately 52.6 million in 2011 according to Frost & Sullivan,
and there were approximately 25.8 million diabetics in the U.S. in 2011 according to the American Diabetes Association. The medical
Journal Lancet has reported that number of worldwide diabetics has doubled over the past thirty years. While about 70% of the
increase has been attributed to population growth and aging, the balance was linked to changing diets, rising obesity levels and
less physical activity. In the U.S., one in four adults has diabetes. An additional 79 million U.S. adults have pre-diabetes, which puts them at high risk for developing Type 2 diabetes.
About 138 million adult diabetics live in China and India and another 10 million in Russia. Many public health experts consider
the rise in diabetes to be more alarming than the rise in high blood pressure rates and cholesterol levels.
43
It is also estimated
that the costs of diabetes complications account for between 5% and 10% of total healthcare spending in the world. Early diagnosis
of warning signs and ongoing monitoring of diabetes are the keys to the prevention and treatment of the disease, with blood glucose
monitoring being the primary method of diagnosis and disease management, coupled with matching blood glucose readings with food
(i.e., carbohydrate) and insulin or other medication intake.
Since blood
glucose self monitoring is a key part of managing diabetes, the market for SMBG products required to service these many patients
is also large.
According to research firm Visiongain, the global SMBG market was $9.7 billion
in 2011 and the global market for
diabetes monitoring devices
is expected to
be $27.42 billion by 2022. The
Enterprise Analysis Corporation has estimated that the global market for SMBG testing supplies
was $1.7 billion in 1994. By 2000, the market had reached approximately $3.8 billion, and by 2008, worldwide sales of these products
climbed to $8.8 billion.
It has been estimated that the U.S. accounts for 40% of the SMBG
market, or approximately $3.9 billion, and Frost & Sullivan estimates that Europe accounted for
$3.97 billion in this
market in 2011
.
In fact, the SMBG testing market, which barely existed in 1980, now
accounts for approximately a quarter of the entire in vitro diagnostics industry.
Key factors
driving market growth include increasing diabetic population, growing patient awareness, technological advancements and increasing
number of patients adopting blood glucose self-monitoring. In addition, the affordable cost of blood glucose test strips, and
increase in daily monitoring, are also expected to contribute to market growth. As such, self-monitoring of blood glucose (SMBG)
represents a large market that has grown significantly over the past 30 years and is expected to continue to grow.
We have specifically
designed Dario to compete in this vast market. As described above, Dario is a fully integrated disposable strip/adaptor device,
combined with a lancet that, combined with the common smartphone, could replace the need for self-powered glucose meters and the
associated kit which are the current standard of care.
Industry Background and the Dario
Opportunity
From a competition
perspective, four companies currently dominate the SMBG business, controlling approximately 90% of the market: Roche Diagnostics
(part of Hoffman-LaRoche), LifeScan (a Johnson & Johnson company), Bayer Healthcare Division, and Abbott Laboratories. These
"big four" offer a wide variety of SMBG products and have led the market since the late 1990s. Numerous second-tier
and third-tier competitors, including several in Asia, hold the remaining 10% of the market. We believe that the SMBG offerings
by all vendors are pretty much the same, with very mild differentiation of the main feature sets of the devices. This is akin
to the differentiation among personal computers (PCs) during the 1990s and 2000s, where most of them had the same key feature
set of Microsoft Windows and Intel Processors.
We believe that
now is the time to change the SMBG market. Dario is offering a fresh look at SMBG — no more separate glucose monitors or
carb-calculators and no more awkward and cumbersome connectivity to computer-based results diaries. Our intention is for Dario
to bring glucose monitoring to the mobile age and we will seek to secure significant market share through Dario's novel
approach to SMBG.
44
With respect
to the U.S. SMBG market, the principal barriers to entry (all of which we believe the features of Dario can overcome) can be summarized
as follows:
·
Achieving
                                                                                                             significant product
                                                                                                             differentiation in
                                                                                                             the eyes of diabetes
                                                                                                             patients or insurance
                                                                                                             payers
. We believe
                                                                                                             that Dario offers
                                                                                                             a novel design that
                                                                                                             is compatible with
                                                                                                             the usability of
                                                                                                             the current devices,
                                                                                                             yet offers a modern
                                                                                                             look and feel when
                                                                                                             compared to products
                                                                                                             in the marketplace.
                                                                                                             Marketing of the
                                                                                                             product directly
                                                                                                             to consumers will
                                                                                                             emphasize the product's
                                                                                                             distinguishing attributes,
                                                                                                             without incurring
                                                                                                             the significant product
                                                                                                             introduction expenses
                                                                                                             typically incurred
                                                                                                             for the marketing
                                                                                                             of a standard glucometer
                                                                                                             via traditional retail
                                                                                                             channels.
·
Costs.
We anticipate
                                                                                                             that low manufacturing
                                                                                                             costs for the Dario
                                                                                                             adaptor and the similarity
                                                                                                             to our competitors'
                                                                                                             estimated cost of
                                                                                                             manufacturing the
                                                                                                             strips, when coupled
                                                                                                             with the direct-to-consumer
                                                                                                             marketing, creates
                                                                                                             the potential for
                                                                                                             providing us with
                                                                                                             a meaningful cost
                                                                                                             advantage versus
                                                                                                             most vendors of traditional
                                                                                                             glucometers.
·
Difficulty
                                                                                                             obtaining shelf space
                                                                                                             at the pharmacy
.
                                                                                                             With many products
                                                                                                             on the market, a
                                                                                                             new entrant has to
                                                                                                             battle for visibility
                                                                                                             on the shelf. Dario
                                                                                                             will avoid this obstacle
                                                                                                             by primarily relying
                                                                                                             on Internet based
                                                                                                             direct-to-consumer
                                                                                                             marketing and sales.
·
The
                                                                                                             challenge of influencing
                                                                                                             diabetes specialists
                                                                                                             to recommend another
                                                                                                             SMBG product to patients
.
                                                                                                             We will seek to introduce
                                                                                                             and present Dario
                                                                                                             to the medical community
                                                                                                             through our participation
                                                                                                             in academic and professional
                                                                                                             conferences. Dario
                                                                                                             will mainly be marketed
                                                                                                             directly to our target
                                                                                                             users, who are increasingly
                                                                                                             becoming the primary
                                                                                                             decision makers in
                                                                                                             choosing their glucose
                                                                                                             monitoring equipment.
We thus believe
that Dario's specific features and trends in the marketplace create a significant opportunity to penetrate the market and
effectively compete with and gain market share against the established players.
Utilization of Mobile Health
Applications
Smartphone applications
are becoming the "killer apps" for mobile health solutions (so called mHealth). Although the potential benefits of
mHealth solutions have been widely discussed for over a decade, the market is now starting to emerge from the trial phase. According
to a publicly available 2010 study by research2guidance, smartphone applications will enable the mHealth industry to reach 500
million of a total 1.4 billion worldwide smartphone users in 2015. We believe that Dario is designed to play directly into this
trend.
Currently more
than 70% of the mHealth applications in major "app stores" are adhering to the paid business model according to research2guidance.
With more and more traditional healthcare providers joining the mobile applications market, we expect the business models will
broaden to include healthcare services, advertising and drug sales revenues. According to research2guidance, with the growing
sophistication level of mHealth applications, only 14% of the total market revenue in the next 5 years will come from application
download, advertisement and transaction revenue, whereas 76% of total mHealth application market revenue will come from related
services and products. We believe that Dario will be well-positioned to benefit from that trend.
45
Dario will be
accompanied by its own smartphone and web-based application that will allow users to easily record, transmit and store key data points
such as glucose level, insulin and carbohydrate intake. The app will also incorporate community-based social networking components
aimed at making use of Dario more attractive to users. Potential examples include games with rewards and online competition for
compliance in testing and consistency of glucose readings.
Sales and Marketing
Dario will primarily
be an Internet-driven product. Dario was designed for the mobile age and will be powered by the Internet as an effective route
of launching and marketing new consumer products. We plan to primarily sell directly to consumers and collaborate with distributors
and online marketing in select jurisdictions. It is estimated that a typical Type 1 diabetes patient, who is testing his or her
blood sugar 4 to 10 times a day, uses 120 to 300 strips each month, which, at an expected selling price of up to $1 per strip,
creates the potential for a substantial and predictable revenue stream.
On the marketing
side, we plan to primarily utilize online marketing in order to create awareness to Dario. Rather than solely rely on online advertisement,
we will also consider revenue sharing with affiliate networks and a variety of other pay-for-performance methods commonly used
in online commerce.
While our initial
marketing will be focused on the younger population of diabetics, we expect to gradually broaden our marketing efforts toward
the older population, where diabetes is even more prevalent. We plan to initially focus on insulin dependent (mainly Type I) diabetes
patients. While this population constitutes about 10%
of the diabetic patient population, we estimate it to be responsible
for over 40% of the revenue from blood glucose monitoring. Dario's ease of use and the lack of need for a special glucometer
are also expected to be of major appeal to the entire Type 2 diabetes population. With our initial market launch, we expect to
address the U.S. and European markets. This will be followed, possibly through marketing collaborations, by targeting additional
large markets such as Brazil.
Manufacturing
As we do not
plan to engage in manufacturing activity ourselves, we plan to have supply agreements with manufacturers for the Dario device,
glucose test strips, lancing devices and lancets. We have arrangements in place with commercial scale manufacturers for both the
Dario devices and for our test strips.
In June 2012,
we entered into an agreement with a Korean supplier to supply test strips, connectors and other related components for Dario.
The agreement covers a period of three years, but the agreement provides that we have no obligation to continue work with this
supplier as it is cancellable upon specified notice, and we believe that other suppliers could be obtained if necessary.
In addition,
in September 2012, we entered into an initial work order arrangement with a U.S. manufacturer to effectuate the final commercial
design for, and manufacture, the molds for the Dario devices. Work commenced under this arrangement in the fourth quarter of 2012,
with the goals of (i) producing the initial devices, (ii) estimating the costs to produce additional devices at scale and (iii)
exploring alternatives, if required, to reduce the cost of the devices. These efforts have yielded positive results and manufacturing
cost savings. As we move closer to full commercial scale manufacturing activities in anticipation of our commercial launch of
Dario in 2013, we expect to enter into a formal supply agreement with this U.S. manufacturer.
46
Insurance Reimbursement
In the United
States and in other jurisdictions such as Germany and England, we expect that Dario's test strips should generally be available
for full or partial patient reimbursement by third-party payors.  We expect to work with third-party payors in the countries
into which we expect to market Dario in order to establish coverage for test strips, although we cannot be sure of this being
obtained.  As of the date of this prospectus, we have begun this process in anticipation of our commercial launch of Dario.
Clinical Trials
In
October 2012, we completed a required clinical trial to test the usability of Dario which has been used in connection with
our regulatory submissions for the product in Europe and will be used for our FDA submission in the U.S. The purpose of the
study was to assist first time users of the Dario device (1) to use it under minimal guidance materials (i.e. quick user
guide and iPhone App) in an effort to demonstrate how the use of the Dario device and related software could potentially
improve patient care and diabetic compliance, (2) to understand the potential weaknesses of the device and introduce methods
of overcoming them to the users and (3) to establish the proposition that any user can operate the device compared to
other devices on the market.
The
study was performed in Israel with the prototype of the Dario product, with its basic functionalities combined with a simulating
program for the smartphone. 61 patients under varied diabetic conditions participated in the study, whose ages were between 8
and 80. The subjects were recruited from the diabetes clinic at Wolfson Medical Center in Tel Aviv.
Over
95% of the patients passed the study and the data base had been locked and was included in our European CE Mark regulatory filing.
The study results are also expected to be used for our FDA submission for Dario. As required by Israeli law, the study was confirmed
by a local ethical committee.
We have been
advised by our regulatory consultants that this study should be sufficient in order to obtain regulatory approvals in the EU and
the U.S., although we may be required to conduct additional clinical studies.
Government Regulation
The principal
markets that we are initially targeting for Dario are the European Union and the United States. The following is an overview of
the regulatory regimes in these jurisdictions as well as in Brazil, which we currently believe will be the third geographic location
we may target.
United States
Regulation Generally
In the United
States, devices are subject to varying levels of regulatory control, the most comprehensive of which requires that a clinical
evaluation be conducted before a device receives approval for commercial distribution.  Under Section 201(h) of the
Food, Drug, and Cosmetic Act, a medical device is an article, which, among other things, is intended for use in the diagnosis
of disease or other conditions, or in the cure, mitigation, treatment or prevention of disease, in man or other animals. We believe
that Dario will be classified as a medical device and subject to regulation by numerous agencies and legislative bodies, including
the FDA and its foreign counterparts.  FDA regulations govern product design and development, pre-clinical and clinical
testing, manufacturing, labeling, storage, pre-market clearance or approval, advertising and promotion, and sales and distribution.
Specifically, the FDA classifies medical devices into one of three classes.  Class I devices are relatively simple and
can be manufactured and distributed with general controls.  Class II devices are somewhat more complex and require greater
scrutiny.  Class III devices are new and frequently help sustain life.
47
In the United
States, a company generally can obtain permission to distribute a new device in two ways – through a Section 510(k) premarket
notification application or through a Section 515 premarket approval application.  The 510(k) submission applies to
any device that is substantially equivalent to a device first marketed prior to May 1976 or to another device marketed after that
date, but which was substantially equivalent to a pre-May 1976 device.   Under the 510(k) submission process, the FDA
will issue an order finding substantial equivalence to a predicate device (pre-May 1976 or post-May 1976 device that was substantially
equivalent to a pre-May 1976 device) and permitting commercial distribution of that device for its intended use.  A
510(k) submission must provide information supporting its claim of substantial equivalence to the predicate device.  The
FDA permits certain low risk medical devices to be marketed without requiring the manufacturer to submit a premarket notification.  In
other instances, the FDA may require that a premarket notification not only be submitted, but also be accompanied by clinical
data.  If clinical data from human experience is required to support the 510(k) submission, this data must be gathered
in compliance with investigational device exemption regulations for investigations performed in the United States.  The
FDA review process for premarket notifications submitted pursuant to section 510(k) should take about 90 days, but it can take
substantially longer if the agency has concerns, and there is no guarantee that the agency will clear the device for marketing,
in which case the device cannot be distributed in the United States.  Nor is there any guarantee that the agency will
deem the device subject to the 510(k) process, as opposed to the more time-consuming, resource intensive and problematic PMA process
described below.
Unless an exemption
applies, each medical device commercially distributed in the United States will require either a prior 510(k) clearance or a pre-market
approval (or PMA) from the FDA. We believe that Dario will be classified as Class II and that we will make a 510(k) submission
for the product; however, no assurances can be given that it will not be classified as Class III device requiring a PMA. Both
the 510(k) clearance and PMA processes can be expensive and lengthy and entail significant user fees, unless exempt. We will follow
the commonly used industry practice, including those described in the FDA draft guidelines for glucose monitors and test strips,
such as "Total Product Life Cycle for Portable Invasive Blood Glucose Monitoring Systems."
As mentioned
above, to obtain 510(k) clearance for Dario or any of our potential future devices (or for certain modifications to devices that
have received 510(k) clearance), we must submit a pre-market notification demonstrating that the proposed device is substantially
equivalent to a previously cleared 510(k) device or a pre-amendment device that was in commercial distribution before May 28,
1976 for which the FDA has not yet called for the submission of a PMA application. The FDA's 510(k) clearance pathway generally
takes from three to twelve months from the date the application is completed, but can take significantly longer. After a medical
device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would
constitute a significant change in its intended use, requires a new 510(k) clearance.
Moreover, devices
deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or devices deemed
not substantially equivalent to a previously cleared 510(k) device or device in commercial distribution before May 28, 1976
for which PMAs have not been required, generally require a PMA before they can be commercially distributed. Although PMAs may
be required for our potential future products, we do not believe a PMA will be required for Dario. A PMA application must be supported
by extensive data, including technical, pre-clinical, one or more clinical trials, manufacturing and labeling to demonstrate to
the FDA's satisfaction the safety and effectiveness of the device. After a PMA application is complete, the FDA begins an
in-depth review of the submitted information, which generally takes between one and three years, but may take significantly longer.
After any pre-market approval, a new pre-market approval application or application supplement may be required in the event of
modifications to the device, its labeling, intended use or indication or its manufacturing process. In addition, any PMA approval
may be conditioned upon the manufacturer conducting post-market surveillance and testing.
48
European
and Non-European Regulation Generally
Sales of medical
devices outside the United States are subject to foreign regulatory requirements that vary widely from country to country. These
laws and regulations range from simple product registration requirements in some countries to complex clearance and production
controls in others. As a result, the processes and time periods required to obtain foreign marketing approval may be longer or
shorter than those necessary to obtain FDA approval.
For countries
in the European Union, medical devices must display a CE Mark before they may be imported or sold and must comply with the requirements
of the European Medical Device Directive or the Active Implantable Medical Device Directive, which we refer to as the MDD or the
In Vitro Diagnostic Directive (IVDD).  We anticipate that Dario will be subject to the MDD as well as subject to the
IVDD.  Compliance with the MDD as well as the IVDD Directives and obtaining a CE Mark involve obtaining International
Organization for Standardization, or ISO 13485 certification, an internationally recognized quality system, and approval of the
product's technical file by a notified body that is recognized by applicable authorities of an EU Member State.
We have initiated
the procedures seeking the CE Mark regulatory approval. DEKRA Certification has been assigned as our Notified Body. The regulators
conducted the first audit of our company in October 2012 and we are in the process of completing the technical filings to be sent
for examination.
We may also
seek regulatory approval to market Dario in foreign countries that do not rely on the CE Mark. To date, the only non-CE Mark jurisdictions
which we have identified as an intended target market for our product are South Africa, Russia, India and Brazil, with Brazil
currently being the most likely jurisdiction we will target after the EU and the United States. To the extent that we seek to
market our product in other non-CE Mark countries in the future, we will be required to comply with the applicable regulatory
requirements in each such country.  Such regulatory requirements vary by country and may be onerous.  As a
result, no assurance can be given that we will be able to satisfy the regulatory requirements to sell our products in any such
country.
For example,
in Brazil, all medical devices imported into or distributed within Brazil must first be registered with the Agência Nacional
de Vigilância Sanitária, also known as ANVISA or the National Health Surveillance Agency. Established in 1993 under
Brazil's Ministry of Health, ANVISA is an independently administered, financially autonomous regulatory agency responsible
for the regulation and oversight of medical devices and other medical products in Brazil. Specifically, ANVISA is responsible
for the registration of medical devices and for the maintenance of a registered products database. Unlike the EU notified body
system or the 510(k) system of the FDA, ANVISA performs all registration and inspection functions within the agency.
Only companies
based in Brazil can apply for ANVISA registration. Therefore, companies (like ours) based elsewhere that do not have subsidiaries
in Brazil must depend on Brazilian-based third parties, such as hosting companies, distributors and dealers, to obtain ANVISA
registration for medical devices. Under such an arrangement, the local third party holds the ANVISA registration, and a manufacturer
must maintain an effective commercial relationship with a third party to ensure the ongoing maintenance of a registration.
49
Clinical
Studies
Even when a
clinical study has been approved or cleared by the FDA or a notified body or deemed approved, the study is subject to factors
beyond a manufacturer's control, including, but not limited to the fact that the institutional review board at a given clinical
site might not approve the study, might decline to renew approval which is required annually, or might suspend or terminate the
study before the study has been completed. There is no assurance that a clinical study at any given site will progress as anticipated;
the interim results of a study may not be satisfactory leading the sponsor or others to terminate the study, there may be an insufficient
number of patients who qualify for the study or who agree to participate in the study, or the investigator at the site may have
priorities other than the study. Also, there can be no assurance that the clinical study will provide sufficient evidence to assure
the FDA or a notified body that the product is substantially equivalent in terms of safety and effectiveness to a predicate device,
a prerequisite for clearance under 510(k).
Post-Clearance
Matters
Even if the
FDA or a notified body approves or clears a device, it may limit its intended uses in such a way that manufacturing and distributing
the device may not be commercially feasible. After clearance or approval to market is given, the FDA and foreign regulatory agencies,
upon the occurrence of certain events, are authorized under various circumstances to withdraw the clearance or approval or require
changes to a device, its manufacturing process or its labeling or additional proof that regulatory requirements have been met.
A manufacturer
of a device approved through the premarket approval application process is not permitted to make changes to the device
which affects its safety or effectiveness without first submitting a supplement application to its premarket approval application
and obtaining FDA approval for that supplement.  In some instances, the FDA may require a clinical trial to support
a supplement application.  A manufacturer of a device cleared through a 510(k) submission must submit another premarket
notification if it intends to make a change or modification in the device that could significantly affect the safety or effectiveness
of the device, such as a significant change or modification in design, material, chemical composition, energy source or manufacturing
process.  Any change in the intended uses of a premarket approval application device or a 510(k) device requires
an approval supplement or cleared premarket notification.  Exported devices are subject to the regulatory requirements
of each country to which the device is exported, as well as certain FDA export requirements.
Mobile Medical
Applications Guideline
On July 21,
2011, the FDA issued a draft guideline for comment related to mobile medical applications, which we refer to herein as the Guideline.
Under the Guideline, the FDA plans to apply its regulatory oversights to certain types of mobile medical devices. We anticipate
that Dario will be subject to the Guideline.
Ongoing Regulation
by FDA and International Regulators
Even after a
device receives clearance or approval and is placed on the market, numerous regulatory requirements apply. These include:
·
establishment
                                                                                                             registration and
                                                                                                             device listing;
50
·
quality
                                                                                                             system regulation,
                                                                                                             which requires manufacturers,
                                                                                                             including third party
                                                                                                             manufacturers, to
                                                                                                             follow stringent
                                                                                                             design, testing,
                                                                                                             control, documentation
                                                                                                             and other quality
                                                                                                             assurance procedures
                                                                                                             during all aspects
                                                                                                             of the manufacturing
                                                                                                             process;
·
labeling
                                                                                                             regulations and FDA
                                                                                                             prohibitions against
                                                                                                             the promotion of
                                                                                                             products for uncleared,
                                                                                                             unapproved or "off-label"
                                                                                                             uses, and other requirements
                                                                                                             related to promotional
                                                                                                             activities;
·
medical
                                                                                                             device reporting
                                                                                                             regulations, which
                                                                                                             require that manufacturers
                                                                                                             report to the FDA
                                                                                                             if their device may
                                                                                                             have caused or contributed
                                                                                                             to a death or serious
                                                                                                             injury or malfunctioned
                                                                                                             in a way that would
                                                                                                             likely cause or contribute
                                                                                                             to a death or serious
                                                                                                             injury if the malfunction
                                                                                                             were to recur;
·
corrections
                                                                                                             and removals reporting
                                                                                                             regulations, which
                                                                                                             require that manufacturers
                                                                                                             report to the FDA
                                                                                                             field corrections
                                                                                                             and product recalls
                                                                                                             or removals if undertaken
                                                                                                             to reduce a risk
                                                                                                             to health posed by
                                                                                                             the device or to
                                                                                                             remedy a violation
                                                                                                             of the Federal Food,
                                                                                                             Drug and Cosmetic
                                                                                                             Act that may present
                                                                                                             a risk to health; and
·
post-market
                                                                                                             surveillance regulations,
                                                                                                             which apply when
                                                                                                             necessary to protect
                                                                                                             the public health
                                                                                                             or to provide additional
                                                                                                             safety and effectiveness
                                                                                                             data for the device.
Failure to comply
with applicable regulatory requirements can result in enforcement action by the FDA, and other regulatory agencies, which may
include any of the following sanctions: fines, injunctions, civil or criminal penalties, recall or seizure of our current or future
products, operating restrictions, partial suspension or total shutdown of production, refusing our request for 510(k) clearance
or PMA approval of new products, rescinding previously granted 510(k) clearances or withdrawing previously granted PMA approvals.
We may be subject
to announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of our subcontractors.
If, as a result of these inspections, the FDA determines that our or our subcontractor's equipment, facilities, laboratories
or processes do not comply with applicable FDA regulations and conditions of product approval, the FDA may seek civil, criminal
or administrative sanctions and/or remedies against us, including the suspension of our manufacturing and selling operations.
International
sales of medical devices are subject to foreign government regulations, which may vary substantially from country to country.
The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval, and the
requirements may differ. There is a trend towards harmonization of quality system standards among the European Union, United States,
Canada and various other industrialized countries.
State Licensure
Requirements
Several states
require that durable medical equipment (or DME) providers be licensed in order to sell products to patients in that state. Certain
of these states require that DME providers maintain an in-state location. If these rules are determined to be applicable to us
and if we were found to be noncompliant, we could lose our licensure in that state, which could prohibit us from selling our current
or future products to patients in that state.
51
Federal Anti-Kickback
and Self-Referral Laws
The Federal
Anti-Kickback Statute prohibits the knowing and willful offer, payment, solicitation or receipt of any form of remuneration in
return for, or to induce the:
·
referral
                                                                                                             of a person;
·
furnishing
                                                                                                             or arranging for
                                                                                                             the furnishing of
                                                                                                             items or services
                                                                                                             reimbursable under
                                                                                                             Medicare, Medicaid
                                                                                                             or other governmental
                                                                                                             programs; or
·
purchase,
                                                                                                             lease, or order of,
                                                                                                             or the arrangement
                                                                                                             or recommendation
                                                                                                             of the purchasing,
                                                                                                             leasing, or ordering
                                                                                                             of any item or service
                                                                                                             reimbursable under
                                                                                                             Medicare, Medicaid
                                                                                                             or other governmental
                                                                                                             programs.
To the extent
we are required to comply with these regulations, it is possible that regulatory authorities could allege that we have not complied,
which could subject us to sanction. Noncompliance with the federal anti-kickback legislation can result in exclusion from Medicare,
Medicaid or other governmental programs, restrictions on our ability to operate in certain jurisdictions, as well as civil and
criminal penalties, any of which could have an adverse effect on our business and results of operations.
Federal law
also includes a provision commonly known as the "Stark Law," which prohibits a physician from referring Medicare or
Medicaid patients to an entity providing "designated health services," including a company that furnishes durable
medical equipment, in which the physician has an ownership or investment interest or with which the physician has entered into
a compensation arrangement. Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received
under a noncompliant arrangement, civil penalties, and exclusion from Medicare, Medicaid or other governmental programs.
Federal False
Claims Act
The Federal
False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly
presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a
false statement or used a false record to get a claim approved. In addition, amendments in 1986 to the Federal False Claims Act
have made it easier for private parties to bring "qui tam" whistleblower lawsuits against companies. Penalties include
fines ranging from $5,500 to $11,000 for each false claim, plus three times the amount of damages that the federal government
sustained because of the act of that person.
Civil Monetary
Penalties Law
The Federal
Civil Monetary Penalties Law prohibits the offering or transferring of remuneration to a Medicare or Medicaid beneficiary that
the person knows or should know is likely to influence the beneficiary's selection of a particular supplier of Medicare
or Medicaid payable items or services. Noncompliance can result in civil money penalties of up to $10,000 for each wrongful act,
assessment of three times the amount claimed for each item or service and exclusion from the Federal healthcare programs.
State Fraud
and Abuse Provisions
Many states
have also adopted some form of anti-kickback and anti-referral laws and false claims acts. A determination of liability under
such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions.
52
Administrative
Simplification of the Health Insurance Portability and Accountability Act of 1996
The Health Insurance
Portability and Accountability Act of 1996, or HIPAA, mandated the adoption of standards for the exchange of electronic health
information in an effort to encourage overall administrative simplification and enhance the effectiveness and efficiency of the
healthcare industry. Ensuring privacy and security of patient information is one of the key factors driving the legislation.
Intellectual Property
In May 2011,
our founders filed a Patent Cooperation Treaty (or PCT) application for a "smartphone based glucose and other body fluids
content monitor" (PCT/IL2011/000369) which incorporates two U.S. provisional patent applications submitted in the preceding
year. These applications and all related intellectual property were transferred to us by our founders on October 27, 2011.
The PCT
covers the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of
body fluids. The PCT has been converted into several national phase patent applications. With respect to PCT/IL2011/000369 for
two U.S. provisional patent applications, we claimed the patent priority dates of September 5, 2010 for patent application
no. 61/332,778 and November 1, 2011 for patent application no. 61/431,449. We have advanced patent applications
of PCT/IL2011/000369 outside the U.S., including Israel, Europe, India, South Africa, Australia, China, Japan
and Brazil.
With regards
to our technology, we are continuing our pursuit of patent protection and are preparing for regulatory filings in multiple jurisdictions
of both the Dario device and related software.
We are preparing
numerous additional patent filings related to the core technology and anticipated future generations of the Dario product. We
are also in the process of defining the final design of the initial Dario product and we are continuing development of the software
through both internal and outsourced resources. In addition, we are seeking to develop new intellectual property around future
generations of Dario hardware and software with the goal of achieving enhanced functionality, user interface and data usability.
However, our patents have not been granted by any of applicable regulatory authority.
In addition,
we regularly conduct review of our intellectual property. Our management is timely informed and actively supervising the development
of our intellectual property, including with respect to trademarks.
Competition
We face competition
principally from two arenas:
Direct competition
from existing companies in the blood based glucose monitors market
. We will compete directly and primarily with large pharmaceutical
and medical device companies, including, but not limited to, Abbott Laboratories, Bayer Healthcare Division, Johnson & Johnson
LifeScan, Roche Diagnostics and Sanofi. While the market is highly competitive, we believe that Dario will carry numerous significant
comparative advantages versus other devices in the market. Some of these devices are now offered as connected devices to smartphones,
such as the Sanofi iBGStar.
53
Dario device
is offering an all in one glucose monitoring system, including a small form factor glucose reader, lancing device and a strip
cartridge integrated with existing smartphones, which will enable Dario to offer features that are similar to or superior to the
most advanced meters in the market (such as the Contour and Ultrasmart) while having a smaller form factor than the compact meters
in the market (FreeStyle Lite and OneTouch UltraMini). We believe this design will be attractive to diabetic patients.
Non-invasive
and continuous blood glucose monitors.
While there are numerous continuous blood glucose monitoring technologies in the market,
we believe they are expensive to use and are therefore offered mainly for temporary usage and in medical settings (such as hospitals).
There have been a wealth of attempts for non invasive glucose monitors, but we are not aware of any that are available in the
market or expected to reach the market with significant presence over the next few years.
Employees
We currently
have 10 full time employees and 5 part time employees. In addition we utilize outsourced personnel and plan to utilize additional
outsourced personnel as follows:
1.
Software and Hardware Engineering
.
                                                              Work has been done primarily in Israel, and we shall continue to
                                                              utilize engineering services under the direct supervision of our
                                                              management team.
2.
Sales and Marketing
. We plan
                                                              to utilize the outsourced services of experts and affiliate marketing
                                                              networks specializing in online marketing of healthcare products.
Currently, we
have employment agreements with our three executive officers. See "Executive Compensation."
Facilities
We
maintain an address at
40 E. Main Street, Suite 759,
Newark, Delaware 19711 and our telephone number is (646) 259-3321.
LabStyle Israel, our wholly-owned Israeli subsidiary, maintains an office in Ramat Gan, Israel. We believe our facilities are
adequate for our current operations.
Previous Financings
To date, we
have raised an aggregate of approximately $5.66 million (before capital raising expenses) through the sale of our common stock
to investors pursuant to private placement transactions. Such private placements are described below. In addition, we received
irrevocable commitments from investors as part of our August 2012 Private Placement to invest additional $1 million in our company.
Formation
On August 11,
2011, in connection with our formation and the contribution of intellectual property to our company in October 2011, our founders
(including an affiliate of Dr. Oren Fuerst, Dr. David Weintraub and Shilo Ben Zeev, each of whom are executives and/or directors
of our company) received an aggregate of 7,500,000 shares of common stock for nominal consideration.
In connection
with our formation on August 11, 2011, we also closed a private placement of 2,000,000 shares of our common stock to an aggregate
of 9 accredited investors for an aggregate purchase price of $10,000. We are not registering the founders' shares issued
in our August 11, 2011 private placement.
54
2011-2012
Private Placement
On October 27,
2011, we conducted the initial closing of a private placement offering (which we refer to herein as our 2011-2012 Private Placement)
of an aggregate of 2,461,000 shares of our common stock at a purchase price of $1.00 per share and warrants to purchase an aggregate
of 2,461,000 shares of our common stock with an exercise price of $1.50 per share, which warrants are exercisable at any time
within five (5) years from October 27, 2011. The $1.50 exercise price was adjusted to $1.42 per share due to the August 2012 Private
Placement described below and the number of shares of common stock underlying such warrants was adjusted upward by an aggregate
of 138,648 shares. The exercise price of the such warrants as well as the number of shares subject to such warrants is expected
to reduced to $1.30 and 379,774, respectively, accordingly following completing the second and third tranches of the August 2012
Private Placement as described below.
The final closing
of the 2011-2012 Private Placement occurred on March 30, 2012. There were a total of 45 accredited investors in the 2011-2012
Private Placement. Spencer Trask Ventures, Inc. (who we refer to herein as Spencer Trask) acted as the placement agent for the
2011-2012 Private Placement. The gross proceeds to us from the 2011-2012 Private Placement were $2.461 million. Pursuant to the
registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued in the 2011-2012 Private Placement for public resale by the selling stockholders named herein
and their assigns.
As part of its
compensation for acting as placement agent for the 2011-2012 Private Placement, we issued two warrants to Spencer Trask, each
to purchase 482,200 shares of common stock with an exercise price of, respectively, $1.00 and $1.50 per share (subsequently adjusted
downward to $1.42 and expected to further reduced to $1.30 and in addition the amount of warrants was adjusted to 509,366 and
expected to adjusted to 556,612 warrants). Such warrants contain a "cashless exercise" feature and are exercisable
at any time prior to the earlier of: (i) March 30, 2019 or (ii) three years following the date that our common stock becomes publicly
traded. We are not registering the shares of common stock underlying the warrants issued to Spencer Trask for public resale. Due
to the August 2012 Private Placement described below, the shares underlying Spencer Trask's were increased by 27,166 shares,
and the exercise price is currently $1.42.
August 2012
Private Placement
On August 29,
2012, we consummated the August 2012 Private Placement with 13 accredited investors, including existing stockholders of our company.
Pursuant to this financing, we issued an aggregate of 500,014 shares of our common stock at a price equal to $1.00 per share (for
gross proceeds of $500,014) and issued warrants to purchase an aggregate of 500,014 shares of our common stock with an exercise
price of $1.00 per share.
In addition,
the investors in the August 2012 Private Placement irrevocably committed to purchase an additional 1,000,022 shares of common
stock in the aggregate at $1.00 per share and warrants to purchase an aggregate of 1,000,022 shares of our common stock with an
exercise price of $1.00 per share, for gross proceeds of $1,000,022. Such purchases shall take place in two tranches, the first
on the 90
th
day following the date (which we refer to as the Funding Trigger Date) as of which both: (i) a registration
statement covering the shares of our common stock issued and underlying warrants issued in our August 2012 Private Placement has
been declared effective by the Securities and Exchange Commission and (ii) we have received a ticker symbol for our common stock
and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading
system (consisting of 500,011 shares and 500,011 warrants), and the second the 180
th
day following the Funding Trigger
Date (also consisting of 500,011 shares and 500,011 warrants). To evidence this irrevocable commitment, each investor executed
a promissory note in our favor to fund for their pro rata portion of the additional investments as of the foregoing dates. We
expect, therefore, that the total gross proceeds from the August 2012 Private Placement will be $1,500,036, not including any
potential warrant exercises. No placement agents were utilized in connection with the August 2012 Private Placement.
55
One-half of
the warrants issued in the August 2012 Private Placement have a an exercise period ending on the first anniversary means the date
that our company has received a ticker symbol for our common stock and caused our common stock to be eligible for trading on the
Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (which we refer to as the Warrant Effective Date), and
the exercise period for the remaining one-half of the warrants ends on the second anniversary of the Warrant Effective Date.
Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock, and shares of common
stock underlying the warrants, issued or to be issued in the August 2012 Private Placement for public resale by the selling stockholders
named herein and their assigns.
October 2012
Private Placement
On October 17,
2012, we consummated a final closing of a separate private placement transaction (which we refer to as the October 2012 Private
Placement) with 44 accredited investors, including existing stockholders of our company. Pursuant to this financing, we issued
an aggregate of 1,795,009 shares of our common stock at a price equal to $1.50 per share (for gross proceeds of $2,692,513). We
utilized the services of four FINRA member broker-dealers as finders for this private placement, including Spencer Trask, and
we paid commissions to such finders equal to 10% of the funds they each raised in cash and warrants to purchase an aggregate of
179,502 shares of our common stock. Such finder warrants contain a "cashless exercise" feature and are exercisable
at any time prior to October 16, 2015. We are not registering the shares of common stock underlying the finder warrants for public
resale.
Pursuant to
the registration statement of which this prospectus is a part, we are registering the shares of common stock issued in the October
2012 Private Placement for public resale by the selling stockholders named herein and their assigns.
Legal Matters
We are not currently
subject to any material legal proceedings. However, we may from time to time become a party to various legal proceedings arising
in the ordinary course of our business.
56
MANAGEMENT
All
directors hold office for one-year terms until the election and qualification of their successors. Officers are appointed by our
board of directors and serve at the discretion of the board, subject to applicable employment agreements. The following table
sets forth information regarding our executive officers and the members of our board of directors as of the date of this prospectus.
Name
Age
Position(s)
Oren Fuerst, Ph.D.
45
Chief Executive Officer and Chairman of the Board of Directors
Shilo Ben Zeev
39
President, Chief Operating Officer and Director
Mordechi (Motty) Hershkowitz
37
Chief Financial Officer, Treasurer and Secretary
Dr. David Weintraub
61
Director
Malcolm Hoenlein
68
Director
Nahum D. Melumad
57
Director
Adam K. Stern
49
Director
Except for the
two year right (commencing October 27, 2011) of Spencer Trask to appoint one member to our board of directors, there are no arrangements
between our directors and any other person pursuant to which our directors were nominated or elected for their positions. There
are no family relationships between any of our directors or executive officers.
Oren Fuerst,
Ph.D.
is our Chairman of the Board and Chief Executive Officer. Dr. Fuerst is a serial entrepreneur, investor, advisor
and inventor of technologies commercialized by numerous medical companies. He presently serves as the Managing Director and Chairman
of Strategic Models, a New York-based investment, strategy and ideas group nurturing boutique, which he founded in 1999, of Geb
Invest Group and of Fuerst Technologies. Strategic Models is one of the founding stakeholders of LabStyle. In 2009, Dr. Fuerst
co-founded and became Chairman of Circ MedTech, a developer of PrePex, an HIV prevention medical device. In 2011, Dr. Fuerst co-founded
and became Chairman of Hiterpia, a development stage company developing a dietary supplement for enhanced brain function, Medivizor,
a health informatics service, and Eco-Fusion, an integrated mobile hardware-software service for general health maintenance and
rehabilitation. In 2007, he co-founded and became Chairman of Tevel Angels and later Tevel Global, a network of investors with
a focus on investing in early-stage Israeli-related technology companies, including numerous medical devices and software companies.
From 1999 to 2003, he was the initiator and later co-Director of the Technology Valuation Executive Program at Columbia Business
School, and from 1997 to 2000, he served as a faculty member at Yale University School of Management and Yale International Center
for Finance, focusing on International and Technology Valuation and Management. Dr. Fuerst is also involved in numerous not for
profit organizations, mostly related to healthcare in disadvantaged communities. We believe Dr. Fuerst is qualified to serve on
our board of directors due to his status as one of our founders and a co-inventor of our core technology and also because of his
extensive experience in innovation, finance and product development with life sciences companies. Dr. Fuerst holds an M.Phil.
and Ph.D. from Columbia Business School with a dissertation topic of the linkages of game theory, valuation and corporate stock
exchange listing. He holds a dual bachelor's degree from Tel Aviv University (Dual Magna Cum Laude) in Accounting and Economics.
57
Shilo
Ben Zeev
is our President and Chief Operating Officer as well as a director of our company.  Mr. Ben Zeev was appointed
Chief Operating Officer and director at our formation on August 11, 2011 and was appointed President in February 2012.  From
2009 to 2012, he served as VP Business Development - Israel for MEX Agency of Medical Experts GmbH, a Germany-based consultancy
agency engaged in building market infrastructure, introduction and assimilation of medical devices companies in the German medical
market. His position included searching and identifying cutting edge Israeli medical technologies and assisting in embedding these
technologies in medical institutions in the German market. During 2010, he also served as Vice President of ThreeWire Inc., a
company engaged in the recruitment and enrollment of patients into clinical trials for international pharmaceuticals and medical
devices companies.  From 2006 to 2008, he was the Chief Operating Officer of Lifewave Ltd. (TASE: LIFE), an Israeli medical
device company engaged in the development and marketing of specialized chronic wound treatment technologies. At Lifewave, he was
involved in establishing and managing staff recruitment, the company's initial public offering, clinical trials in Europe,
production and marketing. From 2004 to 2006, Mr. Ben Zeev was a project manager at Baran Raviv Group, a leading engineering and
infrastructure integration firm, where his work included coordination between the Israeli government and the company for the establishment
and construction of cellular sites. Mr. Ben Zeev has also founded and managed D-Cure, a research fund, sponsoring technology-oriented
medical research for diabetes treatments, headed by diabetes expert Professor Itamar Raz. We believe Mr. Ben Zeev is qualified
to serve on our board of directors due to his status as one of our founders and also because of his extensive experience in business
operations for medical device companies.
Mordechi
(Motty) Hershkowitz
has been our Chief Financial Officer since March 2012 and was appointed as our Treasurer and Secretary
in May 2012.  From 2006 to 2011, Mr. Hershkowitz was the head of a department in the taxation group at BDO Israel.  Prior
to his position at BDO, from 2004 to 2006, Mr. Hershkowitz was a manager at Pelephone Communication Ltd., a mobile phone service
company in Israel.  From 2002 to 2004, Mr. Hershkowitz was involved in the management of several not-for-profit entities
focusing in the areas of education and schools. Mr. Hershkowitz is a lecturer at The College of Management Academic Studies in
Israel.  He is a Certified Public Accountant in Israel and holds a BA in business management and accounting from Ono Academic
College in
Kiryat Ono, Israel
.
Dr. David
Weintraub
is a founding director and stockholder of our company. Dr. Weintraub has more than 25 years of experience in
medical technologies, including the founding of numerous companies, including Versamed (acquired by GE Healthcare in 2008 for
over $40 million), a developer of a novel line of respirators. Dr. Weintraub founded the first Women Health Center in Israel in
1987 and practices obstetrics and gynecology in his private clinic. Dr. Weintraub has also served as the Medical Director of the
Ramat Aviv Medical Center in Tel Aviv since 2003. As part of his medical device experience, from 2004 to 2005, he was the Medical
Director of UltraShape Ltd., a medical device company, and from 2006 to 2009, he was the co-founder and Medical Director of medical
device maker Anima. He also managed and maintained his own private clinic from 2006 to 2009. We believe Dr. Weintraub is qualified
to serve on our board of directors due to his status as one of our founders and also because of his extensive experience with
medical technologies. He graduated from the Sackler School of Medicine, Tel Aviv University in 1980.
Malcolm
Hoenlein
has been a director of our company since August 31, 2011. Since 1986, Mr. Hoenlein has served as Chief Executive
Officer and Executive Vice Chairman of the Conference of Presidents of Major American Jewish Organizations, the coordinating body
on international and national concerns for 52 national American Jewish organizations. Previously, he served as the founding Executive
Director of the Jewish Community Relations Council of Greater New York. Prior to that, he was the founding Executive Director
of the Greater New York Conference on Soviet Jewry. A National Defense Fellow at the Near East Center of the University of Pennsylvania,
Mr. Hoenlein taught International Relations in the Political Science Department and served as a Middle East specialist at the
Foreign Policy Research Institute. In addition, he served on the editorial staff of ORBIS, the Journal of International Affairs.
He serves as a director of several companies, including Bank Leumi USA, PureSafe Water Systems, Inc. (OTCBB:PSWS), Powermat USA,
O.D.F. Optronics Ltd. and WellSense Technologies. We believe Mr. Hoenlein is qualified to serve on our board of directors because
of his extensive experience serving on the boards of public and private companies. Mr. Hoenlein has a B.A. in Political Science
from Temple University and a Masters Degree in International Relations from the University of Pennsylvania, as well as an
honorary Doctorate of Laws from Touro College and an honorary Doctorate of Humane Letters from Yeshiva University.
58
Prof.
Nahum D. Melumad
has been a director of our company since August 31, 2011. He is the James Dohr Professor of Accounting
and Business Law at the Columbia Business School (CBS). He has been a member of the CBS faculty since 1993. Between 2000 and 2006,
he served as the chairman of the accounting division at the CBS. Professor Melumad is the recipient of the 2005 Annual CBS Dean's
Award for Excellence in MBA/EMBA teaching. Between 2003 and 2008, he co-directed the Columbia Business School/New York Stock Exchange
Program for directors of public companies titled Integrity in Financial Disclosure. Prior to joining CBS, he was a member of the
faculty at the Stanford Business School. Professor Melumad has served as a consultant and advisor to many organizations, including
Bristol-Myers Squibb, General Electric, Johnson & Johnson, the New York Stock Exchange, and Morgan Stanley. We believe Prof.
Melumad is qualified to serve on our board of directors because of his extensive experience in public company accounting and audit
matters. Professor Melumad is a CPA, received M.B.A. and Ph.D. degrees from the University of California at Berkeley and earned
is B.A. degree from Tel Aviv University.
Adam K.
Stern
has been a director of our company since October 27, 2011.
Mr. Stern
has over 25 years of venture
capital and investment banking experience focusing primarily on the technology and life science industries. Since November 2012,
Mr. Stern has served as the Managing Director of Private Equity Banking at Aegis Capital Corp. and the Chief Executive Officer
of SternAegis Ventures. From 1997 to November 2012, Mr. Stern was affiliated with Spencer Trask, most recently as Managing Director.
From 1989 to 1997, he was associated with Josephthal & Co., members of the New York Stock Exchange, where he served as Senior
Vice President and Managing Director of Private Equity Marketing and held increasingly responsible positions. He has been a licensed
securities broker since 1987 and a General Securities Principal since 1991. From May 2007 until June 2011, he served as a director
of Prolor Biotech Inc. (NYSE MKT: PBTH) and he has served as a director of InVivo Therapeutics Holdings Corp. (OTCBB: NVIV) since
October 2010 and Organovo Holdings, Inc. (OTCBB:ONVO) since February 2012. We believe Mr. Stern is qualified to serve on our
board of directors because of his extensive experience in corporate finance and experience in the technology and life science
industries. Mr. Stern holds a Bachelor of Arts degree with honors from the University of South Florida in Tampa.
Key Employees
Below are the
biographies of certain key non-executive officer employees of our company:
Tal Givoly
has been our Chief Technology Officer since February 2012. Mr. Givoly has over 25 years of systems and software development
experience, and has held management positions in the areas of technology intellectual property, research, development, standards
and product management at both startup companies and multinational corporations. Until March 2011 and for the 7 years prior, Mr.
Givoly was Chief Scientist at Amdocs Limited (NYSE: DOX) and led innovation activities across the company, including heading up
Amdocs' technology incubation unit and innovation programs. Mr. Givoly is the inventor of over 25 granted patents with others
pending. He is a co-founder of Medivizor, a medical informatics service. He has been a speaker at major telecommunications industry
events, such as the Mobile World Congress and CTIA – The Wireless Association. He has also been actively involved in industry
forums and standard bodies, including TM Forum, the Internet Engineering Task Force, the Alliance for Telecommunications Industry
Standards, and IPDR.org. He holds B.Sc. Cum Laude, Mathematics and Physics from Tel Aviv University.
59
Eyal Sandach
has been our Director of Production since July 2012. Mr. Sandach is an experienced executive, with more than 15 years
of experience in the medical device field managing both start-ups and larger companies in both the U.S. and Israel. From May 2006
to July 2008, Mr. Sandich served as Chief Executive Officer of vascular products company B-Balloon Ltd., which company was merged
with Neovasc Medical Ltd. and acquired by Medical Ventures (Canada). From 2008 to 2009, he then served as General Manager of merged
Israel operations for Medical Ventures Corp. From 2000 to 2006, Mr. Sandich worked for American Medical Systems, Inc., a urology
& gynecology company located in Minnetonka, Minnesota. With AMS, Mr. Sandich held several senior management positions, in
operations, mergers and acquisitions and in marketing and sales. Mr. Sandich holds a BSC in Industrial engineering and MBA from
the University of St. Thomas in Saint Paul, Minnesota.
Scientific Advisory Board
We are in the
process of establishing a scientific advisory board. Our advisory board members will be available to us to advise on our business
plans and operational strategies. The biographical information for our initial advisory board member is listed below.
Professor
Itamar Raz
.
Itamar Raz, M.D. is world-renowned diabetes expert. He is a professor of Internal Medicine at Hadassah
University Medical Center and the head of the Diabetes Unit and Research Center at Hadassah. He also serves as the head of the
Israel National Council of Diabetes and as a member of several international editorial boards. Professor Raz has published extensively
in the area of diabetes, with over 190 publications to his credit.  As president of the Israel Diabetes Research Group,
he collaborates with other diabetologists in Israel and worldwide, conducting clinical research aimed at improving the treatment
of diabetic patients. He is also the president of D-Cure, a non-profit foundation involving diabetes research. He is leading several
international clinical studies involving prevention of Type 1 Diabetes and protection of kidneys and hearts of diabetics.
Consulting
Agreement with SLD Capital Corp.
In
October 2012, we entered into a non-exclusive strategic advisory consulting agreement with SLD Capital Corp. SLD Capital is an
affiliate of Steven Rosner, an investor in our company. Pursuant to this agreement, SLD Capital will, over the one year term of
the agreement, provide strategic advice to our management regarding, among other matters: (i) our operations and related obligations
as a U.S. publicly-listed and reporting company, (ii) the industries and businesses in which we are engaged, including our publicly-listed
competitors and (iii) other aspects of or concerning our business about which SLD Capital has knowledge or expertise, including
ongoing our stockholder relations initiatives. SLD Capital will also provide feedback to our management on the evolution of our
business and on our execution of our business plans.
As consideration
for such services, upon execution of the agreement, we issued SLD Capital 250,000 shares of our common stock and agreed to issue
SLD Capital additional 20,833 shares of common stock per month in arrears during the first eleven months of the agreement term
and 20,837 shares of common stock in the final month of the agreement term, for a total of 250,000 additional shares of common
stock. Pursuant to the registration statement of which this prospectus is a part, we are registering the shares of common stock
issued or to be issued under this consulting agreement for public resale by SLD Capital and its assigns.
60
Board Committees
Our board of
directors has two standing committees — an Audit Committee and a Compensation Committee.
Audit Committee
Our Audit Committee
is comprised of Prof. Nahum D. Melumad and Malcolm Hoenlein, each of whom is an independent director. Prof. Melumad serves as
Chairman of the Audit Committee. The board of directors has determined that Prof. Melumad is an "audit committee financial
expert" as defined in Item 407(d)(5)(ii) of Regulation S-K.
Our Audit Committee
will oversee our corporate accounting, financial reporting practices and the audits of financial statements. For this purpose,
the Audit Committee has a charter (which will be reviewed annually) and performs several functions. The Audit Committee will:
·
evaluate
                                                                                                             the independence
                                                                                                             and performance of,
                                                                                                             and assesses the
                                                                                                             qualifications of,
                                                                                                             our independent auditor
                                                                                                             and engage such independent
                                                                                                             auditor;
·
approve
                                                                                                             the plan and fees
                                                                                                             for the annual audit,
                                                                                                             quarterly reviews,
                                                                                                             tax and other audit-related
                                                                                                             services and approve
                                                                                                             in advance any non-audit
                                                                                                             service to be provided
                                                                                                             by our independent
                                                                                                             auditor;
·
monitor
                                                                                                             the independence
                                                                                                             of our independent
                                                                                                             auditor and the rotation
                                                                                                             of partners of the
                                                                                                             independent auditor
                                                                                                             on our engagement
                                                                                                             team as required
                                                                                                             by law;
·
review
                                                                                                             the financial statements
                                                                                                             to be included in
                                                                                                             our Annual Report
                                                                                                             on Form 10-K and
                                                                                                             Quarterly Reports
                                                                                                             on Form 10-Q and
                                                                                                             reviews with management
                                                                                                             and our independent
                                                                                                             auditor the results
                                                                                                             of the annual audit
                                                                                                             and reviews of our
                                                                                                             quarterly financial
                                                                                                             statements;
·
oversee
                                                                                                             all aspects our systems
                                                                                                             of internal accounting
                                                                                                             control and corporate
                                                                                                             governance functions
                                                                                                             on behalf of the
                                                                                                             board; and
·
provide
                                                                                                             oversight assistance
                                                                                                             in connection with
                                                                                                             legal, ethical and
                                                                                                             risk management compliance
                                                                                                             programs established
                                                                                                             by management and
                                                                                                             the board, including
                                                                                                             compliance with requirements
                                                                                                             of the Sarbanes-Oxley
                                                                                                             Act of 2002, and
                                                                                                             make recommendations
                                                                                                             to the board of directors
                                                                                                             regarding corporate
                                                                                                             governance issues
                                                                                                             and policy decisions.
Compensation
Committee
Our Compensation
Committee is comprised of Malcolm Hoenlein and David Weintraub, with Mr. Hoenlein serving as Chairman. The Compensation Committee
will review or recommend the compensation arrangements for our management and employees and also assists the board of directors
in reviewing and approving matters such as company benefit and insurance plans, including monitoring the performance thereof.
The Compensation
Committee has the authority to directly engage, at our expense, any compensation consultants or other advisers as it deems necessary
to carry out its responsibilities in determining the amount and form of employee, executive and director compensation.
61
Director
Independence
Our board of
directors has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly.
Based on this review, our board has determined that Messrs. Weintraub, Hoenlein and Melumad are "independent directors"
as defined in the rules of NASDAQ OMX Group, Inc. corporate governance requirements and Rule 10A-3 promulgated under the Securities
Exchange Act of 1934, as amended.
Code of Business Conduct and
Ethics
We have not
adopted a Code of Business Conduct and Ethics but anticipate doing so following the effectiveness of the registration statement
of which this prospectus is a part.
Limitation of Directors Liability
and Indemnification
The Delaware
General Corporation Law authorizes corporations to limit or eliminate, subject to certain conditions, the personal liability of
directors to corporations and their stockholders for monetary damages for breach of their fiduciary duties. Our certificate of
incorporation limits the liability of our directors to the fullest extent permitted by Delaware law.
We have director
and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to
us, including matters arising under the Securities Act. Our certificate of incorporation and bylaws also provide that we will
indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved
in a legal proceeding of any nature.
There is no
pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be
required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.
62
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following
table summarizes, as of December 31, 2012, the annual compensation paid to Oren Fuerst, Mordechi (Motty) Hershkowitz
and
Shilo Ben Zeev, whom we refer to collectively as the "named executive officers" for the fiscal years ended December
31, 2012 and 2011. Our company was formed in August 2011; therefore the figures indicated below for 2011 reflect only a partial
year.
Name and
Principal
Position
Year
Salary
($)
Bonus
($)
Stock
Awards
Option
Awards
($)
Non-equity
incentive plan
compensation
Non-qualified
incentive plan
compensation
All Other
Compensation
($)
Total ($)
Oren Fuerst (Chairman and CEO)
2012
$
198,922
(1)
—
(2)
—
$
183,622
(3)
—
—
$
23,434
(4)
$
406,978
2011
$
49,884
(1)
—
(2)
—
—
—
—
$
2,380
$
52,264
Shilo Ben Zeev (President and COO)
2012
$
121,387
(5)
—
—.
$
292,000
(6)
—
—
$
41,545
(7)
$
454,931
2011
$
18,697
(5)
—
—.
—
—
—
4,446
$
23,143
Mordechi (Motty) Hershkowitz (CFO)
2012
$
55,224
(8)
—
—
$
36,400
(9)
—
—
$
22,781
(10)
$
114,404
2011
—
—
—
—
—
—
—
—
(1)
In accordance with his employment agreement
                                                           with our company (which was approved by our board of directors in March
                                                           2012), Dr. Fuerst was entitled to an annual salary of $192,000. In
                                                           August 2012, upon the approval of the Compensation Committee of our
                                                           board of directors, Dr. Fuerst's annual salary was increased
                                                           to $252,000, starting from August 2012. Since Dr. Fuerst receives part
                                                           of his salary from our Israeli subsidiary denominated in New Israeli
                                                           Shekel ("NIS"), the compensation received from the Israeli
                                                           subsidiary is calculated for purposes of this table based on the annual
                                                           average currency exchange. Amounts of salary do not include $18,500
                                                           which was earned but not paid at December 31, 2012.
(2)
In accordance with his employment agreement,
                                                           Dr. Fuerst is entitled to receive bonuses based on his achieving the
                                                           following milestones: (a) $96,000 in the event we achieve data lock
                                                           on least one clinical study required for FDA and/or CE Mark regulatory
                                                           approval, (b) $48,000 in the event we make a 510K regulatory submission
                                                           with the FDA for regulatory clearance of a company product, (c) $48,000
                                                           in the event we obtain a European notified body CE Mark clearance for
                                                           a company product, (d) $48,000 in the event we obtain a market clearance
                                                           for a company product in a market not covered by FDA or CE with a population
                                                           in excess of 100,000,000 and (e) $96,000 in the event we obtain FDA
                                                           regulatory clearance for a company product. Dr. Fuerst is also entitled
                                                           to receive additional bonuses for five years in connection with strategic
                                                           transactions that Dr. Fuerst has helped to consummate. As of December
                                                           31, 2012, Dr. Fuerst was entitled to receive a bonus at the amount
                                                           of $96,000 in light of the achieving of the first milestone described
                                                           above. However, the bonus had not been paid as of December 31, 2012.
63
(3)
In accordance with his employment agreement with our company, Dr.
                                                           Fuerst was entitled to receive fully-vested options to purchase shares
                                                           of our common stock equal to three percent (3%) of our issued and outstanding
                                                           capital stock on an as-converted fully diluted basis (but no less than
                                                           500,000 shares). Pursuant to Dr. Fuerst's employment agreement
                                                           and for accounting purposes, the exercise price of such options was
                                                           set at $1.00 per share; provided, that the exercise price remained
                                                           subject to modification if deemed appropriate by our board of directors.
                                                           In June 2012, the Compensation Committee of our board of directors
                                                           approved initial option grants under our 2012 Equity Incentive Plan.
                                                           As part of this approval, the Compensation Committee approved a reduction
                                                           in the exercise price of the options Dr. Fuerst was entitled to receive
                                                           from $1.00 to $0.52 and issued additional options at $0.52 per share.
                                                           As such, Dr. Fuerst was granted an aggregate of 750,000 options with
                                                           an exercise price of $0.52 per share. In September 2012, the Compensation
                                                           Committee of our board of directors clarified that 330,000 of these
                                                           options vested immediately, and 420,000 are subject to 2-year vesting
                                                           in equal increments on annual basis. We may grant Dr. Fuerst additional
                                                           options to purchase shares of common stock from time to time at the
                                                           discretion of our board of directors or the Compensation Committee
                                                           thereof. The value of the granted options for purposes of this table
                                                           was derived using the Black-Sholes model.
(4)
In addition to his salary, Dr. Fuerst is entitled to receive a
                                                           leased automobile and mobile phone during his employment as well as
                                                           reimbursements for expenses accrued. These benefits as well as other
                                                           social benefits under Israeli law are included as part of his "All
                                                           Other Compensation".
(5)
Since Mr. Ben Zeev receives his entire salary from our Israeli
                                                           subsidiary denominated in NIS, the compensation received is calculated
                                                           for purposes of this table based on the annual average currency exchange.
(6)
As part of the initial grants under our 2012 Equity Incentive Plan
                                                           approved by the Compensation Committee of our board of directors in
                                                           June 2012, Mr. Ben Zeev was granted 400,000 options to purchase shares
                                                           of common stock with an exercise price of $0.001 per share. 100,000
                                                           of these options vested immediately and 300,000 are subject to 2-year
                                                           vesting in equal increments on a quarterly basis. We may grant Mr.
                                                           Ben Zeev additional options to purchase shares of common stock from
                                                           time to time at the discretion of our board of directors or the Compensation
                                                           Committee thereof. The value of the granted options for purposes of
                                                           this table was derived using the Black-Sholes model.
(7)
In addition to his salary, Mr. Ben-Zeev is entitled to receive
                                                           a leased automobile and mobile phone during his employment. These benefits
                                                           as well as other social benefits under Israeli law are included as
                                                           part of his "All Other Compensation".
(8)
Mr. Hershkowitz became of Chief Financial Officer in March 2012.
                                                           Since Mr. Hershkowitz receives his entire salary from our Israeli subsidiary
                                                           denominated in NIS, the compensation received is calculated for purposes
                                                           of this table based on the annual average currency exchange.
(9)
As part of the initial grants under our 2012 Equity Incentive Plan
                                                           approved by the Compensation Committee of our board of directors in
                                                           June 2012, Mr. Hershkowitz was granted 70,000 options to purchase shares
                                                           of common stock with an exercise price of $0.47 per share. 10,000 of
                                                           these options vested immediately and 60,000 are subject to 2-year vesting
                                                           in equal increments on a quarterly basis. We may grant Mr. Hershkowitz
                                                           additional options to purchase shares of common stock from time to
                                                           time at the discretion of our board of directors or the Compensation
                                                           Committee thereof. The value of the granted options for purposes of
                                                           this table was derived using the Black-Sholes model.
(10)
In addition to his salary, Mr. Hershkowitz is entitled to receive
                                                            a leased automobile and mobile phone during his employment. These
                                                            benefits as well as other social benefits under Israeli law are included
                                                            as part of his "All Other Compensation".
All compensation awarded to our executive
officers were independently reviewed by our Compensation Committee and approved by our entire board of directors.
Employment Agreements
Except as set forth below, we currently
have no written employment agreements with any of our officers, directors or key employees. The following is a description of
our current executive employment agreements:
64
Oren Fuerst, Chairman of the Board and
Chief Executive Officer
– We entered into an at-will employment agreement with Dr. Fuerst on March 15, 2012 and effective
on November 1, 2011. Such agreement was amended in August 2012 to increase Dr. Fuerst's annual base salary. Dr. Fuerst is
not required to dedicate a minimum amount of time to fulfilling his roles with our company. Under the terms of his amended agreement,
Dr. Fuerst is entitled to receive an annual base salary of $252,000. Dr. Fuerst is also entitled to receive bonuses based on his
achieving the following milestones: (a) $96,000 in the event we achieve data lock on least one clinical study required for FDA
and/or CE Mark regulatory approval, (b) $48,000 in the event we make a 510K regulatory submission with the FDA for regulatory
clearance of a company product, (c) $48,000 in the event we obtain a European notified body CE Mark clearance for a company product,
(d) $48,000 in the event we obtain a market clearance for a company product in a market not covered by FDA or CE with a population
in excess of 100,000,000 and (e) $96,000 in the event we obtain FDA regulatory clearance for a company product. Moreover, Dr.
Fuerst is entitled to receive the following additional bonuses for five years in connection with strategic transactions of our
company that Dr. Fuerst has helped to consummate as follows: (i) 5% of the revenues of the company from such transaction in the
event we complete a strategic transaction with an aggregate actual or potential value of over US$1 million and less than US$10
million and (ii) 7% of the revenues of the revenues of our company from such transaction in the event we complete a strategic
transaction with an aggregate actual or potential value in excess of $10 million.
In addition, in accordance with his employment
agreement (which was approved by our board of directors in March 2012), upon the completion of the 2011-2012 Private Placement,
Dr. Fuerst was entitled to receive fully-vested options to purchase shares of our common stock equal to three percent (3%) of
our issued and outstanding capital stock on an as-converted fully diluted basis (but no less than 500,000 shares). Since the trigger
for the grant of such options occurred on March 30, 2012, we recognized for accounting purposes at March 31, 2012 the full compensation
cost related to 547,392 options in total amount of $26,141.
In June 2012, the Compensation Committee
of our board of directors approved a grant under our 2012 Equity Incentive Plan to Dr. Fuerst of 750,000 options to purchase shares
of our common stock (which include the 547,392 options referred to above plus 202,608 additional options). In connection with
such grant, the Compensation Committee reviewed a current valuation of our company and accordingly reduced the exercise price
of the options Dr. Fuerst was entitled to receive under his employment agreement from $1.00 to $0.52 per share and granted the
additional 202,608 with an exercise price of $0.52. In September, 2012 the Compensation Committee of our board of directors clarified
that 330,000 of these options vested immediately, and 420,000 are subject to 2-year vesting in equal increments on annual basis.
The employment agreement may be terminated
by us at will or upon the following events: death, disability, Change of Control or for Cause (each defined under the employment
agreement). In the event the employment agreement is terminated at will, Dr. Fuerst shall be entitled to receive 6-month base
salary. In the event the employment agreement is terminated and triggered by an event of Change of Control, Dr. Fuerst shall be
entitled to receive (i) benefits for up to two (2) times annual salary, (ii) rights granted to him under our benefit plans and
exercise any unvested options and (iii) right to immediately exercise any unvested options granted to him under our 2012 Equity
Incentive Plan and other applicable sub-plans over a period of three (3) years from the occurrence of Change of Control. In the
event the employment agreement is terminated on death or disability, any unvested options granted to him shall become fully vested
and exercisable. In the event the employment agreement is terminated by us for Cause, Dr. Fuerst will be entitled to payment of
any base salary earned but unpaid through the date of termination.
Dr. Fuerst's employment agreement
also includes a one (1) year non-competition and non-solicitation, certain confidentiality covenants and assignment of any his
invention. Under the terms of the agreement, Dr. Fuerst is entitled to certain expense reimbursements and other standard vacation
and sick leave.
65
Shilo Ben Zeev, President and Chief
Operating Officer
– We entered into an at-will Personal Employment Agreement with Mr. Ben Zeev on March 15, 2012 and
effective on November 1, 2011. Mr. Ben Zeev is required to spend no less than 90% of his entire business time and attention to
the business of our company. Under the terms of his agreement (which was amended in August 2012), Mr. Ben Zeev is entitled to
receive a monthly base salary of NIS 46,000. Mr. Ben Zeev is also entitled to additional options pursuant to our 2012 Equity Incentive
Plan, which may be awarded by the board, in the board's sole discretion, based on certain annual performance-based objectives
established by our board of directors.
The employment agreement may be terminated
at will or upon the following events by us: death, disability, Change of Control or for Cause (each defined under the employment
agreement). In the event the employment agreement is terminated at will, Mr. Ben Zeev shall be entitled to receive 6-month base
salary and severance payment pursuant to applicable Israeli severance law. In the event the employment agreement is terminated
and triggered by an event of Change of Control, Mr. Ben Zeev shall be entitled to receive (i) benefits for up to two (2) times
annual salary, (ii) rights granted to him under our benefit plans and exercise any unvested options and (iii) right to immediately
exercise any unvested options granted to him under our 2012 Equity Incentive Plan and other applicable sub-plans over a period
of three (3) years from the occurrence of Change of Control. In the event the employment agreement is terminated on death or disability,
any unvested options granted to Mr. Ben Zeev shall become fully vested and exercisable. In the event the employment agreement
is terminated by us for Cause, Mr. Ben Zeev will be entitled to severance payment under applicable Israeli severance law.
Mr. Ben Zeev's employment agreement
also includes a one (1) year non-competition and non-solicitation, certain confidentiality covenants and assignment of any his
invention. Under the terms of the agreement, Mr. Ben Zeev is entitled to certain expense reimbursements and other standard benefits,
including vacation, sick leave and life and disability insurance.
Mordechi (Motty) Hershkowitz, Chief
Financial Officer, Treasurer and Secretary
– We entered into an at-will Personal Employment Agreement with Mr. Hershkowitz
on March 15, 2012. Mr. Hershkowitz is a full-time employee of our company. Under the terms of his agreement (which was amended
in August 2012), Mr. Hershkowitz is entitled to receive a base monthly salary of NIS 26,000. Mr. Hershkowitz is also entitled
to additional options pursuant to our 2012 Equity Incentive Plan, which may be awarded by the board, in the board's sole
discretion, based on certain annual performance-based objectives established by the board of directors.
The employment agreement may be terminated
at will or for Cause (each defined under the employment agreement) by us. In the event the employment agreement is terminated
at will, Mr. Hershkowitz shall be entitled to receive 3-month base salary and severance payment pursuant to applicable Israeli
severance law. In the event the employment agreement is terminated by us for Cause, Mr. Hershkowitz will be entitled to severance
payment under applicable Israeli severance law.
Mr. Hershkowitz's employment agreement
also includes a one (1) year non-competition and non-solicitation, certain confidentiality covenants and assignment of any his
invention. Under the terms of this agreement, Mr. Hershkowitz is entitled to certain expense reimbursements and other standard
benefits, including vacation, sick leave and life and disability insurance.
66
2012 Equity Incentive Plan
On January 23, 2012, our board of directors
and stockholders adopted a 2012 Equity Incentive Plan for our company (which includes both U.S. and Israeli sub-plans). An aggregate
of 2,860,000 shares of our common stock have been reserved for issuance under our 2012 Equity Incentive Plan. The purpose of our
2012 Equity Incentive Plan is to attract and retain directors, officers, consultants, advisors and employees whose services are
considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development
and financial achievements. The 2012 Equity Incentive Plan will be administered by the Compensation Committee of our board of
directors or by the full board, which may determine, among other things, the (a) terms and conditions of any option or stock purchase
right granted, including the exercise price and the vesting schedule, (b) persons who are to receive options and stock purchase
rights and (c) the number of shares to be subject to each option and stock purchase right. The 2012 Equity Incentive Plan will
provide for the grant of (i) "incentive" options (qualified under section 422 of the Internal Revenue Code of
1986, as amended) to employees of our company and (ii) non-qualified options to directors and consultants of our company.
In addition, our board has authorized the appointment of
Tamir Fishman
Equity Plan Services
to act as a trustee for grants of options under the Israeli sub-plan to Israeli residents.
In connection with the administration of
our 2012 Equity Incentive Plan, our Compensation Committee will:
·
determine which
                                                                                                             employees and other
                                                                                                             persons will be granted
                                                                                                             awards under our
                                                                                                             2012 Equity Incentive
                                                                                                             Plan;
·
grant the awards
                                                                                                             to those selected
                                                                                                             to participate;
·
determine the
                                                                                                             exercise price for
                                                                                                             options; and
·
prescribe any
                                                                                                             limitations, restrictions
                                                                                                             and conditions upon
                                                                                                             any awards, including
                                                                                                             the vesting conditions
                                                                                                             of awards.
Any grant of awards to any of directors
under our 2012 Equity Incentive Plan must be approved by the Compensation Committee of our board of directors. In addition, our
Compensation Committee will:
·
interpret our
                                                                                                             2012 Equity Incentive
                                                                                                             Plan; and
·
make all other
                                                                                                             determinations and
                                                                                                             take all other action
                                                                                                             that may be necessary
                                                                                                             or advisable to implement
                                                                                                             and administer our
                                                                                                             2012 Equity Incentive
                                                                                                             Plan.
The 2012 Equity Incentive Plan provides
that in the event of a change of control event, the Compensation Committee or our board of directors shall have the discretion
to determine whether and to what extent to accelerate the vesting, exercise or payment of an award.
In addition, our board of directors may
amend our 2012 Equity Incentive Plan at any time. However, without stockholder approval, our 2012 Equity Incentive Plan may not
be amended in a manner that would:
·
increase the
                                                                                                             number of shares
                                                                                                             that may be issued
                                                                                                             under our 2012 Equity
                                                                                                             Incentive Plan;
·
materially modify
                                                                                                             the requirements
                                                                                                             for eligibility for
                                                                                                             participation in
                                                                                                             our 2012 Equity Incentive
                                                                                                             Plan;
67
·
materially increase
                                                                                                             the benefits to participants
                                                                                                             provided by our 2012
                                                                                                             Equity Incentive
                                                                                                             Plan; or
·
otherwise disqualify
                                                                                                             our 2012 Equity Incentive
                                                                                                             Plan for coverage
                                                                                                             under Rule 16b-3
                                                                                                             promulgated under
                                                                                                             the Securities Exchange
                                                                                                             Act of 1934, as amended.
Awards previously granted under our 2012
Equity Incentive Plan may not be impaired or affected by any amendment of our 2012 Equity Incentive Plan, without the consent
of the affected grantees.
Outstanding Equity Awards
In June 2012, the Compensation Committee
of our board of directors approved the terms of initial grants under our 2012 Equity Incentive Plan. An aggregate of 2,100,000
stock options were granted to our officers, employees, directors and several of our consultants. The options issued to our executive
officers are described under "Summary Compensation Table" above.
Director Compensation
In September 2012, the Compensation Committee
of our board of directors adopted a director compensation policy for our company under which our independent directors will receive
reasonable compensation for their service on our board of directors or any committees thereof. Under this policy, independent
directors will receive, both retroactively for 2012 and going forward, cash fees of: (i) $2,000 per meeting for board meetings
or board calls attended and (ii) $1,000 per meeting for committee meetings or committee calls attended.
In addition, as part of the initial grants
of options under our 2012 Equity Incentive Plan approved by the Compensation Committee of our board of directors in June 2012,
two of our three independent directors (Malcolm Hoenlein and Prof. Nahum Melumad) were each granted 200,000 options with an exercise
price of $0.47 per share. In each case, 100,000 of such options vested immediately and the remaining 100,000 options are subject
to 2-year vesting in equal increments on quarterly basis.
68
PRINCIPAL STOCKHOLDERS
The following table sets forth information
regarding the beneficial ownership of our common stock as of the date of this prospectus by:
·
each person known
                                                                                                             by us to be the beneficial
                                                                                                             owner of more than
                                                                                                             5% of our outstanding
                                                                                                             shares of common
                                                                                                             stock;
·
each of our named
                                                                                                             executive officers
                                                                                                             and directors; and
·
all our executive
                                                                                                             officers and directors
                                                                                                             as a group.
Beneficial ownership is determined in accordance
with the rules of the SEC and includes voting or investment power with respect to the securities. Except as otherwise indicated,
each person or entity named in the table has sole voting and investment power with respect to all shares of our capital shown
as beneficially owned, subject to applicable community property laws.
In computing the number and percentage
of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of the date of this prospectus
are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other
person.
Name of Beneficial Owner
Shares
    of
Common
Beneficially
Stock Owned
Percent
                                                                                                                                of
Common
                                                                                                         Stock
Beneficially
Owned
(1)
David
    Weintraub
(2)
2,700,000
18.51
%
Oren
    Fuerst
(3)
2,055,000
13.91
%
Meir Plevinski
1,275,000
8.74
%
Spencer
    Trask Investment Partners, LLC
(4)
1,271,273
8.70
%
Laurence
    G. Allen
(5)
904,788
6.10
%
Adam
    K. Stern
(6)
700,000
4.80
%
Shilo
    Ben Zeev
(7)
550,000
3.73
%
Mordechi
    (Motty) Hershkowitz
(8)
25,000
*
Malcolm
    Hoenlein
(9)
125,000
*
Nahum
    D. Melumad
(10)
125,000
*
All
    Executive Officers and Directors as a group (7 persons)
6,280,000
42.82
%
*
Less than 1%.
(1)
Percentage ownership is based on
14,583,522
shares of our common stock outstanding as
                                                           of the date of this prospectus and, for each person or entity listed
                                                           above, warrants or options to purchase shares of our common stock which
                                                           exercisable within 60 days of the date of this prospectus.
(2)
David Weintraub is a director
                                                                                             of our company.
(3)
Includes:
                                                                                             (i) 1,725,000 shares of common stock
                                                                                             held by
Strategic Models,
                                                                                             LLC, a Delaware limited liability
                                                                                             company owned and controlled by Dr.
                                                                                             Fuerst and Tzameret Fuerst and (ii)
                                                                                             330,000 vested options to purchase
                                                                                             common stock held by Dr. Fuerst.
                                                                                             Excludes 420,000 options which are
                                                                                             not vested.
69
(4)
Includes: (i) to purchase
700,000 shares
                                                           of common stock with
;
(ii) a warrant
                                                           to purchase 277,811 shares of common stock with an exercise price of
                                                           $1.00 per share and (iii) a warrant to purchase 293,462 shares of common
                                                           stock with a current exercise of $1.42 per share. Such warrants were
                                                           originally issued to Spencer Trask as part of its compensation for
                                                           acting as our placement agent and subsequently transferred to Spencer
                                                           Trask Investment Partners, LLC by Spencer Trask. In addition, Spencer
                                                           Trask Investment Partners, LLC will be eligible to receive an additional
                                                           42,337 underlying warrant shares due to further anti-dilution adjustment
following completing the second and third tranches of the August
                                                           2012 Private Placement
. Such warrants are
                                                           exercisable at any time prior to the earlier of: (i) March 30, 2019
                                                           or (ii) three years following the date that our common stock becomes
                                                           publicly traded.
(5)
Laurence G. Allen is the natural person with voting and dispositive
                                                           power over the shares held by ACP X, LP, ACP Investment Group, LLC,
                                                           NYPPEX LLC and NYPPEX Holdings, LLC. This includes 681,901 shares of
                                                           common stock and underlying warrant shares held by ACP X, LP, 51,408
                                                           shares of common stock and underlying warrant shares held by ACP Investment
                                                           Group, LLC, 42,254 shares of underlying warrant shares held by NYPPEX
                                                           LLC, and 26,408 shares of underlying warrant shares held by NYPPEX
                                                           Holdings, LLC. Also includes 102,817 shares of common stock and underlying
                                                           warrant shares held by an individual retirement account for Mr. Allen.
(6)
Adam K. Stern is a director of our company. The share numbers include
                                                           shares owned individually by Mr. Stern and through two entities (Piper
                                                           Venture Partners, LLC and Pavilion Capital Partners, LLC) owned and/or
                                                           controlled by Mr. Stern.
(7)
Shilo Ben Zeev is our President
                                                                                             and Chief Operating Officer. Includes
                                                                                             175,000 vested options to purchase
                                                                                             common stock held by Mr. Ben Zeev.
                                                                                             Excludes 225,000 options which are
                                                                                             not vested.
(8)
Motty Hershkowitz is our Chief Financial Officer, Treasurer and
                                                           Secretary. Includes 25,000 vested options to purchase common stock
                                                           held by Mr. Hershkowitz. Excludes 45,000 options which are not vested.
(9)
Malcolm Hoenlein is a director of our company. Includes 125,000
                                                           vested options to purchase common stock held by Mr. Hoenlein. Excludes
                                                           75,000 options which are not vested.
(10)
Nahum D. Melumad is a director of our company. Includes 125,000
                                                           vested options to purchase common stock held by Prof. Melumad. Excludes
                                                           75,000 options which are not vested.
70
CERTAIN RELATIONSHIPS AND RELATED
PARTY TRANSACTIONS
Founders and Management
In connection with our formation in August
2011 and the contribution of intellectual property to our company in October 2011, our founders (including an affiliate of Dr.
Oren Fuerst, Dr. David Weintraub and Shilo Ben Zeev, each of whom are executives, directors and/or employees of our company) received
an aggregate of 7,500,000 shares of common stock for nominal consideration.
Spencer Trask and its Related Parties
In connection with our
formation on August 11, 2011, certain affiliates of Spencer Trask Ventures, Inc. and certain other parties not affiliated with
our company or Spencer Trask received an aggregate of 2,000,000 shares of common stock, for which they agreed to pay an aggregate
of $10,000 (or $0.005 per share). Under this transaction, Spencer Trask Investment Partners, LLC, an affiliate of Spencer Trask,
purchased 700,000 shares of common stock and Adam K. Stern, a former affiliate of Spencer Trask and also now a director of our
company, both individually and through two entities controlled by him, purchased 700,000 shares of our common stock.
Spencer Trask, acting
as our placement agent in our 2011-2012 Private Placement, received certain cash placement fees and was also granted two warrants:
(i) to purchase
482,200 shares of common stock with an exercise price of $1.00 and (ii) to purchase
509,366 shares of common stock with a current exercise price of $1.42 per share. In addition, Spencer Trask will be granted additional
47,246 underlying warrant shares due to further anti-dilution adjustment
following completing the second and third tranches
of the August 2012 Private Placement
. Such warrants are exercisable at any time prior to the earlier
of: (i) March 30, 2019 or (ii) three years following the date that our common stock becomes publicly traded. Subsequent to issuance,
and as permitted under FINRA rules, such warrants were divided and allocated to certain affiliates and individual employees of
Spencer Trask.
Pursuant to the terms
of a placement agent agreement, dated September 8, 2011, between us and Spencer Trask entered into in connection with our 2011-2012
Private Placement, Spencer Trask appointed Adam K. Stern as a member of our board of directors for a two-year term from October
27, 2011. His successor during such two year period, if any, will be chosen by Spencer Trask, subject to our reasonable approval.
We also entered into
a Right of First Refusal Agreement with Spencer Trask on October 27, 2011 which provides that, for a period of two (2) years from
March 30, 2012, Spencer Trask has the irrevocable preferential right of first refusal (i) to purchase for its own account or to
act as agent for any proposed private offering of securities (equity or debt) by us and (ii) to purchase or sell such securities
on terms no less favorable than we can obtain elsewhere. If, within ten (10) days of the receipt of such notice of intention and
statement of terms, Spencer Trask does not accept in writing such offer to purchase such securities or to act as agent with respect
to such offering upon the terms proposed, we will be free to negotiate terms with third parties with respect to such offering
and to effect such offering on such proposed terms.
In addition, on October 27, 2011, we entered
into a non-exclusive Finder's Fee Agreement with Spencer Trask which provides that if we or any of our affiliates enter
into any of certain transactions enumerated in the Finder's Agreement (including financing transactions and business combinations
or similar arrangements) with any party introduced to us by Spencer Trask, directly or indirectly at any time prior to the date
which is four (4) years after March 30, 2012, then we shall pay or cause to be paid to Spencer Trask certain cash finder's
fees as follows:
71
(i)
7% of the first $1,000,000 or portion thereof of the consideration
                                                               paid in such
transaction; plus
(ii)
6% of the next $1,000,000 or portion thereof of the consideration
                                                                paid in such transaction; plus
(iii)
5% of the next $5,000,000 or portion thereof of the consideration
                                                                 paid in such transaction; plus
(iv)
4% of the next $1,000,000 or portion thereof of the consideration
                                                                paid in such transaction; plus
(v)
3% of the next $1,000,000 or portion thereof of the consideration
                                                               paid in such transaction; plus
(vi)
2.5% of any consideration paid in such transaction in excess
                                                                of $9,000,000.
On August 20, 2012, we entered into another
non-exclusive Finder's Agreement with Spencer Trask in connection with our October 2012 Private Placement under which we
paid to Spencer Trask (i) a cash fee equal to 10% of the consideration actually paid to us by investors introduced to us by Spencer
Trask and (ii) a warrant to purchase shares of common stock equal to 10% of the number of shares of common stock purchased by
investors introduced to us by Spencer Trask and (iii) reimbursement for expenses related to the Private Placement at the amount
of up to $10,000.
Employment Agreements
We entered into an employment agreement
with Dr. Oren Fuerst, our Chairman and Chief Executive Officer in March, 2012. For a full description of the employment agreement
with Dr. Oren Fuerst, see "Executive Compensation." This agreement was amended on August 8, 2012.
We entered into an employment agreement
with Shilo Ben Zeev, our Chief Operating Officer, in March, 2012. For a full description of the employment agreement with Mr.
Ben Zeev, see "Executive Compensation." This agreement was amended as of September 2012 and effective starting from
August 2012.
We entered into an employment agreement
with Mordechi (Motty) Hershkowitz, our Chief Financial Officer, in March, 2012. For a full description of the employment agreement
with Mr. Hershkowitz, see "Executive Compensation." This agreement was amended as of September 2012 and effective
starting from August 2012.
72
DESCRIPTION OF SECURITIES
The following description of our capital
stock is a summary and does not purport to be complete and is subject to, and qualified in its entirety by, our certificate of
incorporation, our bylaws which we have included as exhibits to the registration statement of which this prospectus forms a part.
Our Certificate of Incorporation
authorizes us to issue:
·
45
                                                                                                                                                                                                                                                                                                                                               million
                                                                                                                                                                                                                                                                                                                                               shares
                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                               common
                                                                                                                                                                                                                                                                                                                                               stock,
                                                                                                                                                                                                                                                                                                                                               par
                                                                                                                                                                                                                                                                                                                                               value
                                                                                                                                                                                                                                                                                                                                               $0.0001
                                                                                                                                                                                                                                                                                                                                               per
                                                                                                                                                                                                                                                                                                                                               share;
                                                                                                                                                                                                                                                                                                                                               and
·
5
                                                                                                                                                                                                                                                                                                                                               million
                                                                                                                                                                                                                                                                                                                                               shares
                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                               "blank
                                                                                                                                                                                                                                                                                                                                               check"
                                                                                                                                                                                                                                                                                                                                               preferred
                                                                                                                                                                                                                                                                                                                                               stock,
                                                                                                                                                                                                                                                                                                                                               par
                                                                                                                                                                                                                                                                                                                                               value
                                                                                                                                                                                                                                                                                                                                               $0.0001
                                                                                                                                                                                                                                                                                                                                               per
                                                                                                                                                                                                                                                                                                                                               share,
                                                                                                                                                                                                                                                                                                                                               none
                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                               which
                                                                                                                                                                                                                                                                                                                                               have
                                                                                                                                                                                                                                                                                                                                               yet
                                                                                                                                                                                                                                                                                                                                               been
                                                                                                                                                                                                                                                                                                                                               designated.
In order to provide our
management with the flexibility to properly structure our capitalization as a public company, in May 2012, our board of directors
and stockholders granted our management the authority to declare a forward stock split of our outstanding and authorized common
stock in a ratio of up to 4-for-1. Our management may exercise their discretion to declare such split at any time prior to June
1, 2013.
The following statements
are summaries only of provisions of our authorized capital stock and are qualified in their entirety by our Certificate of Incorporation.
You should review these documents for a description of the rights, restrictions and obligations relating to our capital stock.
Common Stock
Voting.
The holders
of our common stock are entitled to one vote for each share held of record on all matters on which the holders are entitled to
vote (or consent to).
Dividends.
The
holders of our common stock are entitled to receive, ratably, dividends only if, when and as declared by our board of directors
in their discretion pursuant to the Delaware General Corporation Law therefor and after provision is made for each class of capital
stock having preference over the common stock (including the preferred stock if any).
Liquidation Rights.
In the event of our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share, ratably,
in all assets remaining available for distribution after payment of all liabilities and after provision is made for each class
of capital stock having preference over the common stock (including the preferred stock if any).
Conversion Rights.
The holders of our common stock have no conversion rights.
Preemptive and Similar
Rights.
The holders of our common stock have no preemptive or similar rights under our Certificate of Incorporation but will
have rights of anti-dilution, price protection and participation in future private financings of our company as provided for in
a certain Investor Rights Agreement entered into in connection with the 2011-2012 Private Placement.
Tag-along, Drag-along
and Registration Rights.
The holders of our common stock have rights of tag-along, drag along and registration as provided
for in a certain Investors Rights Agreement entered into in connection with the 2011-2012 Private Placement.
Redemption/Put Rights.
There are no redemption or sinking fund provisions applicable to the common stock. All of the outstanding shares of our common
stock are fully-paid and nonassessable.
73
Transfer Restrictions.
Shares of our common stock are subject to transfer restrictions. See "Restrictions on the Transfer of Securities."
Warrants
2011-2012 Warrants
General Terms.
In
connection with our 2011-2012 Private Placement, we issued warrants to 45 investors to purchase an aggregate 2,461,000 shares
of our common stock. We refer to these warrants as the 2011-2012 Investor Warrants. The 2011-2012 Investor Warrants are exercisable
for our common stock at an exercise price equal to $1.50 per share (the "Exercise Price"). The Exercise Price and
the number of securities issued upon exercise of the 2011-2012 Investor Warrants are subject to adjustment in certain cases described
below under "Adjustments." The Exercise Price has been adjusted to $1.42 per share and 138,648 underlying warrant
shares were issued to the holders of the 2011-2012 Investor Warrants due to a dilutive issuance arising out of the consummation
of the first tranche of the August 2012 Private Placement. The exercise price of the said warrants are expected to be adjusted
to $1.30 per share following completion of the second and third tranches of the August 2012 Private Placement. The total number
of additional warrant shares granted to such holders is 379,774 as a result of the entire August 2012 Private Placement.
Exercisability.
The
2011-2012 Investor Warrants are exercisable immediately upon issuance and may be exercised at any time prior to October 27, 2016.
The 2011-2012 Investor Warrants may be exercised at any time in whole or in part at the applicable exercise price until expiration
of the 2011-2012 Investor Warrants. No fractional shares will be issued upon the exercise of the 2011-2012 Investor Warrants.
Adjustments
The
exercise price and the number of warrant shares purchasable upon the exercise of the 2011-2012 Investor Warrants are subject to
"weighted average" adjustment for dilutive issuance as well as adjustment upon the occurrence of certain events, including
stock dividends, stock splits, combinations, down round protection and reclassifications of our capital stock. Additionally, an
adjustment would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into another
corporation (other than a consolidation or merger in which our company is the surviving corporation) or sale of all or substantially
all of the assets of our company in order to enable holders of the 2011-2012 Investor Warrants to acquire the kind and number
of shares of stock or other securities or property receivable in such event by a holder of the number of shares common stock that
might otherwise have been purchased upon the exercise of the 2011-2012 Investor Warrants.
Warrantholder Not
a Stockholder.
The 2011-2012 Investor Warrants do not confer upon the holders thereof any voting, dividend or other rights
as stockholders of our company.
Placement Agent Warrants
As part of the consideration
issued to Spencer Trask for acting as the placement agent in our 2011-2012 Private Placement, we issued to Spencer Trask: (i)
a warrant to purchase 482,200 shares of our common stock at an exercise price equal to $1.00 per share and (ii) a second warrant
to purchase 482,200 shares of our common stock at an exercise price equal to $1.50 per share (the "$1.50 Exercise Price").
The $1.50 Exercise Price has been adjusted to $1.42 per share due to a dilutive issuance arising out of the consummation of the
first tranche of the August 2012 Private Placement and Spencer Trask is entitled to purchase additional 27,166 shares of common
stock at the current exercise of $1.42 per share for the second warrant. The exercise price of the said warrants are expected
to be further reduced to $1.30 per share following completing the second and third trances of the August 2012 Private Placement.
Spencer Trask will be entitled to purchase additional 74,412 shares of common stock at the exercise of $1.30 per share for the
second warrant as a result of the entire August 2012 Private Placement.
74
Exercisability.
The
STV Placement Agent Warrants are exercisable immediately upon issuance and may be exercised at any time prior to the earlier of:
(i) March 30, 2019 or (ii) three years after we become a publicly traded company. The STV Placement Agent Warrants contain a "cashless
exercise" provision and may be exercised at any time in whole or in part at the applicable exercise price until expiration
of the STV Placement Agent Warrants. No fractional shares will be issued upon the exercise of the STV Placement Agent Warrants.
Adjustments.
The
exercise price and the number of warrant shares purchasable upon the exercise of the STV Placement Agent Warrants are subject
to "weighted average" adjustment for dilutive issuance as well as adjustment upon the occurrence of certain events,
including stock dividends, stock splits, combinations down round protection and reclassifications of our capital stock. Additionally,
an adjustment would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into
another corporation (other than a consolidation or merger in which our company is the surviving corporation) or sale of all or
substantially all of the assets of our company in order to enable holders of the STV Placement Agent Warrants to acquire the kind
and number of shares of stock or other securities or property receivable in such event by a holder of the number of shares common
stock that might otherwise have been purchased upon the exercise of the STV Placement Agent Warrants.
Warrantholder Not
a Stockholder.
The STV Placement Agent Warrants do not confer upon the holders thereof any voting, dividend or other rights
as stockholders of our company.
August 2012 Warrants
General Terms.
In
connection with our August 2012 Private Placement, we issued warrants to 13 investors to purchase an aggregate 500,014 shares
of our common stock. Following completing the 2
nd
and the 3
rd
trance of the August 2012 Private Placement,
we will issue additional warrants to such investors. We refer to these warrants in the aggregate as the August 2012 Investor Warrants.
The August Investor Warrants are exercisable for our common stock at an exercise price equal to $1.00 per share. The exercise
price and the number of securities issued upon exercise of the August 2012 Investor Warrants are subject to adjustment in certain
cases described below under "Adjustments."
Exercisability.
The
August 2012 Investor Warrants are exercisable immediately upon issuance and may be exercised at any time: (i) until the first
anniversary of the Effective Date (as defined below) with respect to the one hundred percent (100%) of the August 2012 Investor
Warrants and (ii) until the second anniversary of the Effective Date with respect to fifty percent (50%) of the August 2012 Investor
Warrants. The August 2012 Investor Warrants may be exercised at any time in whole or in part at the applicable exercise price
until expiration of the August 2012 Investor Warrants. No fractional shares will be issued upon the exercise of the August 2012
Investor Warrants. The term "Effective Date" means the date that we have received a ticker symbol for our common stock
and caused our common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading
system.
Adjustments.
The
exercise price and the number of warrant shares purchasable upon the exercise of the August 2012 Investor Warrants are not subject
to "weighted average" or any other price based adjustment. The exercise price is subject to adjustment upon the occurrence
of certain events, including stock dividends, stock splits, combinations and reclassifications of our capital stock. Additionally,
an adjustment would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into
another corporation (other than a consolidation or merger in which our company is the surviving corporation) or sale of all or
substantially all of the assets of our company in order to enable holders of the August 2012 Investor Warrants to acquire the
kind and number of shares of stock or other securities or property receivable in such event by a holder of the number of shares
common stock that might otherwise have been purchased upon the exercise of the August 2012 Investor Warrants.
75
Warrantholder Not
a Stockholder.
The August 2012 Investor Warrants do not confer upon the holders thereof any voting, dividend or other rights
as stockholders of our company.
Finder Warrants
As part of the consideration
issued to the FINRA members we engaged as finders for our October 2012 Private Placement we issued to such finders warrants to
purchase an aggregate of 179,502 shares of our common stock at an exercise price equal to $1.50 per share. We refer to these warrants
as the Finder Warrants.
Exercisability.
The
Finder Warrants are exercisable immediately upon issuance and may be exercised at any time prior to the third anniversary of the
issuance of the Finder Warrants. The Finder Warrants contain a "cashless exercise" provision and may be exercised
at any time in whole or in part at the applicable exercise price until expiration of the Finder Warrants. No fractional shares
will be issued upon the exercise of the Finder Warrants.
Adjustments.
The
exercise price and the number of warrant shares purchasable upon the exercise of the Finder Warrants are not subject to "weighted
average" or any other price based adjustment. The exercise price is subject to adjustment upon the occurrence of certain
events, including stock dividends, stock splits, combinations and reclassifications of our capital stock. Additionally, an adjustment
would be made in the case of a reclassification or exchange, consolidation or merger of our company with or into another corporation
(other than a consolidation or merger in which our company is the surviving corporation) or sale of all or substantially all of
the assets of our company in order to enable holders of the Finder Warrants to acquire the kind and number of shares of stock
or other securities or property receivable in such event by a holder of the number of shares common stock that might otherwise
have been purchased upon the exercise of the Finder Warrants.
Warrantholder Not
a Stockholder.
The Finder Warrants do not confer upon the holders thereof any voting, dividend or other rights as stockholders
of our company.
Transfer Agent and Registrar
VStock Transfer, LLC is the transfer agent
and registrar for our common stock.
Quotation of Securities
We intend to seek to have a broker-dealer
file a Form 211 in order to have our common stock quoted on the OTC Bulletin Board and/or OTCQB. It is anticipated that our common
stock will be quoted on the OTC Bulletin Board and/or OTCQB on or promptly after the date of this prospectus, provided, however,
that is no assurance that our common stock will actually be approved and quoted on the OTC Bulletin Board or OTCQB.
Anti-Takeover Effect of Delaware Law, Certain Charter and
Bylaw Provisions
Our certificate of incorporation and bylaws
contain provisions that could have the effect of discouraging potential acquisition proposals or tender offers or delaying or
preventing a change of control of our company. These provisions are as follows:
76
·
they provide
                                                                                                             that special meetings
                                                                                                             of stockholders may
                                                                                                             be called only by
                                                                                                             the board of directors,
                                                                                                             President or our
                                                                                                             Chairman of the Board
                                                                                                             of Directors, or
                                                                                                             at the request in
                                                                                                             writing by stockholders
                                                                                                             of record owning
                                                                                                             at least fifty (50%)
                                                                                                             percent of the issued
                                                                                                             and outstanding voting
                                                                                                             shares of common
                                                                                                             stock;
·
they do not include
                                                                                                             a provision for cumulative
                                                                                                             voting in the election
                                                                                                             of directors. Under
                                                                                                             cumulative voting,
                                                                                                             a minority stockholder
                                                                                                             holding a sufficient
                                                                                                             number of shares
                                                                                                             may be able to ensure
                                                                                                             the election of one
                                                                                                             or more directors.
                                                                                                             The absence of cumulative
                                                                                                             voting may have the
                                                                                                             effect of limiting
                                                                                                             the ability of minority
                                                                                                             stockholders to effect
                                                                                                             changes in our board
                                                                                                             of directors; and
·
they allow us
                                                                                                             to issue, without
                                                                                                             stockholder approval,
                                                                                                             up to 5,000,000 shares
                                                                                                             of preferred stock
                                                                                                             that could adversely
                                                                                                             affect the rights
                                                                                                             and powers of the
                                                                                                             holders of our common
                                                                                                             stock.
We are subject to the provisions of Section
203 of the General Corporation Law of the State of Delaware, an anti-takeover law. In general, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for
a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business
combination is approved in the following prescribed manner:
·
prior to the
                                                                                                             time of the transaction,
                                                                                                             the board of directors
                                                                                                             of the corporation
                                                                                                             approved either the
                                                                                                             business combination
                                                                                                             or the transaction
                                                                                                             which resulted in
                                                                                                             the stockholder becoming
                                                                                                             an interested stockholder;
·
upon completion
                                                                                                             of the transaction
                                                                                                             that resulted in
                                                                                                             the stockholder becoming
                                                                                                             an interested stockholder,
                                                                                                             the stockholder owned
                                                                                                             at least 85% of the
                                                                                                             voting stock of the
                                                                                                             corporation outstanding
                                                                                                             at the time the transaction
                                                                                                             commenced, excluding
                                                                                                             for purposes of determining
                                                                                                             the number of shares
                                                                                                             outstanding (1) shares
                                                                                                             owned by persons
                                                                                                             who are directors
                                                                                                             and also officers
                                                                                                             and (2) shares owned
                                                                                                             by employee stock
                                                                                                             plans in which employee
                                                                                                             participants do not
                                                                                                             have the right to
                                                                                                             determine confidentially
                                                                                                             whether shares held
                                                                                                             subject to the plan
                                                                                                             will be tendered
                                                                                                             in a tender or exchange
                                                                                                             offer; and
·
on or subsequent
                                                                                                             to the time of the
                                                                                                             transaction, the
                                                                                                             business combination
                                                                                                             is approved by the
                                                                                                             board and authorized
                                                                                                             at an annual or special
                                                                                                             meeting of stockholders,
                                                                                                             and not by written
                                                                                                             consent, by the affirmative
                                                                                                             vote of at least
                                                                                                             66 2/3% of the outstanding
                                                                                                             voting stock which
                                                                                                             is not owned by the
                                                                                                             interested stockholder.
Generally, for purposes of Section 203,
a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit
to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and associates,
owns or, within three years prior to the determination of interested stockholder status, owned 15% or more of a corporation's
outstanding voting securities.
77
SELLING STOCKHOLDERS
The following table sets forth information
as of the date of this prospectus, to our knowledge, about the beneficial ownership of our common stock by the selling stockholders
both before and immediately after the offering.
All of the selling
stockholders received their securities in: (i) the
2011-2012 Private Placement
, (ii) the August
2012 Private Placement and/or (iii) the October 2012 Private Placement, in each case prior to the initial filing date of the registration
statement of which this prospectus is a part.  The securities registered on behalf of the investors in the August 2012 Private
Placement include the securities they are expected to receive upon the full funding of their irrevocable commitments to provide
funding to our company. We believe that the selling stockholders have sole voting and investment power with respect to all of
the shares of common stock beneficially owned by them unless otherwise indicated.
The percent
of beneficial ownership for the selling stockholders is based on
14,583,522
shares of common
stock outstanding as of the date of this prospectus.  Warrants to purchase shares of our common stock held by certain investors
that are currently exercisable or exercisable within 60 days of the date of this prospectus are considered outstanding and beneficially
owned by such investors for the purpose of computing the percentage ownership of their respective percentage ownership but are
not treated as outstanding for the purpose of computing the percentage ownership of any other stockholder.  Unless otherwise
stated below, to our knowledge, none of the selling stockholders has had a material relationship with us other than as a stockholder
at any time within the past three years or has ever been one of our officers or directors.
Pursuant to Rules 13d-3 and 13d-5 of the
Exchange Act, beneficial ownership includes any shares of our common stock as to which a stockholder has sole or shared voting
power or investment power, and also any shares of our common stock which the stockholder has the right to acquire within 60 days,
including upon exercise of warrants to purchase shares of our common stock.
The shares of common stock being offered
pursuant to this prospectus may be offered for sale from time to time during the period the registration statement of which this
prospectus is a part remains effective, by or for the account of the selling stockholders.  After the date of effectiveness,
the selling stockholders may have sold or transferred, in transactions covered by this prospectus or in transactions exempt from
the registration requirements of the Securities Act, some or all of their common stock.
Information about the selling stockholders
may change over time.  Any changed information will be set forth in an amendment to the registration statement or supplement
to this prospectus, to the extent required by law.
Shares Beneficially
Owned as of the date of
this
    Prospectus
Shares
Offered by
this
Shares
                                                                         Beneficially
Owned
                                                                                                                                                                                               After
                                                                                                                                                                                               the
Offering
(
1
)
Name of Selling Stockholder
Number
Percent
Prospectus
Number
Percent
DIT Equity Holdings, LLC
(2) (3) (4) (5)
386,150
2.64
%
791,049
—
—
Anthony Ivankovich
(2) (3) (4)
635,950
4.32
%
704,909
—
—
FEQ Realty, LLC
(2) (3) (4) (6)
251,408
1.71
%
653,858
—
—
78
ACP X, LP
(2) (4) (7)
681,901
4.58
%
671,295
—
—
Veladen Investments Corp, LLC
(2) (3) (8)
200,000
1.36
%
600,000
—
—
David Blonder
(2) (4)
514,085
3.46
%
538,579
—
—
George Karfunkel
(2) (3) (4)
435,950
2.95
%
504,909
—
—
SLD Capital Corp.
(2) (9)
312,499
2.14
%
500,000
—
—
Donald Wray & Linda Wray JTWROS
(2) (4)
411,268
2.78
%
430,863
—
—
Moggle Investors, LLC
(2) (3) (10)
134,000
*
402,000
—
—
Steven B. Rosner
(2) (3)(9)
492,499
3.38
%
300,000
—
—
Sten-Anders Fellman
(2) (3) (4)
251,309
1.71
%
285,787
—
—
Steven B. Rosner, as trustee for SLD Capital Corp. MPP
(2)
    (3)
80,000
*
240,000
—
—
ABBA Properties Partnership
(2) (4) (11)
205,634
1.40
%
215,432
—
—
Mondas Investments Ltd.
(2) (4) (12)
205,634
1.40
%
215,432
—
—
White Rock Capital Partners, L.P.
(13)
166,666
1.14
%
166,666
—
—
Montague Capital LP
(14)
150,000
1.03
%
150,000
—
—
Porthos Ventures, LLC
(15)
133,333
*
133,333
—
—
Avrom Balsam
(2) (4)
123,380
*
129,259
—
—
RBC Capital Markets Cust FBO Laurence G. Allen IRA
(2) (4)
102,817
*
107,716
—
—
Barbara S. Dickler Trust
(2) (4) (16)
102,817
*
107,716
—
—
Bruce P. Andre Trust
(2) (4) (17)
102,817
*
107,716
—
—
Dan Manor
(2) (4)
102,817
*
107,716
—
—
Edward S. Rosenthal
(2)
(4)
102,817
*
107,716
—
—
Maurice Aaron
(2) (4)
102,817
*
107,716
—
—
79
Robert D DeRose and Susan DeRose Family Trust
(2)
    (4) (18)
102,817
*
107,716
—
—
Steve M. Payne
(2) (4)
102,817
*
107,716
—
—
CRL Management LLC
(19)
100,000
*
100,000
—
—
Don Bahouth
100,000
*
100,000
—
—
Nathaniel Abramson
(2) (4)
74,028
*
77,555
—
—
Four Jr. Investments LTD.
(20)
66,666
*
66,666
—
—
Robert M. Newsome
66,666
*
66,666
—
—
Louis A. Romeo & Brenda K. Romeo
66,666
*
66,666
—
—
Henry Rothman
(2) (3) (4)
54,496
*
63,114
—
—
John E. Dell
60,000
*
60,000
—
—
ACP Investment Group, LLC
(2) (4) (21)
51,408
*
53,858
—
—
Clayton Struve
(2) (4)
51,408
*
53,858
—
—
David & Julie Rosen
(2) (4)
51,408
*
53,858
—
—
Marvin Boehm
(2) (4)
51,408
*
53,858
—
—
Mary L. Marcus-West Declaration Trust
(2) (4) (22)
51,408
*
53,858
—
—
Larry W. Schwartz
(2) (4)
51,408
*
53,858
—
—
Graham Short
(2) (4)
51,408
*
53,858
—
—
NYPPEX Holdings, LLC
(2) (4) (23)
26,408
*
28,858
—
—
Richard Neustadter
(2) (4)
51,408
*
53,858
—
—
Richard Todd Gross
(2) (4)
51,408
*
53,858
—
—
Renald & Catherine Anelle
50,666
*
50,666
—
—
John R. Campo
50,000
*
50,000
—
—
80
Charles Affron and Mirella Affron JTWROS
(2) (4)
41,127
*
43,086
—
—
Fabrizio Balestri
(2) (4)
41,127
*
43,086
—
—
Joseph Merrill
(2) (4)
41,127
*
43,086
—
—
Raymond L. Vollintine
(2) (4)
41,127
*
43,086
—
—
Howard K. Fuguet
40,000
*
40,000
—
—
Michael Leiter
33,333
*
33,333
—
—
Robert Montgomery
(2) (4)
30,563
*
31,543
—
—
Edward Dunn
30,000
*
30,000
—
—
David A. Rosner
(2) (3)
10,000
*
30,000
—
—
Lauren Paige Rosner
(2) (3)
10,000
*
30,000
—
—
John Dempsey
(2) (4)
25,704
*
26,929
—
—
Ron Eller
(2) (3) (4)
21,797
*
25,245
—
—
Akita Capital, LLC
(24)
21,866
*
21,866
—
—
Ian Stern
(2) (4)
20,563
*
21,543
—
—
Robert Frome
(2) (4)
20,563
*
21,543
—
—
Walter J. Lachewitz Jr.
(2) (4)
20,563
*
21,543
—
—
Michael Willis
20,000
*
20,000
—
—
Thomas C. Stephens
20,000
*
20,000
—
—
John T. Winebrenner Trust
(25)
20,000
*
20,000
—
—
Robyn Schreiber Irrevocable Trust
(26)
20,000
*
20,000
—
—
William C. Stone & Megan N. Williams
20,000
*
20,000
—
—
Richard Grossbard
17,000
*
17,000
—
—
Derek Sroufe
16,666
*
16,666
—
—
Robert B. Baker
16,666
*
16,666
—
—
81
Trevor R. Ashmore
16,666
*
16,666
—
—
David & Lillian Barry
16,666
*
16,666
—
—
Scott Anderson
16,666
*
16,666
—
—
Lawrence Grossbard
16,666
*
16,666
—
—
Brian and Debbie Keller
(2) (4)
15,423
*
16,157
—
—
Paul O'Brien
15,000
*
15,000
—
—
Brooks and Carmen McCartney
13,400
*
13,400
—
—
John C. Boyer
13,333
*
13,333
—
Paul V. Isicrate
13,300
*
13,300
—
—
Israel Bernstein
(2) (4)
10,282
*
10,772
—
—
PNT Marketing Services Inc. Profit Sharing Plan & Trust FBO
    Anthony Coretto
(2) (4) (27)
10,282
*
10,772
—
—
Tatiana Ivanova
(2) (4)
10,282
*
10,772
—
—
Bill L. Boad
10,000
*
10,000
—
—
Michael Hetzner & Ann Hetzner
10,000
*
10,000
—
—
Mark A. Dante
8,333
*
8,333
—
—
Eric J. Cooper
6,750
*
6,750
—
—
John F. Neary
6,700
*
6,700
—
—
Grigoriy Levitskiy
6,666
*
6,666
—
—
Rafique Sheikh
5,000
*
5,000
—
—
Dmitry Dary
4,000
*
4,000
—
—
Robert Friedman
3,000
*
3,000
—
—
TOTAL
8,600,677
10,596,855
*	             Less than 1%.
(1)
Assumes the sale of all shares offered pursuant to this prospectus.
(2)
Share numbers include shares underlying warrants held by the selling
                                                           stockholders.
82
(3)
Securities registered include
                                                                                             shares of common stock and shares
                                                                                             of common stock underlying warrants
                                                                                             to be purchased by the selling stockholder
                                                                                             pursuant to the irrevocable commitment
                                                                                             to purchase such securities provided
                                                                                             by such selling stockholder in connection
                                                                                             with the August 2012 Private Placement.
(4)
Securities registered include additional shares of common stock
                                                           to be available underlying warrants held by the selling stockholder
                                                           as a result of anti-dilution adjustments to be caused by the funding
                                                           of tranches two and three of the August 2012 Private Placement.
(5)
Kyung Won Lee
is the natural
                                                           person with voting and dispositive power over the shares held by DIT
                                                           Equity Holdings, LLC.
(6)
Ernest
                                                                                             Bartlett
is the natural person
                                                                                             with voting and dispositive power
                                                                                             over the shares held by FEQ Realty,
                                                                                             LLC.
(7)
Laurence
                                                                                             G. Allen is the natural person
with
                                                                                             voting and dispositive power over
                                                                                             the shares held by ACP X, LP, ACP
                                                                                             Investment Group, LLC, NYPPEX, LLC
                                                                                             and NYPPEX Holdings, LLC. Mr. Allen
                                                                                             and NYPPEX Holdings, LLC are affiliated
                                                                                             with NYPPEX, LLC, a FINRA member
                                                                                             broker-dealer.
(8)
William Miller
is
                                                                                             the natural person
with voting
                                                                                             and dispositive power over the shares
                                                                                             held by Veladen Investments Corp,
                                                                                             LLC.
(9)
Steven B. Rosner
is
                                                                                             the natural person
with voting
                                                                                             and dispositive power over the shares
                                                                                             held by SLD Capital Corp and Steven
                                                                                             B. Rosner, as Trustee for SLD Capital
                                                                                             Corp. MPP. The shares offered by
                                                                                             SLD Capital Corp. consist of shares
                                                                                             received under a Consulting Agreement
                                                                                             between SLD Capital Corp. and our
                                                                                             company. See "Management —
                                                                                             Consulting Agreement with SLD Capital
                                                                                             Corp."
(10)
Stephen Harrington
is
                                                                                              the natural person
with voting
                                                                                              and dispositive power over the shares
                                                                                              held by Moggle Investors, LLC.
(11)
Avrom Balsam and Nathaniel Abramson are the natural persons with
                                                            voting and dispositive power over the shares held by ABBA Properties
                                                            Partnership.
(12)
Marika Favre-Calo and Francois Kirschmann are the natural persons
                                                            with voting and dispositive power over the shares held by Mondas Investments
                                                            Ltd.
(13)
Thomas U. Barton
is the natural person
with voting and dispositive power over the shares held by White
                                                            Rock Capital Partners, L.P.
(14)
Denis Kalenja is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by Montague
                                                                                              Capital LP.
(15)
Nick Patel is the natural person
                                                                                              with voting and dispositive power
                                                                                              over the shares held by Porthos
                                                                                              Ventures, LLC.
(16)
Barbara S. Dickler and Marshall N. Dickler
are
the co-trustees with voting and dispositive power over
                                                            the shares held by the Barbara S. Dickler Trust.
(17)
Bruce P. Andre
is the trustee
                                                            with voting and dispositive power over the shares held by the Bruce
                                                            P. Andre Trust.
(18)
Robert D. DeRose and Susan DeRose are co-trustees with voting
                                                            and dispositive power over the shares held by the Robert D DeRose
                                                            and Susan DeRose Family Trust.
(19)
Charles Raymond Langston
is the natural person with voting
                                                                                              and dispositive power over the shares
                                                                                              held by
CRL Management LLC.
(20)
Robert D. Burke MD is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by Four
                                                                                              Jr. Investments LTD.
(21)
Laurence
                                                                                              G. Allen is the natural person
with
                                                                                              voting and dispositive power over
                                                                                              the shares held by ACP X, LP, ACP
                                                                                              Investment Group, LLC and NYPPEX
                                                                                              Holdings, LLC.
(22)
Mary L. Marcus-West
is the trustee
                                                            with voting and dispositive power over the shares held by the Mary
                                                            L. Marcus-West Declaration Trust.
(23)
Laurence
                                                                                              G. Allen is the natural person
with
                                                                                              voting and dispositive power over
                                                                                              the shares held by ACP X, LP, ACP
                                                                                              Investment Group, LLC and NYPPEX
                                                                                              Holdings, LLC.
83
(24)
Gary Gotto
is
                                                                                                               the natural person
                                                                                                               with voting and
                                                                                                               dispositive power
                                                                                                               over the shares
                                                                                                               held by Akita Capital,
                                                                                                               LLC.
(25)
Thomas C. Stephens is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by John
                                                                                              T. Winebrenner Trust.
(26)
Warren Schreiber is the natural
                                                                                              person with voting and dispositive
                                                                                              power over the shares held by
Robyn Shreiber Irrevocable Trust.
(27)
Anthony Coretto
is the trustee
                                                            with voting and dispositive power over the shares held by the PNT
                                                            Marketing Services Inc. Profit Sharing Plan & Trust FBO Anthony
                                                            Coretto.
84
PLAN OF DISTRIBUTION
The selling stockholders, which as used
herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares
of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution
or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or
interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private
transactions.
The selling security holders may sell some
or all of their shares at a fixed price of $1.50 per share until our shares are quoted on the OTC Bulletin Board and/or OTCQB
Market and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTC Bulletin Board
and/or OTCQB Market, shareholders may sell their shares in private transactions to other individuals.
Our common stock is not listed or traded
on any public exchange, and we have not applied for listing or quotation on any exchange. We are seeking sponsorship for the quotation
of our common stock on the OTC Bulletin Board and/or OTCQB Market. In order to be quoted on the OTC Bulletin Board and/or OTCQB
Market, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no
assurance that a market maker will agree to file the necessary documents with FINRA, nor can there be any assurance that such
an application for quotation will be approved.  There is further no assurance that an active trading market for our
shares will develop, or, if developed, that it will be sustained.  In the absence of a trading market or an active trading
market, investors may be unable to liquidate their investment.
The selling stockholders may use any one
or more of the following methods when disposing of shares or interests therein:
·
ordinary brokerage
                                                                                                             transactions and
                                                                                                             transactions in which
                                                                                                             the broker-dealer
                                                                                                             solicits purchasers;
·
block trades
                                                                                                             in which the broker-dealer
                                                                                                             will attempt to sell
                                                                                                             the shares as agent,
                                                                                                             but may position
                                                                                                             and resell a portion
                                                                                                             of the block as principal
                                                                                                             to facilitate the
                                                                                                             transaction;
·
purchases by
                                                                                                             a broker-dealer as
                                                                                                             principal and resale
                                                                                                             by the broker-dealer
                                                                                                             for its account;
·
privately negotiated
                                                                                                             transactions;
·
short sales;
·
through the writing
                                                                                                             or settlement of
                                                                                                             options or other
                                                                                                             hedging transactions,
                                                                                                             whether through an
                                                                                                             options exchange
                                                                                                             or otherwise;
·
broker-dealers
                                                                                                             may agree with the
                                                                                                             selling stockholders
                                                                                                             to sell a specified
                                                                                                             number of such shares
                                                                                                             at a stipulated price
                                                                                                             per share;
·
a combination
                                                                                                             of any such methods
                                                                                                             of sale; and
·
any other method
                                                                                                             permitted pursuant
                                                                                                             to applicable law.
85
The selling stockholders may, from time
to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for
purposes of this prospectus; provided, however, that prior to any such transfer the following information (or such other information
as may be required by the federal securities laws from time to time) with respect to each such selling beneficial owner must be
added to the prospectus by way of a prospectus supplement or post-effective amendment, as appropriate: (1) the name of the selling
beneficial owner; (2) any material relationship the selling beneficial owner has had within the past three years with us or any
of our predecessors or affiliates; (3) the amount of securities of the class owned by such beneficial owner before the offering;
(4) the amount to be offered for the beneficial owner's account; and (5) the amount and (if one percent or more) the percentage
of the class to be owned by such beneficial owner after the offering is complete.
In connection with the sale of our common
stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.
The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short
positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders
may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by
this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented
or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders
from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions,
if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject,
in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the
proceeds from this offering, provided, however, we will receive proceeds from the exercise of the warrants held by certain investors.
The selling stockholders also may resell
all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided
that they meet the criteria and conform to the requirements of that rule.
The selling stockholders and any underwriters,
broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any
resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are "underwriters"
within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities
Act.
To the extent required, the shares of our
common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the
names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement
that includes this prospectus.
86
The maximum amount of compensation to be
received by any FINRA member or independent broker-dealer for the sale of any securities registered under this prospectus will
not be greater than 8.0% of the gross proceeds from the sale of such securities.
In order to comply with the securities
laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers
or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or
an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders
that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the
activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be
supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus
delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.
87
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information
There is no public trading market on which
our common stock is traded. Among other matters, in order for our common stock to become OTCBB/OTCQB eligible, a FINRA-member
broker/dealer must file a Form 211 with FINRA and commit to make a market in our securities once the Form 211 is approved by FINRA.
As of the date of this prospectus, the Form 211 has not been filed with FINRA. There is no assurance that our common stock will
be included on the OTCBB/OTCQB.
The
shares
of common stock registered hereby can be sold by selling stockholders at a fixed price of $1.50 per share until our shares are
quoted on the OTC Bulletin Board and/or OTCQB
Market
and thereafter at prevailing market prices
or privately negotiated prices. We determined such fixed price based on the highest price at which shares of our common stock
were sold in our previous private placements.
We can offer no assurance that an active
public market in our shares will develop or be sustained. Future sales of substantial amounts of our shares in the public market
could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale
of our equity securities.
Holders
As of the date of this prospectus, there
are 108 record holders of our common stock.
LEGAL MATTERS
The validity of the securities offered
in this prospectus is being passed upon for us by Ellenoff Grossman & Schole LLP, New York, New York.
EXPERTS
The consolidated financial statements of
LabStyle Innovations Corp. appearing in this prospectus and related registration statement have been audited by Kost Forer Gabbay
& Kasierer, a member of Ernst & Young Global, independent registered public accounting firm, as set forth in their report
thereon (which contains an explanatory paragraph describing conditions that raise substantial doubt about our ability to continue
as a going concern as described in Note 1b to the consolidated financial statements) appearing elsewhere herein, and are included
in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION
OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our directors and officers are indemnified
to the fullest extent permitted under Delaware law. We may also purchase and maintain insurance which protects our officers and
directors against any liabilities incurred in connection with their service in such a capacity, and such a policy may be obtained
by us in the future.
88
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing,
or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by a director, officer or controlling person of ours in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration
statement on Form S-1 under the Securities Act, with respect to the common stock offered by this prospectus. This prospectus,
which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the
registration statement. For further information pertaining to us and our common stock, reference is made to the registration statement
and the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents or provisions
of any documents referred to in this prospectus are not necessarily complete, and in each instance where a copy of the document
has been filed as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of
the matters involved.
You may read and copy all or any portion
of the registration statement without charge at the office of the SEC at the Public Reference Room at Station Place, 100 F Street,
N.E., Washington, D.C. 20549. Copies of the registration statement may be obtained from the SEC at prescribed rates from the Public
Reference Section of the SEC at such address. In addition, registration statements and certain other filings made with the SEC
electronically are publicly available through the SEC's web site at
http://www.sec.gov
. The registration statement,
including all exhibits and amendments to the registration statement, has been filed electronically with the SEC.
Contemporaneously with the effectiveness
of the registration statement of which this prospectus is a part, we will file a Registration Statement on Form 8-A and become
subject to the information and periodic reporting requirements of the Exchange Act and, accordingly, will file annual reports
containing financial statements audited by an independent public accounting firm, quarterly reports containing unaudited financial
data, current reports, proxy statements and other information with the Securities and Exchange Commission. You will be able to
inspect and copy such periodic reports, proxy statements and other information at the SEC's public reference room, and the
web site of the SEC referred to above.
89
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-3 - F-4
Consolidated Statements of Operations
F-5
Statements of Changes in Stockholders' Equity (deficit)
F-6
Consolidated Statements of Cash Flows
F-7
Notes to Consolidated Financial Statements
F-8 - F-26
F-
1
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Shareholders
of
LABSTYLE INNOVATIONS CORP.
(A Development Stage Company)
We have audited the
accompanying consolidated balance sheet of LabStyle Innovations Corp. (the "Company") and its subsidiary as of December
31, 2011, and the related consolidated statements of operations, shareholders' equity and cash flows for the period from
August 11, 2011 (inception date) through December 31, 2011. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on
our audit.
We conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatements. We were not engaged to perform an audit of the Company's and its subsidiary internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company's
and its subsidiary internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion,
the financial statements referred to above, present fairly, in all material respects, the consolidated financial position of the
Company and its subsidiary as of December 31, 2011, and the consolidated results of their operations and their cash flows
for the period from August 11, 2011 (inception date) through December 31, 2011, in conformity with U.S. generally accepted
accounting principles.
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1b,
the Company has incurred recurring operating losses
and negative cash flows from operating activities
during the period from August 11, 2011 (inception date) through December 31, 2011
. Its ability
to continue to operate is dependent upon obtaining additional financial support. This condition as described in Note 1b, raise
substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.
Tel-Aviv, Israel
KOST FORER GABBAY & KASIERER
June 26, 2012
A Member of Ernst & Young Global
Except for Note 1b and Note 10 to which
the date is December 10, 2012
F-
2
CONSOLIDATED BALANCE SHEETS
U.S. dollars
September 30,
December 31,
2012
2011
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
820,017
$
908,765
Short-term bank deposit
33,571
13,130
Other accounts receivable and prepaid expenses (Note 3)
88,824
12,664
Receivable on account of shares (Note 8g)
1,050,074
-
Total
current assets
1,992,486
934,559
LEASE DEPOSIT
21,146
20,616
PROPERTY AND EQUIPMENT, NET (Note 4)
50,120
23,223
Total
assets
$
2,063,752
$
978,398
The accompanying notes are an integral
part of the consolidated financial statements.
F-
3
CONSOLIDATED BALANCE SHEETS
U.S. dollars (except stock data)
September 30,
December 31,
2012
2011
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Trade payables
$
220,269
$
32,578
Other accounts payable and accrued expenses (Note 5)
357,079
88,313
Total
current liabilities
577,348
120,891
LIABILITY RELATED TO WARRANTS
3,218,140
664,363
COMMITMENTS AND CONTINGENT LIABILITIES (Note 6)
STOCKHOLDERS' EQUITY (DEFICIT) (Note 8):
Common Stock of $0.0001 par value - Authorized: 45,000,000
    shares at September 30, 2012 and December 31, 2011; Issued: 13,262,747 (unaudited) and 10,830,000 shares at September 30,
    2012 and December 31, 2011, respectively; Outstanding: 13,262,747 (unaudited) and 10,830,000 shares at September 30, 2012
    and December 31, 2011, respectively
1,326
1,083
Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at
    September 30, 2012 and December 31, 2011; Issued: None at September 30, 2012 and December 31, 2011; Outstanding: None at September
    30, 2012 and December 31, 2011
-
-
Additional paid-in capital
3,146,555
577,410
Deficit accumulated during the development stage
(4,879,617
)
(385,349
)
Total
stockholders' equity (deficit)
(1,731,736
)
193,144
Total
liabilities and stockholders' equity (deficit)
$
2,063,752
$
978,398
The accompanying notes are an integral
part of the consolidated financial statements.
F-
4
CONSOLIDATED STATEMENTS OF
    OPERATIONS
U.S. dollars
Nine months
ended
September 30,
2012
Period from
August 11, 2011
(inception date)
to December 31,
2011
Period from
August 11, 2011
(inception date)
to September
30, 2012
Unaudited
Unaudited
Operating expenses:
Research and development
$
1,012,087
77,895
$
1,089,982
Marketing and pre-production costs
128,171
-
128,171
General and administrative
1,244,053
156,818
1,400,871
Total operating loss
2,384,311
234,713
2,619,024
Financial expenses, net (Note 9a)
2,109,957
150,636
2,260,593
Net loss
$
4,494,268
$
385,349
$
4,879,617
Net loss per share (Note 9b)
Basic and diluted loss per share
$
(0.38
)
$
(0.04
)
Weighted average number of common stock used in computing basic and diluted
    net loss per share
11,676,809
9,499,507
The accompanying notes are an integral
part of the consolidated financial statements.
F-
5
STATEMENTS OF CHANGES IN STOCKHOLDERS'
    EQUITY (DEFICIT)
U.S. dollars (except stock data)
Common stock
Additional
paid-in
Accumulated
Total
stockholders'
Number
Amount
capital
deficit
equity (deficit)
Balance as of August 11, 2011 (inception date)
-
$
-
$
-
$
-
$
-
Issuance of common stock to founders upon
    inception date at par value
6,500,000
650
-
-
650
Issuance of common stock to accredited investors upon
    inception date at par value
2,000,000
200
9,800
-
10,000
Issuance of common stock to founders in October 2011
    at par value
1,000,000
100
-
-
100
Issuance of common stock  in October 2011 at $0.61
    per stock, net of issuance cost
805,000
81
346,082
-
346,163
Issuance of common stock in November  2011at $0.61
    per stock, net of issuance cost
335,000
33
135,294
-
135,327
Issuance of common stock in December 2011 at $0.62
    per stock, net of issuance cost
190,000
19
86,234
-
86,253
Net loss
-
-
-
(385,349
)
(385,349
)
Balance as of December 31, 2011
10,830,000
1,083
577,410
(385,349
)
193,144
Issuance of common stock in February 2012 at $0.63
    per stock, net of issuance cost
171,000
17
81,465
-
81,482
Issuance of common stock in March 2012 at $0.63 per
    stock, net of issuance cost
890,000
89
422,031
-
422,120
Issuance of common stock in March 2012 at $0.63 per
    stock, net of issuance cost
70,000
7
36,500
-
36,507
Issuance of common stock and warrants in August 2012
    at $1.00 per unit, net of issuance cost
500,014
50
498,107
498,157
Issuance of common stock in September 2012 at $1.50
    per stock, net of issuance cost
801,733
80
1,049,994
-
1,050,074
Stock-based compensation
-
-
481,048
-
481,048
Net loss
-
-
-
(4,494,268
)
(4,494,268
)
Balance as of September 30, 2012 (unaudited)
13,262,747
$
1,326
$
3,146,555
$
(4,879,617
)
$
(1,731,736
)
The accompanying notes are an integral
part of the consolidated financial statements.
F-
6
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars
Nine months
ended
September 30,
2012
Period from
August 11,
2011
(inception
date) to
December 31,
2011
Period from
August 11,
2011
(inception
date) to
September, 30,
2012
Unaudited
Unaudited
Cash flows from operating
    activities:
Net loss
$
(4,494,268
)
$
(385,349
)
$
(4,879,617
)
Adjustments required to reconcile net loss to net
    cash used in operating activities:
Stock-based compensation
481,048
-
481,048
Issuance cost related to warrants to investors and
    service provider
101,263
156,097
257,360
Issuance cost related to common shares to founders
-
750
750
Depreciation
6,748
504
7,252
Increase in other accounts receivable and prepaid
    expenses
(77,280
)
(12,358
)
(89,638
)
Increase in trade payables
187,691
32,578
220,269
Change in the fair value of warrants
2,006,777
(15,867
)
1,990,910
Increase in other accounts payable
    and accrued expenses
268,766
88,313
357,079
Net cash used in operating activities
(1,519,255
)
(135,332
)
(1,654,587
)
Cash flows from investing
    activities:
Investment in short-term bank deposits
(19,851
)
(13,437
)
(33,288
)
Investment in lease deposit
-
(20,616
)
(20,616
)
Purchase of property and equipment
(33,645
)
(23,727
)
(57,372
)
Net cash used in investing activities
(53,496
)
(57,780
)
(111,276
)
Cash flows from financing
    activities:
Proceeds from issuance of Common
    Stock and warrants, net of issuance cost
1,484,003
1,101,877
2,585,880
Net cash provided by financing
    activities
1,484,003
1,091,877
2,585,880
Increase (decrease) in cash and cash equivalents
(88,748
)
908,765
820,017
Cash and cash equivalents at the
    beginning of the period
908,765
-
-
Cash and cash equivalents at
    the end of the period
$
820,017
$
908,765
$
820,017
Non-cash investing and
    financing and activities:
Receivable on account of shares
$
1,050,074
$
-
$
1,050,074
The accompanying notes are an integral
part of the consolidated financial statements.
F-
7
LABSTYLE INNOVATIONS CORP.
(Development stage Company)
NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
U.S. dollars (except stock and per stock data)
NOTE 1:-
GENERAL
a.
LabStyle Innovations Corp. (the
                                                                 "Company") was incorporated in Delaware, to exploit
                                                                 a proprietary technology and commenced its operations on August
                                                                 11, 2011. The Company's technology is seeking to bring
                                                                 laboratory testing capabilities to consumers through the use
                                                                 of smartphones. Accordingly, the Company is considered to be
                                                                 in the development stage as defined in ASC No. 915, "Development
                                                                 stage entities".
The Company
has a wholly owned subsidiary, LabStyle Innovations Ltd. ("Ltd."), incorporated and located in Israel, which commenced
operations on September 14, 2011. Its principal business activity is to perform the research and development activities of the
group.
b.
Through September 30, 2012, the
                                                                 Company incurred recurring operating losses from operating activities
                                                                 and negative cash flows from operating activities since inception
                                                                 amounting to $
2,619,024
and
                                                                 $1,654,587, respectively. The Company will have to obtain additional
                                                                 capital resources to maintain its commercialization, research
                                                                 and development activities. According to the management estimates,
                                                                 based on the Company's budget and the assumption that initial
                                                                 commercial sales will commence, the Company will have sufficient
                                                                 liquidity resources to continue its activity at least until the
                                                                 end of 2013. However, if the Company is unable to meet its commercial
                                                                 sales targets or in obtaining additional capital resources, it
                                                                 won't be able to continue its activity beyond the end of
                                                                 2013. The Company is addressing its liquidity issues by seeking
                                                                 additional fund raisings and implementing initiatives to allow
                                                                 covering its anticipated budget deficit for 2013. The Company
                                                                 plans to have its securities quoted on the Over-the-Counter Bulletin
                                                                 Board ("OTCBB") and/or the OTCQB Market operated
                                                                 by OTC Markets Group, Inc. ("OTCQB") as soon as practicable
                                                                 thereafter, for the purpose of raising capital to finance its
                                                                 operations. Additionally, the Company is trying to raise capital
                                                                 from other sources.
There are
no assurances, however, that the Company will be able to obtain an adequate level of financing needed for the long-term development
and commercialization of its products or have its securities quoted on OTCBB and / or OTCQB. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any
adjustments to reflect the possible future effects on recoverability and classification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.
Subsequent
to the balance sheet date, the Company obtained additional financing in total amount of $1,334,404, net of issuance cost, through
the issuance of shares of Company common stock, par value $0.0001 per share (the "Common Stock") as described in more
detail in Note 10b.
F-
8
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
The consolidated
financial statements are prepared according to United States generally accepted accounting principles ("U.S. GAAP").
a.
Use of estimates:
The preparation
of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
b.
Financial statements in U.S.
                                                                 dollars:
The accompanying financial
statements have been prepared in U.S. dollars.
Ltd.'s financing activities
are incurred in U.S. dollars. Although a portion of the Company's expenses are denominated in NIS (mostly salaries and rent),
a substantial portion of their expenses are denominated in U.S. dollars. The Company's management believes that the currency
of the primary economic environment in which the operations of the Company and its Israeli subsidiary are conducted is the U.S.
dollar ("dollar"); thus, the dollar is the functional currency of the Company and Ltd.
Transactions and balances
denominated in U.S. dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the
dollar are re-measured into dollars in accordance with ASC No. 830, "Foreign Currency Matters". All transaction
gains and losses of the re-measurement of monetary balance sheet items are reflected in the consolidated statement of operations
as financial income or expenses, as appropriate.
c.
Principles of consolidation:
The consolidated financial
statements include the accounts of the Company and its subsidiary. All intercompany balances and transactions have been eliminated
upon consolidation.
d.
Cash equivalents:
The Company considers all
highly liquid investments, which are readily convertible to cash with a maturity of three months or less at the date of acquisition,
to be cash equivalents.
F-
9
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)
e.
Short-term bank deposits:
Short-term bank deposits are
deposits with maturities of more than three months and up to one year. The short-term bank deposits are denominated in
Israeli
New Shekels
("NIS") and bear interest at an average rate of 2.72 % and 2.17 % as of December 31, 2011 and September
30, 2012, respectively. The short-term bank deposits are presented at their cost, including accrued interest.
f.
Long-term lease deposit:
Long-term lease deposit includes
long-term deposit for offices rent.
g.
Property and equipment:
Property and equipment are
stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets at the following annual rates:
%
Computers, and peripheral equipment
15-33
Office furniture and equipment
6
Leasehold improvements
Over the shorter of the lease term or useful economic life
h.
Impairment of long-lived assets:
Property and equipment are
reviewed for impairment in accordance with ASC No. 360, "Property, Plant and Equipment," whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated
by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. During the period from August 11, 2011 until December
31, 2011 and for nine months period ended September 30, 2012, no impairment losses have been recorded.
i.
Concentrations of credit risk:
Financial instruments that
potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term
bank deposit and other account receivables.
F-
10
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)
The majority of cash and cash
equivalents of the Company and its subsidiary are invested in deposits and current accounts with major U.S. and Israeli banks.
Such cash and cash equivalents may be in excess of insured limits and are not insured in other jurisdictions. Generally, cash
and cash equivalents may be redeemed and therefore a minimal credit risk exists with respect to these deposits and investments.
j.
Research and development costs:
Research
and development costs are charged to the statement of operations, as incurred.
k.
Income taxes:
The Company accounts for income
taxes in accordance with ASC No. 740, "Income Taxes". This Statement prescribes the use of the liability method whereby
deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated
realizable value. As of December 31, 2011 and September 30, 2012, a full valuation allowance was provided by the Company.
ASC 740 contains a two-step
approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position
taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely
than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of
any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more
than 50% likely to be realized upon ultimate settlement. No liability for unrecognized tax benefits was recorded as a result of
the implementation of ASC 740.
l.
Fair value of financial instruments:
The Company
applies ASC 820, "Fair Value Measurements and Disclosures". Under this standard, fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction
between market participants at the measurement date.
In determining
fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value
that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability
developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the
Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based
on the best information available in the circumstances.
F-
11
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)
The hierarchy
is broken down into three levels based on the inputs as follows:
Level 1 -
Valuations based on quoted
                                                                      prices in active markets for identical assets that the Company
                                                                      has the ability to access. Valuation adjustments and block
                                                                      discounts are not applied to Level 1 instruments. Since
                                                                      valuations are based on quoted prices that are readily and
                                                                      regularly available in an active market, valuation of these
                                                                      products does not entail a significant degree of judgment.
Level 2 -
Valuations based on one
                                                                      or more quoted prices in markets that are not active or
                                                                      for which all significant inputs are observable, either
                                                                      directly or indirectly.
Level 3 -
Valuations based on inputs
                                                                      that are unobservable and significant to the overall fair
                                                                      value measurement.
The availability
of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example,
the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation
is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires
more judgment and the investments are categorized as Level 3.
The carrying
amounts of cash and cash equivalents, short-term bank deposit, other accounts receivable, trade payables and other accounts payable
approximate their fair value due to the short-term maturity of such instruments. Warrants are classified within Level 3 because
they are valued using valuation techniques. Some of the inputs to these models are unobservable in the market and are significant.
Fair value
measurements using significant unobservable inputs (Level 3):
Fair value
of embedded
derivatives
Balance at August 11, 2011 (inception date)
$
-
Fair value of warrants to investors and service provider (see Note 8e)
680,230
Change in fair value of warrants (see Note 8e)
(15,867
)
Balance at December 31, 2011
$
664,363
F-
12
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)
Fair value
of embedded
derivatives
Balance at December 31, 2011 (inception date)
$
664,363
Fair value of warrants to investors and service provider (see Note 8e)
547,000
Change in fair value of warrants (see Note 8e)
2,006,777
Balance at September 30, 2012 (unaudited)
$
3,218,140
m.
Basic and diluted net earnings
                                                                 per share:
Basic net
earnings per share is computed based on the weighted average number of shares of Common Stock outstanding during each year. Diluted
net earnings per share is computed based on the weighted average number of shares of Common Stock outstanding during each year,
plus dilutive potential Common Stock considered outstanding during the year, in accordance with ASC topic 260, "Earnings
Per Share" ("ASC 260").
The total
weighted average number of shares related to the outstanding warrants and options excluded from the calculations of diluted net
earnings per share due to their anti-dilutive effect was 754,062 and 3,953,972 for the period ended December 31, 2011 and three
months ended September 30, 2012 (Unaudited), respectively.
n.
Severance pay:
Since inception
date, all of the subsidiary's employees who are entitled to receive Severance pay in accordance with the applicable law
in Israel are included under section 14 of the Israeli Severance Compensation Law. Under this section, they are entitled only
to monthly deposits, at a rate of 8.33% of their monthly salary, made on their behalf with insurance companies. Payments in accordance
with section 14 release the subsidiary from any future severance payments in respect of those employees. Deposits under section
14 are not recorded as an asset in the Company's balance sheet.
o.
Warrants:
The
Company accounts for certain warrants to investors and service providers which include down round protection as a liability according
to the provisions of ASC 815-40, "Derivatives and Hedging - Contracts in Entity's Own Equity", ("ASC 815")
which provides new two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed
to an issuer's own stock and thus able to qualify to be a derivative financial instrument. The Company measures the warrants
at fair value by using
Binomial option-pricing model
in each reporting period until they are
exercised or expired, with changes in the fair values being recognized in the Company's statement of operations as financial
income or expense. For more information refer to Note 8e.
F-
13
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)
p.
Accounting for stock-based compensation:
The Company accounts for stock-based
compensation in accordance with ASC 718, "Compensation - Stock Compensation" ("ASC 718"). ASC 718 requires
companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value
of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods
in the Company's consolidated statement of operations.
The Company recognizes compensation
expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the
awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.
The Company
estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model. The option-pricing model
requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option
term. Expected volatility was calculated based upon historical volatilities of similar entities in the related sector index. The
expected option term represents the period that the Company's stock options are expected to be outstanding and
is
determined based on the simplified method
until sufficient historical exercise data will support using expected life assumptions.
The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically
not paid dividends and has no foreseeable plans to pay dividends.
The fair
value of the shares of Common Stock underlying the options and warrants had been determined by the Company's management
with assistance of an independent valuation firm by applying of market approach using recent third-party transactions in the equity
of the Company. Because there has been no public market for the Common Stock, management has determined fair value of the Common
Stock at the time of grant of options by considering a number of objective and subjective factors. The fair value of the underlying
shares of Common Stock shall be determined by management until such time as the Common Stock is listed on an established stock
exchange, national market system or other quotation system.
The Company
applies ASC 505-50, "Equity-Based Payments to Non-Employees" with respect to options and warrants issued to non-employees.
F-
14
NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES
                                                                 (Cont.)
q.
Unaudited Interim Financial Information:
The accompanying
consolidated balance sheet as of September 30, 2012, consolidated statements of operations and consolidated statements of cash
flows for the nine months ended September 30, 2012 are unaudited. These unaudited interim consolidated financial statements have
been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. In the opinion
of management, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary
for a fair presentation of our consolidated financial position as of September 30, 2012, our consolidated results of operations
and our consolidated cash flows for the nine months ended September 30, 2012. Results for the nine months ended September 30,
2012, are not necessarily indicative of the results that may be expected for the year ended December 31, 2012.
NOTE 3:-
OTHER ACCOUNTS RECEIVABLE AND
                                                                 PREPAID EXPENSES
September 30,
December 31,
2012
2011
Unaudited
Prepaid expenses
$
35,172
$
3,060
Government authorities
53,652
9,604
$
88,824
$
12,664
NOTE 4:-
PROPERTY AND EQUIPMENT, NET
September 30,
December 31,
2012
2011
Unaudited
Computers and peripheral equipment
$
42,297
$
16,800
Office furniture and equipment
11,693
3,546
Leasehold improvement
3,382
3,381
57,372
23,727
Accumulated depreciation:
Computers and peripheral equipment
6,502
463
Office furniture and equipment
472
17
Leasehold improvement
278
24
7,252
504
Property and equipment, net
$
50,120
$
23,223
F-
15
NOTE 4:-
PROPERTY AND EQUIPMENT, NET (Cont.)
Depreciation
expenses from August 11, 2011 (inception date) until December 31, 2011 and for nine months period ended September 30, 2012 amounted
to $504 and $6,748 (unaudited), respectively.
NOTE 5:-
OTHER ACCOUNTS PAYABLE AND ACCRUED
                                                                 EXPENSES
September 30
December 31
2012
2011
Unaudited
Employees and payroll accruals
$
81,520
$
20,486
Accrued expenses
275,559
67,827
$
357,079
$
88,313
NOTE 6:-
COMMITMENTS AND CONTINGENT LIABILITIES
The facilities and motor vehicles of the Company
are leased under several operating lease agreements.
The Company signed a lease
agreement in Israel for its offices for a period of 24 months beginning November 10, 2011 and scheduled to expire on October 31,
2013. During 2012 the Company entered into additional lease agreement in Israel for additional offices.
On November 13, 2011 the Company
entered into a motor vehicle lease agreement for a period of 36 months. During 2012, in light of the recruitment of additional
employees the Company entered into additional two motor vehicle lease agreement for a period of 36 months. As of September 30,
2012 the Company maintains four lease cars.
As of December 31, 2011, the
future minimum aggregate lease commitments under non-cancelable operating lease agreement are as follows:
Year ended December 31,
Facilities
Motor
vehicles
Total
2012
$
73,428
$
11,797
$
85,225
2013
69,584
10,541
80,125
2014
2,512
11,208
13,720
2015
2,094
3,000
5,094
$
147,618
$
36,546
$
184,164
Facility and motor vehicle
lease expenses for the period since August 11, 2011 (inception date) until December 31, 2011 were $4,763 and $6,858, respectively.
F-
16
NOTE 7:-
TAXES ON INCOME
a.
The Company and its subsidiary
                                                                 are separately taxed under the domestic tax laws of the state
                                                                 of incorporation of each entity.
b.
Tax rates applicable to Ltd.:
Taxable
income of Israeli company is subject to tax at the rate of 24% in 2011.
On December 5, 2011, the Israeli
                                                               Parliament (the Knesset) passed the Law for Tax Burden Reform (Legislative
                                                               Amendments), 2011 ("the Law") which, among others,
                                                               cancels effective from 2012, the scheduled progressive reduction
                                                               in the corporate tax rate. The Law also increases the corporate
                                                               tax rate to 25% in 2012. In view of this increase in the corporate
                                                               tax rate to 25% in 2012, the real capital gains tax rate and the
                                                               real betterment tax rate were also increased accordingly.
c.
Net operating loss carry-forward:
Ltd. has
accumulated net operating losses for Israeli income tax purposes as of December 31, 2011 in the amount of approximately $70,278.
The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period.
As of December
31, 2011, the Company had a loss carry forward of approximately $275,824. If not utilized, the loss carry forward will expire
commencing in 2031.
Utilization
of U.S. loss carryforwards may be subject to substantial annual limitation due to the "change in ownership" provisions
of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of losses
before utilization.
d.
Deferred income taxes:
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as
follows:
December 31,
2011
Deferred tax assets:
Net operating loss carry forward
$
127,196
Deferred tax assets before valuation allowance
127,196
Valuation allowance
(127,196
)
Net deferred tax asset
$
-
F-
17
NOTE 7:-
TAXES ON INCOME (Cont.)
In assessing
the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the
deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation
of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized.
Temporary differences are immaterial. Based on consideration of these factors, the Company recorded a full valuation allowance
at December 31, 2011 and September 30, 2012.
e.
Loss before taxes on income consists
                                                                 of the following:
Nine months
ended
September 30,
2012
Period from
August 11,
2011
(inception
date) to
December 31,
2011
Period from
August 11, 2011
(inception date)
to September
30,
2012
Unaudited
Unaudited
Domestic
$
2,740,453
$
259,957
$
3,000,410
Foreign
1,753,815
125,392
1,879,207
$
4,494,268
$
385,349
$
4,879,617
f.
The main reconciling item between
                                                                 the statutory tax rate of the Company and the effective tax rate
                                                                 is the recognition of valuation allowance in respect of deferred
                                                                 taxes relating to accumulated net operating losses carried forward
                                                                 due to the uncertainty of the realization of such deferred taxes.
NOTE 8:-
STOCKHOLDERS' EQUITY (DEFICIT)
a.
Composition of stock capital:
September 30,
2012
December 31,
2011
Authorized,
Issued and
Outstanding
Authorized,
Issued and
Outstanding
Number of shares
Stock of $0.0001 par value:
Common Stock
13,262,747
10,830,000
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18
NOTE 8:-
STOCKHOLDERS' EQUITY (DEFICIT)
                                                                (Cont.)
The Common
Stock entitles its holders thereof the right to one vote for each share of Common Stock held of record by such holder with respect
to all matters on which holders of Common Stock are entitled to vote, to receive dividends according to Board of Directors decision,
to participate in the balance of the Company's assets remaining after liquidation, dissolution or winding up, ratably in
proportion to the number of shares of Common Stock held by them. The Common Stock has no pre-emptive or similar rights and is
not subject to redemption rights and carries no subscription or conversion rights.
b.
At inception date, the Company
                                                                 issued 6,500,000 shares of Common Stock to its founders and management
                                                                 team.
c.
At inception date, the Company
                                                                 issued 2,000,000 shares of Common Stock to accredited investors
                                                                 for total amount of $10,000.
d.
On October 27, 2011, subject
                                                                 to the private placement (see note 8e) and upon the first closing
                                                                 the Company issued 1,000,000 shares of Common Stock to its founders
                                                                 and management team in consideration of transfer of certain intellectual
                                                                 property rights to the Company.
e.
During 2011, the Company entered
                                                                 into private placement process in which units composed of 50,000
                                                                 shares of the Common Stock and 50,000 warrants to purchase 50,000
                                                                 shares of Common Stock were offered to third party accredited
                                                                 investors, at an exercise price of $1.50 per share. The warrants
                                                                 expire on October 27, 2016.
Under the above-mentioned private
                                                               placement, until December 31, 2011, the Company raised funds in
                                                               a total amount of $
1,091,877
,
                                                               net of issuance cost. In consideration the Company issued
1,330,000
of Common Stock and warrants to purchase
1,330,000
shares of Common Stock.
During the three-month period ended
                                                               March 31, 2012 the Company raised additional funds in a total amount
                                                               of $
915,845
, net
                                                               of issuance cost. In consideration the Company issued 1,131,000
                                                               shares and 1,131,000 warrants.
The
                                                               exercise price and the number of shares to be issued upon exercise
                                                               of the warrants are subject to weighted average adjustment for
                                                               dilution in accordance with ASC 815. The warrants are classified
                                                               as liability and
the fair value of the warrants was measured
                                                               using the Binomial option-pricing model as described below.
According
to the private placement documents, the Company, on a commercially reasonable efforts basis, is required to file a registration
statement covering the sale of the shares of Common Stock included in the units sold and underlying Common Stock upon the exercise
of the warrants included in the units sold (the "Registrable Shares") within 60 days of the final closing of the offering
and to cause such registration statement to become effective within 150 days after such filing. The final closing occurred on
March 30, 2012.
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19
NOTE 8:-
STOCKHOLDERS' EQUITY (DEFICIT)
                                                                (Cont.)
Failure
to comply with the above registration requirements (the "Registration Failure"), or to maintain the effectiveness
and use thereof for a period no less than the date that the investors are able to sell 100% of their Registrable Shares (the "Effectiveness
Failure") in a single day on any day during a consecutive three month period, shall trigger certain liquidated damages.
In the event that a Registration Failure or an Effectiveness Failure, the Company shall pay to each Investor, as liquidated damages,
an amount equal to one percent per month (prorated for each day of non-compliance) of the purchase price paid by such Investor
which shall continue for and be paid each month until the Registration Failure or Effectiveness Failure is cured, up to a maximum
amount of ten percent.
In contemplation
of the above private placement offering, the Company engaged an exclusive placement agent to assist in selling the units, for
which was compensated by a cash fee and a non-accountable expense allowance as certain percentage of the gross proceeds raised
at each closing, and 964,400 warrants of which half are exercisable at an exercise price of $1.50 per share and half are exercisable
at an exercise price of $1.00 per share immediately upon issuance and have a term equal to the earlier of seven years or three
years after the Common Stock becomes publicly-traded. The number and exercise price of these warrants are also subject to dilutive
issuance and therefore classified as liability and re-measured using the Binominal option-pricing model as well.
In
estimating the warrants' fair value, the Company used the following assumptions:
Investors
warrants:
Issuance
date
September 30,
2012
December
31, 2011
Risk-free interest rate (1)
1.2
%
0.47
%
0.78
%
Expected volatility (2)
80
%
80
%
80
%
Expected life (in years) (3)
5
4.07
4.79
Expected dividend yield (4)
0
0
0
Fair value:
Warrants
$
0.39
$
0.92
$
0.38
Placement
agent warrants:
Issuance
date
September 30,
2012
December
31, 2011
Risk-free interest rate (1)
0.86
%
0.39
%
0.53
%
Expected volatility (2)
75
%
70.54
%
75
%
Expected life (in years) (3)
3.93
3.5
3.71
Expected dividend yield (4)
0
0
0
Fair value:
Warrants
$          0.31-0.32
$          0.78-0.89
$          0.29-0.32
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20
NOTE 8:-
STOCKHOLDERS' EQUITY (DEFICIT)
                                                                (Cont.)
(1)
Risk-free interest rate - based
                                                                   on yield rates of non-index linked U.S. Federal Reserve treasury
                                                                   bonds.
(2)
Expected volatility - was calculated
                                                                   based on actual historical stock price movements of companies
                                                                   in the same industry over a term that is equivalent to the
                                                                   expected term of the option.
(3)
Expected life - the expected
                                                                   life was based on the maturity date of the warrants.
(4)
Expected dividend yield - was
                                                                   based on the fact that the Company has not paid dividends to
                                                                   its shareholders in the past and does not expect to pay dividends
                                                                   to its shareholders in the future.
As a result
of the anti-dilution protection in the private placement documents and the price per share in the August SPA that is described
in Note 8f below, the exercise price of $1.50 was adjusted to approximately $1.42 per share and additional warrants to purchase
138,648 and 27,166 shares of Common Stock were granted to the investors and placement agent, respectively.
The Company
measured these warrant at fair value in total amount of $664,363 and $3,218,140 as of December 31, 2011 and September 30, 2012
(unaudited), respectively. Issuance expenses that were allocated to the component of the warrants, amounted to $156,097 and $257,360,
as of December 31, 2011 and September 30, 2012 (unaudited), respectively, were expensed immediately and are included as part of
financial expenses in the consolidated statements of operations.
As of December
31, 2011 and September 30, 2012, the Company re-measured the warrant component. Consequently, during the periods ended December 31,
2011 and September 30, 2012
(unaudited)
, the Company recorded $(
15,867)
and $(2,006,777), respectively, as financial expenses, net as a result of a change in the Company's warrant value.
f.
During August 2012, the Company
                                                                 entered into securities purchase agreement ("SPA")
                                                                 to raise capital by means of units, at a price of $1.00 per unit,
                                                                 composed of 1,500,036 shares of the Common Stock, par value of
                                                                 $0.0001 per share, and 1,500,036 warrants to purchase 1,500,036
                                                                 shares of Common Stock were offered to third party accredited
                                                                 investors, at an exercise price of $1.00 per share. The warrants
                                                                 expiration date for 100% of the warrants is within one year from
                                                                 the date of effectiveness of the Company's registration
                                                                 in OTCBB ("Effective Date") and if not exercised
                                                                 until then, 50% of the warrants will be expired and the remaining
                                                                 will be outstanding for additional year. The warrants contain
                                                                 standard anti-dilution protection clauses and therefore classified
                                                                 as equity.
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21
NOTE 8:-
STOCKHOLDERS' EQUITY (DEFICIT)
                                                                (Cont.)
Subject to the SPA the investment
                                                               amount of $1,500,036 shall be funded in three tranches for which
                                                               the first tranche of $500,014 will occur on the date of the signing
                                                               on the SPA, the second and third tranches will occur within 90
                                                               and 180 days following the Effective Date, each in aggregate amount
                                                               of $500,011.
Under the above mentioned SPA,
                                                               through the period of three months ended September 30, 2012 the
                                                               Company raised funds in a total amount of $
498,157
,
                                                               net of issuance cost. In consideration the Company issued
500,014
shares of Common Stock and warrants to purchase
500,014
shares of Common Stock.
g.
During September 2012, the Company
                                                                 commenced a private placement transaction to accredited investors
                                                                 of up to 1,833,333 shares of Common Stock, at $1.50 per share,
                                                                 for gross proceeds of up to $2,750,000.
In addition, in connection with
                                                               the above private placement warrants, equal to 10% of the shares
                                                               issued as a result of the aforesaid private placement shall be
                                                               issued as a finder fee to purchase shares of Common Stock, with
                                                               an exercise price equal to $1.50 per share and term of three years
                                                               from the date of the Company's closing on the investment
                                                               amount by the applicable investor. The warrants contain standard
                                                               anti-dilution protection clauses and therefore classified as equity.
As of September 30, 2012 the Company
                                                               has issued 801,733 shares of Common Stock in such private placement
                                                               for total consideration of $1,050,074, net of issuance cost, which
                                                               was recorded as receivable on account of shares which was paid
                                                               in October 2012. Consequently, 80,173 warrants were issued as a
                                                               finder fee.
h.
Stock options plans:
1.
On January 23, 2012, an
                                                                  equity incentive plan (the "2012 Plan") was adopted
                                                                  by the Board of Directors of the Company and approved by a majority
                                                                  of the Company's stockholders, under which options to
                                                                  purchase up to 2,860,000 shares of Common Stock, par value of
                                                                  $0.0001 each, have been reserved. Under the Plan, options to
                                                                  purchase Common Stock may be granted to employees, advisors,
                                                                  directors, consultants and service providers of the Company
                                                                  or any affiliate, each option granted can be exercised to one
                                                                  share of Common Stock. The vesting schedule and other terms
                                                                  and conditions will be determined as the Board of Directors
                                                                  of the Company or a designated committee thereof shall deem
                                                                  appropriate and set forth in the option agreement for each grantee.
                                                                  No option shall be exercisable after the expiration of ten years
                                                                  from the date it was granted or the date set forth at the option
                                                                  agreement, as earlier.
2.
On January 23, 2012, the
                                                                  2012 Israeli equity sub plan (the "Sub Plan") was
                                                                  adopted by the Board of Directors of the Company, which is set
                                                                  forth the terms for the grant of stock awards to Israeli employees
                                                                  or Israeli non-employees. The Sub Plan was adopted in accordance
                                                                  with the amended sections 102 and 3(i) of Israel's Income
                                                                  Tax Ordinance. The Sub Plan is part of the 2012 Plan and subject
                                                                  to the same terms and conditions.
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22
NOTE 8:-
STOCKHOLDERS' EQUITY (DEFICIT)
                                                                (Cont.)
3.
On June 22, 2012 the Company's
                                                                  Compensation Committee granted total options to purchase 2,100,000
                                                                  Common Stock of the Company. 320,000, 230,000 and 1,550,000
                                                                  options were granted to employees, consultants and directors,
                                                                  respectively. The exercise prices for such options are ranged
                                                                  from $0.001 to $0.52 per share, with vesting to occur in up
                                                                  to 2 years.
The following
table presents the weighted-average assumptions used to estimate the fair values of the options granted in the period presented:
Nine months
ended
September 30,
2012
Volatility
49.9%-75.1%
Risk-free interest rate
0.37%-0.96%
Dividend yield
0%
Expected life (years)
2.5-5
Weighted
average fair value of options granted during the nine months period ended September 30, 2012 is $0.52.
As of September
30, 2012, the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was
$624,005, which is expected to be recognized over a weighted average period of approximately 1.71 years.
The total
compensation cost related to all of the Company's equity-based awards, recognized during nine month period ended September
30, 2012, was comprised as follows:
Nine months
ended
September 30,
2012
Research and development
$
139,783
General and administrative
341,265
Total stock-based compensation expenses
$
481,048
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23
NOTE 8:-
STOCKHOLDERS' EQUITY (DEFICIT)
                                                                (Cont.)
4.
On March 2012, the Company entered
                                                                  into employment agreement with its chief executive officer ("CEO")
                                                                  and was approved by the Board in which the Company will grant
                                                                  options to purchase shares of Common Stock
                                                                  equal to three percent of the issued and outstanding capital
                                                                  stock of the Company, following to the final closing of the
                                                                  private offering, but not less than 500,000 options with exercise
                                                                  price of $1.00 per share.
Since the
final closing of the private offering was on March 30, 2012, the trigger of the above options to be vested has been occurred and
therefore the Company accounted for these options under ASC 718, "Compensation - Stock Compensation". The Company
recognized full compensation cost related to the 547,392 options that have been granted to the CEO in total amount of $26,141.
The compensation cost was recorded as part of general and administrative expenses.
On June
22, 2012, the Board approved to reduce the exercise price from $1.00 to $0.52 per share and change the vesting schedule by extending
the vesting period of 210,000 options vested as of March 31, 2013, which were previously granted to the Company's CEO, as
fully vested. The Company accounted for the exercise price reduction and the extension of options' terms pursuant to ASC
718 as a modification. Accordingly, additional compensation was calculated by the Company as the fair value of the modified award
in excess of the fair value of the original award measured immediately before its terms have been modified based on current circumstances.
The total incremental compensation cost related to this modification was $76,186. As of September 30, 2012, the Company recognized
$11,039 of these compensation costs which were recorded as part of general and administrative expenses.
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24
NOTE 9:-
SELECTED STATEMENTS OF OPERATIONS
                                                                DATA
a.
Financial expenses, net:
Nine month
ended
September 30,
2012
Period from
August 11, 2011
(inception date)
to December 31,
2011
Period from
August 11, 2011
(inception date)
to September 30,
2012
Unaudited
Unaudited
Financial expenses:
Bank charges
1,860
298
2,158
Foreign currency adjustments losses
57
9,358
9,415
Issuance cost related to warrants to investors and service provider
101,263
156,097
257,360
Issuance cost related to common shares to founders
-
750
750
Revaluation of  warrants to investors and service provider, net
2,006,777
(15,867
)
1,990,910
$
2,109,957
$
150,636
$
2,260,593
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25
NOTE 9:-
SELECTED STATEMENTS OF OPERATIONS
                                                                DATA (Cont.)
b.
Net earnings per share:
The
following table sets forth the computation of basic and diluted net earnings per share:
Nine
months
ended
September
30,
2012
Period from
August 11, 2011
(inception date) to
December 31,
2011
Unaudited
Numerator:
Numerator for basic and diluted net earnings per share - loss available to holders of Common Stock
$
4,494,268
$
385,349
Denominator:
Denominator for basic net earnings per share - weighted average number of shares
11,676,809
9,499,507
Effect of dilutive securities:
Consultant options and investors and placement agent warrants
-
-
Denominator for diluted net earnings per share - adjusted weighted average number of shares
11,676,809
9,499,507
NOTE 10:-
SUBSEQUENT EVENTS
a.
On October 5, 2012, the Company
                                                                entered into consulting agreement in which strategic advisory
                                                                consultancy services will be rendered to the Company in return
                                                                to 500,000 shares of Common Stock, of which 250,000 were issued at the aforementioned
                                                                date and additional 20,833 shares of Common Stock per month in
                                                                arrears during the first eleven months of the agreement term and
                                                                20,837 shares of Common Stock in the final month of the agreement
                                                                term, for a total of 250,000 additional shares of Common Stock.
                                                                The agreement will expire on October 5, 2013.
b.
During October 2012, the Company
                                                                issued 993,276 shares of Common Stock for total consideration of
                                                                $1,334,404, net of issuance cost, as part of the private placement
                                                                transaction described in Note 8g. Consequently, 99,328 warrants
                                                                were issued as a finder fee and the receivable on account of shares
                                                                recorded in the accompanying balance sheets was paid.
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26
You should rely only on the information
contained in this document. We have not authorized anyone to provide you with information that is different. This document may
only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of
this document.
Additional risks and uncertainties
not presently known or that are currently deemed immaterial may also impair our business operations. The risks and uncertainties
described in this document and other risks and uncertainties which we may face in the future will have a greater impact on those
who purchase our common stock. These purchasers will purchase our common stock at the market price or at a privately negotiated
price and will run the risk of losing their entire investment.
LABSTYLE INNOVATIONS CORP.
10,596,855 Shares
Common Stock
PROSPECTUS
[          ], 2013
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13.  OTHER EXPENSES
OF ISSUANCE AND DISTRIBUTION
Our estimated expenses in connection with
the issuance and distribution of the securities being registered are:
SEC Registration Fee
$
2,168.12
Accounting Fees and Expenses
$
65,000.00
Legal Fees and Expenses
$
75,000.00
Miscellaneous Fees and Expenses
$
20,000.00
Total
$
$152,168.12
ITEM 14.  INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the Delaware General Corporation
Law (the "DGCL") provides, in general, that a corporation incorporated under the laws of the State of Delaware, as
we are, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding
if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses
(including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter
as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably
entitled to indemnity for such expenses.
Our certificate of incorporation and bylaws
provide that we will indemnify our directors, officers, employees and agents to the extent and in the manner permitted by the
provisions of the DGCL, as amended from time to time, subject to any permissible expansion or limitation of such indemnification,
as may be set forth in any stockholders' or directors' resolution or by contract. In addition, our director and officer
indemnification agreements with each of our directors and officers provide, among other things, for the indemnification to the
fullest extent permitted or required by Delaware law, provided that no indemnitee will be entitled to indemnification in connection
with any claim initiated by the indemnitee against us or our directors or officers unless we join or consent to the initiation
of the claim, or the purchase and sale of securities by the indemnitee in violation of Section 16(b) of the Securities Exchange
Act of 1934, as amended.
II-
1
Any repeal or modification of these provisions
approved by our stockholders will be prospective only and will not adversely affect any limitation on the liability of any of
our directors or officers existing as of the time of such repeal or modification.
We are also permitted to apply for insurance
on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether or not the DGCL
would permit indemnification.
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
1.          In
connection with our formation, on August 11, 2011, we accepted a subscription from nine (9) investors (including Adam Stern, Piper
Venture Partners, LLC, Pavilion Capital Partners, LLC, Discretionary Investment Trust, Spencer Trask Investment Partners, LLC,
Millennium MSO, Inc., Capital Growth Investment Trust, FEQ Realty, LLC, and Michael J. Garnick) who collectively subscribed for
2,000,000 shares of restricted common stock for an aggregate purchase price of $10,000. No underwriting discounts or commissions
were paid in connection with the sale of the securities. The sale and issuance of these securities was exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") in reliance on Section 4(2) of the Securities Act.
2.          On
March 30, 2012, we consummated the final closing of a private placement transaction with aggregate forty-five (45) investors whereby
such investors collectively purchased 2,461,000 shares of our common stock and warrants to purchase 2,461,000 shares of our common
stock at the exercise of $1.50 for total consideration of $2,461,000. In connection with such private placement transaction, Spencer
Trask was granted warrants to purchase (i) 482,200 shares of common stock at the exercise price of $1.00 per share and (ii) 482,200
shares of common stock at the exercise price of $1.50 per share. The $1.50 exercise price was adjusted to approximately $1.42 per
share due to a certain anti-dilutive issuance and additional warrants to purchase 138,648 shares of common stock and
additional warrants to purchase 27,166 shares of common stock were granted to such investors and Spencer Trask, respectively.
The exercise price of the warrants should be reduced to $1.30 and the total of additional warrants will be granted due to the due
to a certain anti-dilutive protection should be 379,774 for the investors and 74,412 for Spencer Trask. The sale and issuance of
the securities granted to Spencer Trask are exempt from registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, as transaction by an issuer not involving a public offering.
3.          On
August 31, 2012, we consummated a private placement transaction with 13 accredited investors, including existing stockholders of
our company. Pursuant to this financing, we issued an aggregate of 500,014 shares of our common stock at a price equal to $1.00
per share (for gross proceeds of $500,014) and issued warrants to purchase an aggregate of 500,014 shares of our common stock with
an exercise price of $1.00 per share. In addition, the investors in this round financing irrevocably committed to purchase an additional
1,000,022 shares of common stock in the aggregate at $1.00 per share and warrants to purchase an aggregate of 1,000,022 shares
of our common stock with an exercise price of $1.00 per share, for gross proceeds of $1,000,022. Such purchases shall take place
in two tranches, the first on the date (which we refer to as the Funding Trigger Date) as of which both: (i) a registration statement
covering the shares of our common stock issued and underlying warrants issued in our August 2012 Private Placement has been declared
effective by the Securities and Exchange Commission and (ii) we have received a ticker symbol for our common stock and caused our
common stock to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (consisting
of 500,011 shares and 500,011 warrants), and the second the 180
th
day following the Funding Trigger Date (also consisting
of 500,011 shares and 500,011 warrants). To evidence this irrevocable commitment, each investor executed a promissory note in our
favor to fund for their pro rata portion of the additional investments as of the foregoing dates. We expect, therefore, that the
total gross proceeds from this round of financing will be $1,500,036, not including any potential warrant exercises. No placement
agents were utilized in connection with such financing. One-half of the warrants issued hereto have an exercise period ending on
the first anniversary means the date that our company has received a ticker symbol for our common stock and caused our common stock
to be eligible for trading on the Over-the-Counter Bulletin Board, OTCQB Market or similar trading system (which we refer to as
the Warrant Effective Date), and the exercise period for the remaining one-half of the warrants ends on the second anniversary
of the Warrant Effective Date. The sale and issuance of these securities was exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act, as transaction by an issuer not involving a public offering.
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4.          On
October 17, 2012, we consummated a final closing of a separate private placement transaction with 44 accredited investors, including
existing stockholders of our company. Pursuant to this financing, we issued an aggregate of 1,795,009 shares of our common stock
at a price equal to $1.50 per share (for gross proceeds of $2,692,513). We utilized the services of four FINRA member broker-dealers
as finders for this private placement, including Spencer Trask, and we paid commissions to such finders equal to 10% of the funds
they each raised in cash and 10% in warrants. We issued warrants to such brokers-dealers, which allow them to purchase aggregate
179,502 shares of common stock. The sale and issuance of these securities was exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act, as transaction by an issuer not involving a public offering.
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit No.
Description
3.1
Certificate of Incorporation*
3.2
Bylaws*
4.1
Form of Warrant issued to investors in the Company's 2011-2012 private placement*
4.2
Warrant for shares of common stock ($1.00 exercise price) issued to Spencer Trask Ventures, Inc.*
4.3
Warrant for shares of common stock ($1.42 exercise price) issued to Spencer Trask Ventures, Inc.*
4.4
Form of Warrant issued to investors in the Company's August 2012 private placement*
4.5
Form of Finder Warrant issued in connection with the Company's October 2012 private placement*
4.6
2012 Equity Incentive Plan of the Company*
5.1
Opinion of Ellenoff Grossman & Schole LLP**
10.1
Placement Agency Agreement, dated September 8, 2011, between the Company and Spencer Trask Ventures, Inc.*
10.2
Finder's Agreement, dated October 27, 2011, between the Company and Spencer Trask Ventures, Inc.*
10.3
Right of First Refusal Letter Agreement, dated October 27, 2011, between the Company and Spencer Trask Ventures, Inc.*
10.4
Form of Subscription Agreement for the Company's 2011-2012 private placement*
10.5
Investors Rights Agreement, dated October 27, 2011, between the Company and its stockholders*
10.6
Employment Agreement, dated March 15, 2012, between the Company and Oren Fuerst*
10.7
Employment Agreement, dated March 15, 2012, between LabStyle Israel and Shilo Ben Zeev*
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10.8
Employment Agreement, dated March 18, 2012, between LabStyle Israel and Mordechi (Motty) Hershkowitz*
10.9
Amendment to Employment Agreement, dated August 8, 2012, between the Company and Oren Fuerst*
10.10
Amendment to Employment Agreement, dated August 8, 2012, between the Company and Shilo Ben Zeev*
10.11
Amendment to Employment Agreement, dated August 8, 2012, between the Company and Mordechi (Motty) Hershkowitz*
10.12
Form of Securities Purchase Agreement for the Company's August 2012 private placement*
10.13
Form of Promissory Note issued by the investors the Company's August 2012 private placement to the Company*
10.14
Form of Subscription Agreement for the Company's October 2012 private placement*
10.15
Consulting Agreement, dated October 5, 2012, between the Company and SLD Capital Corp.*
21.1
List of Subsidiaries of the Company*
23.1
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global*
23.2
Consent of Ellenoff Grossman & Schole LLP (included in Exhibit 5.1)
24.1
Power of Attorney (included on the signature page of this Registration Statement)*
*
Filed herewith.
**
To be filed by amendment.
ITEM 17.  UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1)        
 To file, during any period in which offers or sales are being made, a post-effective amendment to this registration
statement:
(i)          To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)         To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;
and
(iii)        To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2)     
    That, for the purpose of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3)      
   To remove from registration by means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4)     
    That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser,
each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§230.430A of
this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to
such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of
the registration statement or made in any such document immediately prior to such date of first use.
(5)     
    That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to
any purchaser in the initial distribution of the securities:
The undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser
:
(i)          Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii)         Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
(iii)        The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv)        Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements
of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Tel Aviv, Israel on January 16 2013
.
LABSTYLE INNOVATIONS CORP.
By:
/s/ Oren Fuerst
Name: Oren Fuerst
Title: Chief Executive Officer
By:
/s/ Mordechi Hershkowitz
Name: Mordechi (Motty) Hershkowitz
Title: Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)
KNOW ALL MEN BY THESE
PRESENTS, that we, the undersigned officers and directors LabStyle Innovations Corp., a Delaware corporation (the "Company"),
do hereby constitute and appoint Oren Fuerst, Shilo Ben Zeev and Mordechi (Motty) Hershkowitz, and each of them, as his or her
true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and
other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the
registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended, which relates to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite
and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements
of the Securities Act, this registration statement has been signed below by the following persons in the capacities and on the
dates indicated.
Person
Capacity
Date
/s/ Oren Fuerst.
Chairman of the Board and Chief Executive Officer
January 16, 2013
Oren Fuerst.
(Principal Executive Officer)
/s/ Shilo Ben Zeev
President, Chief Operating Officer and Director
January 16, 2013
Shilo Ben Zeev
/s/ Mordechi Hershkowitz
Chief Financial Officer, Treasurer and Secretary
January 16, 2013
Mordechi (Motty) Hershkowitz
(Principal Financial and Accounting Officer)
/s/ David Weintraub
Director
January 16, 2013
David Weintraub
/s/ Malcolm Hoenlein
Director
January 16, 2013
Malcolm Hoenlein
/s/ Nahum D. Melumad
Director
January 16, 2013
Nahum D. Melumad
/s/ Adam K. Stern
Director
January 16, 2013
Adam K. Stern
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