Filed Pursuant to Rule 424(b)(3)
Registration No.
333-228624
PROSPECTUS
$25,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
Nxt-ID, Inc.
We may offer and sell, from time to time
in one or more offerings in traditional certificated form or in uncertificated form, any combination of common stock, preferred
stock, debt securities, warrants, rights, or units having an aggregate offering price not exceeding $25,000,000. The preferred
stock, debt securities, warrants, right, and units may be exercisable or exchangeable for common stock or preferred stock or other
securities of ours.
This prospectus provides a general description
of the securities we may offer. We will provide specific terms of the offerings of our securities in one or more supplements to
this prospectus. The prospectus supplement may also add, update or change information in this prospectus. You should
read this prospectus and any prospectus supplement, as well as the documents incorporated by reference or deemed to be incorporated
by reference into this prospectus, carefully before you invest in any of our securities.
This prospectus may not be used to
offer or sell our securities unless accompanied by a prospectus supplement relating to the offered securities.
These securities may be sold directly
by us, through dealers or agents designated from time to time, to or through underwriters, dealers or through a combination of
these methods on a continuous or delayed basis. For additional information on the methods of sale, see the section entitled
“Plan of Distribution” in this prospectus. We will also describe the plan of distribution for any particular
offering of our securities in a prospectus supplement. If any agents, underwriters or dealers are involved in the sale of any
securities in respect of which this prospectus is being delivered, we will disclose their names and the nature of our arrangements
with them in a prospectus supplement. The price to the public of such securities and the net proceeds we expect to receive from
any such sale will also be included in a prospectus supplement.
Our common stock and warrants are currently
traded on the NASDAQ Capital Market under the symbols “NXTD” and “NXTDW”, respectively. On December 14,
2018, the last reported sale price of our common stock and warrants as reported on the NASDAQ Capital Market was $0.79 per share
and $0.065, respectively.
The aggregate market value of our outstanding
common stock held by non-affiliates is $17,113,283 based on 25,066,306 shares of outstanding common stock, of which 21,662,384
are held by non-affiliates, and a per share price of $0.79 based on the closing sale price of our common stock on December 14,
2018. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell our common stock in a public primary offering
with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below
$75,000,000. During the previous 12 calendar months prior to and including the date of this prospectus supplement, we have offered
$7,000,000 of our securities pursuant to General Instruction I.B.6 of Form S-3.
We are an “emerging growth company”
as the term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected
to comply with certain reduced public company reporting requirements for this and future filings.
Investing in our securities
involves risks. You should carefully review the risks described under the heading “Risk Factors” beginning on
page 5 and in the documents which are incorporated by reference herein and contained in the applicable prospectus supplement
before you invest in our securities.
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 December 17,
2018.
TABLE OF CONTENTS
You should rely only on the information
contained in this prospectus and the accompanying prospectus supplement or incorporated by reference in these documents. No dealer,
salesperson or other person is authorized to give any information or to represent anything not contained or incorporated by reference
in this prospectus or the accompanying prospectus supplement. If anyone provides you with different, inconsistent or unauthorized
information or representations, you must not rely on them. This prospectus and the accompanying prospectus supplement are an offer
to sell only the securities offered by these documents, but only under circumstances and in jurisdictions where it is lawful to
do so. The information contained in this prospectus or any prospectus supplement is current only as of the date on the front of
those documents.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration
statement that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration
process. Under this shelf registration process, we may sell any combination of the securities described in this prospectus in one
or more offerings from time to time having an aggregate offering price of up to $25,000,000. This prospectus provides you with
a general description of the securities we may offer. Each time we offer securities, we will provide you with a prospectus supplement
that describes the specific amounts, prices and terms of the securities we offer. The prospectus supplement also may add, update
or change information contained in this prospectus. You should read carefully both this prospectus, including the section entitled
“Risk Factors,” and any prospectus supplement, together with the additional information described below under the headings
“Where You Can Find More Information” and “Incorporation of Documents by Reference.”
In addition, this prospectus does not contain
all the information provided in the registration statement we filed with the SEC. For further information, we refer you to the
registration statement, including its exhibits. The registration statement can be read on the SEC website or at the SEC offices
mentioned below under the heading “Where You Can Find More Information.” Statements contained in this prospectus and
any prospectus supplement about the provisions or contents of any agreement or other document are not necessarily complete. If
the SEC’s rules and regulations require that an agreement or document be filed as an exhibit to the registration statement,
please see that agreement or document for a complete description of such matters.
You should rely only on the information
contained or incorporated by reference in this prospectus and any prospectus supplement. We have not authorized any other person
to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus
supplement, as well as information we have previously filed with the SEC and incorporated by reference, is accurate as of the date
on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since
those dates. This prospectus may not be used to consummate a sale of our securities unless it is accompanied by a prospectus supplement.
In this prospectus, we refer to Nxt-ID,
Inc. as “we,” “us,” “our,” and the “Company” unless we specifically state otherwise
or the context indicates otherwise.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus, the applicable prospectus
supplement and the information incorporated by reference in this prospectus contain various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
and Exchange Act of 1934, as amended (the “Exchange Act”), which represent our expectations or beliefs concerning future
events. Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events
or conditions, and/or which include words such as “believes,” “plans,” “intends,” “anticipates,”
“estimates,” “expects,” “may,” “will” or similar expressions. In addition, any
statements concerning future financial performance, ongoing strategies or prospects, and possible future actions, which may be
provided by our management, are also forward-looking statements. Forward-looking statements are based on current expectations and
projections about future events and are subject to risks, uncertainties, and assumptions about our company, economic and market
factors, and the industry in which we do business, among other things. These statements are not guarantees of future performance,
and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future
events, or otherwise, except as required by law. Actual events and results may differ materially from those expressed or forecasted
in forward-looking statements due to a number of factors. Factors that could cause our actual performance, future results and actions
to differ materially from any forward-looking statements include, but are not limited to, those discussed under the heading “Risk
Factors” in any of our filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The
forward-looking statements in this prospectus, the applicable prospectus supplement and the information incorporated by reference
in this prospectus represent our views as of the date such statements are made. These forward-looking statements should not be
relied upon as representing our views as of any date subsequent to the date such statements are made.
PROSPECTUS SUMMARY
This summary highlights selected information
contained elsewhere in this prospectus or in documents incorporated herein by reference. This summary does not contain all the
information that you should consider before investing in our securities. You should carefully read the entire prospectus, including
“Risk Factors,” our consolidated financial statements and the information incorporated by reference herein, before
making an investment decision
Our Company
Nxt-ID, Inc. was incorporated in the State
of Delaware on February 8, 2012. The Company is a security technology company and operates its business in one segment –
hardware and software security systems and applications. The Company is engaged in the development of proprietary products and
solutions that serve multiple end markets, including the security, healthcare, financial technology and the Internet of Things
(“IoT”) markets. The Company evaluates the performance of its business on, among other things, profit and loss from
operations. With extensive experience in access control, biometric and behavior-metric identity verification, security and privacy,
encryption and data protection, payments, miniaturization, and sensor technologies, the Company develops and markets solutions
for payment, IoT and healthcare applications.
On June 25, 2012, the Company acquired
100% of the membership interests in 3D-ID LLC (“3D-ID”), a limited liability company formed in Florida in February
2011 and owned by the Company’s founders. By acquiring 3D-ID, the Company gained the rights to a portfolio of patented technology
in the field of three-dimensional facial recognition and imaging including 3D facial recognition products for access control, law
enforcement and travel and immigration. 3D-ID was an early stage company engaged in the design, research and development, integration,
analysis, modeling, system networking, sales and support of intelligent surveillance, three-dimensional facial recognition and
three-dimensional imaging devices and systems primarily for identification and access control in the security industries. Since
the Company’s acquisition of 3D-ID was a transaction between entities under common control in accordance with Accounting
Standards Codification (“ASC”) 805, “Business Combinations”, Nxt-ID recognized the net assets of 3D-ID
at their carrying amounts in the accounts of Nxt-ID on the date that 3D-ID was organized, February 14, 2011.
On July 25, 2016, the Company completed
the acquisition of LogicMark, LLC (“LogicMark”) pursuant to an Interest Purchase Agreement by and among the Company,
LogicMark and the holders of all of the membership interests of LogicMark (the “LogicMark Sellers”), dated May 17,
2016 (the “Interest Purchase Agreement”). Pursuant to the Interest Purchase Agreement, we acquired all of the membership
interests of LogicMark from the LogicMark Sellers for (i) $17.5 million in cash consideration, (ii) $2.5 million in a secured promissory
note (the “LogicMark Note”) issued to LogicMark Investment Partners, LLC, as representative of the LogicMark Sellers
(the “LogicMark Representative”), (iii) 78,740 shares of our common stock, which were issued upon signing of the Interest
Purchase Agreement (the “LogicMark Shares”), and (iv) warrants (the “LogicMark Warrants”) to purchase an
aggregate of 157,480 shares of common stock (the “LogicMark Warrant Shares”) for no additional consideration. Such
warrants were exercised on July 27, 2016. In addition, the Company was required to pay the LogicMark Sellers earn-out payments
of (i) up to $1,500,000 for calendar year 2016 and (ii) up to $5,000,000 for calendar year 2017 if LogicMark met certain gross
profit targets set forth in the Interest Purchase Agreement.
On
May 23, 2017, the Company completed a merger (the “Merger”) pursuant to an executed Agreement and Plan of Merger (the
“Merger Agreement”) by and among the Company, Fit Merger Sub, Inc., a wholly-owned subsidiary of the Company (the “Merger
Sub”), Fit Pay, Inc. (“Fit Pay”), Michael Orlando (“Orlando”), Giesecke & Devrient Mobile Security
America, Inc. (“G&D”), the other stockholders of Fit Pay (the “Other Holders”) and Michael Orlando
in his capacity as stockholder representative representing the Other Holders (the “Stockholder Representative,” and
together with Orlando and G&D, the “Fit Pay Sellers”). In connection with the Merger, Fit Pay merged with and into
the Merger Sub, with the Merger Sub continuing as the surviving entity and a wholly owned subsidiary of the Company.
Pursuant to the terms of the Merger Agreement,
the aggregate purchase price paid for Fit Pay was: (i) 19.96% of the outstanding shares of common stock; (ii) 2,000 shares of Series
C Non-Convertible Preferred Stock of the Company; (iii) the payment of certain debts by the Company; and (iv) the payment of certain
unpaid expenses by the Company. In addition, the Company will be required to pay the Fit Pay Sellers an earnout payment equal to
12.5% of the gross revenue derived from Fit Pay’s technology for sixteen (16) fiscal quarters commencing on October 1, 2017
and ending on December 31, 2021.
In connection with the Fit Pay transaction,
Orlando became our Chief Operating Officer and President of our new Fit Pay subsidiary effective as of May 23, 2017.
The
Company’s wholly-owned subsidiary, LogicMark, manufactures and distributes non-monitored and monitored personal emergency
response systems (“PERS”) sold through the United States Department of Veterans Affairs, healthcare durable medical
equipment dealers and distributors and monitored security dealers and distributors. The Company’s wholly-owned subsidiary,
Fit Pay, has a proprietary technology platform that delivers payment, credential management, authentication and other secure services
to the IoT ecosystem. The platform uses tokenization, a payment security technology that replaces cardholders’ account information
with a unique digital identifier, to transact highly secure contactless payment and authentication services.
On September 21, 2018, the Company announced
that its board of directors approved a plan to separate the Company’s financial technology business from its healthcare business
into an independent publicly traded company. The Company will distribute shares of the newly created company to the Company’s
stockholders through the execution of a spin-off. As a result, the Company reclassified its financial technology business to discontinued
operations for all periods reported in its Quarterly Report on Form 10-Q for the nine and three months ended September 30, 2018.
The Company’s financial technology business is comprised of its Fit Pay subsidiary and the intellectual property developed
by the Company, including the Flye Smartcard and the Wocket.
Healthcare
With respect to the healthcare market,
our business initiatives are driven by LogicMark, which serves a market that enables two-way communication, medical device connectivity
and patient data tracking of key vitals through sensors, biometrics, and security to make home health care a reality. There are
three major trends driving this market: (1) an increased desire for connectivity; specifically, a greater desire for connected
devices by people over 60 years of age who now represent the fastest growing demographic for social media; (2) the growth of “TeleHealth”,
which is the means by which telecommunications technologies are meeting the increased need for health systems to better distribute
doctor care across a wider range of health facilities, making it easier to treat and diagnose patients; and (3) rising healthcare
costs – as health spending continues to outpace the economy, representing between 6% and 7% of the overall economy, the need
to reduce hospital readmissions, increase staffing efficiency and improve patient engagement remain the highest priorities. Together,
these trends have produced a large and growing market for us to serve. LogicMark has built a successful business on emergency communications
in healthcare. We have a strong business relationship with the VA today, serving veterans who suffer from chronic conditions that
often require emergency assistance. This business is steady and growing, producing the highest annual revenue in its operational
history in 2017. Our strategic plan calls for expanding LogicMark’s business into other healthcare verticals as well as retail
and enterprise channels in order to better serve the expanding demand for connected and remote healthcare solutions.
Home healthcare, which includes health
monitoring and management using IoT and cloud-based processing, is an emerging area for LogicMark. The long-term trend toward more
home-based healthcare is a massive shift that is being driven by demographics (an aging population) and basic economics. People
also value autonomy and privacy which are important factors in determining which solutions will suit the market. Consumers are
beginning to enjoy the benefits of smart home technologies and online digital assistants. One of the promising applications of
our VoiceMatch™ technology is enabling secure commands for restricted medical access. This solution, when coupled with Nxt-ID
BioCloud™, combines biometrics with encryption and distributed access control.
PERS devices are used to call for help
and medical care during an emergency. These devices are also used by a wide patient pool, as well as the general population, to
ensure safety and security when living or traveling alone. The global medical alert systems market caters to different end-users
across the healthcare industry, including individual users, hospitals and clinics, assisted living facilities and senior living
facilities. The growing demand for home healthcare devices is mainly driven by an aging population and rising healthcare costs
worldwide. We believe that this will spur the usage of medical alert systems across the globe, as they offer safety and medical
security while being affordable and accessible.
Payments and Financial Technology
With
respect to the payments and financial technology market, our business initiatives are driven by Fit Pay, which was acquired by
Nxt-ID in May 2017. Fit Pay’s core technology is a proprietary platform that enables contactless payment capabilities, allowing
manufacturers of “smart devices” to add payment capabilities to their products with very little start-up time and minimal
investment in software development, while granting them access to the leading card network and global credit card issuing banks.
It is one of the first successful commercializations of a token requestor service provider integrated with the major payment card
networks – Discover, Mastercard and Visa. The existing propriety capabilities of the contactless payment companies are not
available to other original equipment manufacturers (“OEMs”). The Fit Pay Token Requestor Manager (TRM) Platform creates
an opportunity for a whole new range of devices to be payment-enabled.
Fit
Pay has expanded its relationship with
Garmin International, Inc. (“Garmin”)
for
which it provides technology, platform and tokenization services to power
Garmin Pay™, a contactless payment feature
included on smartwatches manufactured by Garmin. The payment feature, which went live in the fall of 2017, is now included in ten
(10) of Garmin’s smartwatches.
In
addition to expanding the number of devices on which Garmin Pay™ is available from 1 to 10, Fit Pay has made significant
progress in expanding the geographic and issuer footprint for Garmin Pay™. As of September 30, 2018, Garmin Pay™
is supported by an issuer network of 229 issuing banks in 27 countries with additions being made regularly. This represents a significant
increase from fiscal year-end 2017, at which time the network included 60 issuing banks in 8 countries. As a part of this growth,
Fit Pay announced agreements with Chase, Westpac and Discover. This expansion of the Garmin Pay™ network increases the
overall
revenue opportunity for this flagship customer.
Our payment and financial technology business
has also expanded to include new products and services. This includes growing the capabilities of the TRM Platform to integrate
it with additional payment networks and issuing banks. Fit Pay has also developed proprietary payment devices that it will offer
through business-to-business and direct-to-consumer channels. These new products will leverage the TRM Platform and allow us to
access new customers and emerging markets, such as cryptocurrency.
Fit Pay’s initial product offering
is a platform extension and contactless payment device called Flip™, which enables Bitcoin holders to make contactless payment
transactions at millions of retail locations with value exchanged from their cryptocurrency. The development of the product and
platform to support Flip™ has been completed and Fit Pay is currently seeking the final network and bank approvals to begin
the initial shipments of the product. While commercialization of the product has taken longer than anticipated, the Company believes
the product continues to represent an opportunity to bring to market a unique offering in an emerging market segment.
In
addition to these expansions of Fit Pay’s offerings, the Company was also announced
as
a technology partner for Visa’s
Token Service for credential-on-file (“COF”) token requestors. Through
this program, Fit Pay will be able to tokenize credential-on-file digital payments on behalf of merchant and payment ecosystem
clients, greatly expanding the addressable market for the Company’s platform services. Leveraging the EMVCo Payment Tokenization
Standard, the tokenization COF record offers another layer of security for consumers and merchants. It replaces sensitive cardholder
information, such as personal account numbers and expiration dates, with a unique digital identifier (a “token”) that
can be used for payment without exposing a cardholder’s more sensitive account information.
In addition to enhancing security, expired
or compromised payment credentials can be seamlessly updated in the background by the financial institution, eliminating a significant
point of friction for consumers and merchants. These additional services will be buoyed by the overall of growth in digital payments,
which is estimated by eMarketer to grow to $5.4 trillion in total transaction value by 2022.
Together,
these opportunities position our emerging payment and financial technology business for future growth as Fit Pay begins to monetize
its core TRM technology platform and expand its products and services to new markets and customers.
Our payments business operates within a
rapidly expanding market. According to the research firm, Juniper Research (“Juniper”), in-store contactless payments
will reach $2 trillion by 2020, representing 1 in 3 total point of sale transactions. Contactless payments will exceed the $1 trillion
mark for the first time in 2018, a year earlier than previously anticipated by Juniper. This growth is driven by an acceleration
in consumer usage of contactless payment services as well as merchant acceptance.
In addition, according to the latest research
report from Counterpoint’s
Global Smartwatch Tracker
, global smartwatch shipments grew 37% year-over-year in
the second quarter of 2018. Garmin shipments grew 35% year-over-year and it holds 3% market share. Importantly, the report
noted that 50% of the market operates on a proprietary platform (
i.e.,
not Apple or Android) for which Fit Pay’s white
label, operating system agnostic solution is well-suited.
As an early and established entrant into
the payments market, we believe that we are well-positioned to take advantage of both the growth of payment-enabled devices and
the consumer demand for new forms of payments.
Securities We May Offer
The descriptions of the securities contained
in this prospectus, together with the applicable prospectus supplements, summarize all the material terms and provisions of the
various types of securities that we may offer. We will describe in the applicable prospectus supplement relating to any securities
the particular terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement,
the terms of the securities may differ from the terms we have summarized below. We will also include information in the prospectus
supplement, where applicable, about material United States federal income tax considerations relating to the securities, and the
securities exchange, if any, on which the securities will be listed.
We may sell from time to time, in one or
more offerings:
The aggregate offering price of the securities
offered pursuant to this prospectus may not exceed $25,000,000. This prospectus may not be used to consummate a sale of securities
unless it is accompanied by a prospectus supplement.
Corporate Information
The Company is a Delaware corporation formed
on February 8, 2012. We were initially known as Trylon Governmental Systems, Inc. We changed our name to Nxt-ID, Inc. on June 25,
2012.
We are an “emerging growth company”
as defined in the JOBS Act. We will remain an emerging growth company for up to the last day of the fiscal year following the fifth
anniversary of our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual
gross revenue exceeds $1.07 billion, (ii) the date that we become a ’‘large accelerated filer’’ as defined
in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates
exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which
we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Pursuant to Section 107 of
the JOBS Act, we have elected to utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for
complying with new or revised accounting standards. Our emerging growth company status will expire on December 31, 2018.
Where You Can Find Us
Our principal executive offices are located at 1627 U.S. 1,
Unit 206, Sebastian, FL 32958, and our telephone number is (203) 266-2103. Our website address is
www.nxt-id.com
. The
information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration
statement of which it forms a part. The information on our website is not part of this prospectus.
RISK FACTORS
Investing in our securities involves significant
risk. The prospectus supplement applicable to each offering of our securities will contain a discussion of the risks applicable
to an investment in the Company. Prior to making a decision about investing in our securities, you should carefully consider the
specific factors discussed under the heading “Risk Factors” in the applicable prospectus supplement, together with
all of the other information contained or incorporated by reference in the prospectus supplement or appearing or incorporated by
reference in this prospectus. You should also consider the risks, uncertainties and assumptions discussed under the heading “Risk
Factors” included in our most recent Annual Report on Form 10-K, as revised or supplemented by our subsequent Quarterly Reports
on Form 10-Q or our Current Reports on Form 8-K that we have filed with the SEC, as set forth under “Incorporation of Documents
by Reference”, all of which are incorporated herein by reference, and which may be amended, supplemented or superseded from
time to time by other reports we file with the SEC in the future. The risks and uncertainties we have described are not the only
ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect
our operations. The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities.
USE OF PROCEEDS
Except as otherwise provided in the applicable
prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by this prospectus for general
corporate purposes, which may include, among other things, working capital, capital expenditures, product development, marketing
activities, acquisitions of new technologies and investments, repayment of debt and repurchases and redemptions of securities.
The intended application of proceeds from
the sale of any particular offering of securities using this prospectus will be described in the accompanying prospectus supplement
relating to such offering. The precise amount and timing of the application of these proceeds will depend on our funding requirements
and the availability and costs of other funds. Accordingly, we will retain broad discretion over the use of such proceeds. Pending
use of the net proceeds, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing instruments.
THE SECURITIES WE MAY OFFER
The descriptions of the securities contained
in this prospectus, together with the applicable prospectus supplements, summarize all the material terms and provisions of the
various types of securities that we may offer. We will describe in the applicable prospectus supplement relating to any securities
the particular terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement,
the terms of the securities may differ from the terms we have summarized below. We will also include in the prospectus supplement
information, where applicable, about material United States federal income tax considerations relating to the securities, and the
securities exchange, if any, on which the securities will be listed.
We may sell from time to time, in one or
more offerings:
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Shares of our common stock;
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Shares of our preferred stock;
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Warrants to purchase shares of our common stock, preferred stock, or debt securities;
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Rights to purchase shares of our common stock, preferred stock, or other securities; and/or
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Units consisting of any of the securities listed above.
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The terms of any securities we offer will
be determined at the time of sale. We may issue securities that are exchangeable or exercisable for common stock or any of the
other securities that may be sold under this prospectus. When particular securities are offered, a supplement to this prospectus
will be filed with the SEC, which will describe the terms of the offering and sale of such securities.
DESCRIPTION OF CAPITAL STOCK
General
The following description of our capital
stock, together with the additional information we include in any applicable prospectus supplement, summarizes the material terms
and provisions of the capital stock that we may offer under this prospectus, but is not complete. For the complete terms of our
capital stock, please refer to our certificate of incorporation, as amended from time to time, any certificate of designation for
our preferred stock, and our bylaws, as amended from time to time. The Delaware General Corporation Law (the “DGCL”)
may also affect the terms of our capital stock.
Authorized Capital Stock
The Company is authorized to issue 110,000,000
shares of its capital stock consisting of (a) 100,000,000 shares of common stock and (b) 10,000,000 shares of “blank check”
preferred stock, of which 3,125,000 shares of preferred stock were designated as the Series A Convertible Preferred Stock (“Series
A Preferred Stock”), 4,500,000 shares of preferred stock were designated as the Series B Convertible Preferred Stock (“Series
B Preferred Stock”), and 2,000 shares of preferred stock were designated as the Series C Non-Convertible Preferred Stock
(“Series C Preferred Stock”). As of December 14, 2018, 25,066,306 shares of our common stock were issued
and outstanding, 2,000 shares of our Series C Preferred Stock were issued and outstanding and no shares of our Series A Preferred
Stock or Series B Preferred Stock were issued and outstanding.
Common Stock
Each share of common stock entitles the
holder to one vote, either in person or by proxy, at meetings of stockholders. Our stockholders are not permitted to vote their
shares cumulatively. Accordingly, the holders of our common stock who hold, in the aggregate, more than 50% of the total voting
rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect
any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote
thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.
Holders of common stock are entitled to
receive ratably such dividends, if any, as may be declared by our board of directors out of funds legally available. We have not
paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development
of our business. Any future disposition of dividends will be at the discretion of our board of directors and will depend upon,
among other things, our future earnings, operating and financial condition, capital requirements, and other factors.
Holders of our common stock have no preemptive
rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution
or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution
to stockholders after the payment of all of our debts and other liabilities.
Preferred Stock
General
We are authorized to issue up to 10,000,000
shares of “blank check” preferred stock, par value $0.0001 per share, none of which is presently issued or outstanding.
Our board of directors is authorized to issue such shares of preferred stock with designations, rights and preferences as it may
determine from time to time. Accordingly, our board of directors is empowered, without stockholder approval, to issue shares of
preferred stock with dividend, liquidation, conversion, or other rights that could adversely affect the rights of the holders of
our common stock. Once designated by our board of directors, each series of preferred stock will have specific financial and other
terms that will be described in a prospectus supplement. We will also file with the SEC a certificate of designation designating
the rights and preferences of the preferred stock prior to any issuance of preferred stock, and you should read such certificate
of designation for provisions that may be important to you.
Series C Preferred Stock
The following is a summary of the material
terms of the Series C Preferred Stock. This summary is not complete. The following summary of the terms and provisions of the Series
C Preferred Stock is qualified in its entirety by reference to the Certificate of Designations setting forth the terms of the Series
C Preferred Stock (as amended, the “Certificate of Designations”) and our Certificate of Incorporation.
Ranking
The Series C Preferred Stock ranks senior
to our common stock and junior to our Series A Preferred Stock and our Series B Preferred Stock with respect to dividend rights
and/or rights upon distributions, liquidation, dissolution or winding up of the Company.
Dividends on Series C Preferred Stock
Holders of Series C Preferred Stock shall
be entitled to receive from and after the first date of issuance of the Series C Preferred Stock cumulative dividends at a rate
of 5% per annum on a compounded basis, which dividend amount shall be guaranteed. In the event that the Company’s market
capitalization is $50,000,000 for greater than thirty (30) consecutive days, then the dividend rate shall increase to fifteen percent
(15%) per annum. Accrued and unpaid dividends shall be payable in cash.
Redemption of Series C Preferred Stock
The Series C Preferred Stock may be redeemed
by the Company in cash at any time, in whole or in part, upon payment of the stated value of the Series C Preferred Stock, and
all related accrued but unpaid dividends.
Fundamental Change
If a “fundamental change” occurs
at any time while the Series C Preferred Stock is outstanding, the holders of shares of Series C Preferred Stock then outstanding
shall be immediately paid, out of the assets of the Company or the proceeds of such fundamental change, as applicable, and legally
available for distribution to its stockholders, an amount in cash equal to the stated value of the Series C Preferred Stock, and
all related accrued but unpaid dividends.
If the legally available assets of the
Company and the proceeds of such “fundamental change” are insufficient to pay the all of the holders of the Series
C Preferred Stock, then the holders of the Series C Preferred Stock shall share ratably in any such distribution in proportion
to the amount that they would have been entitled to. A fundamental change includes but is not limited to any change in the ownership
of at least 50% of the voting stock, liquidation or dissolution, or the common stock ceases to be listed on the market upon which
it currently trades.
Voting Rights
The holders of the Series C Preferred Stock
shall be entitled to vote on any matter submitted to the stockholders of the Company for a vote. One (1) share of Series C Preferred
Stock shall carry the same voting rights as one (1) share of common stock.
Dividends
Since inception we have not paid any dividends
on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although
we intend to retain our earnings, if any, to finance the exploration and growth of our business, our board of directors will have
the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital
requirements, and other factors, which our board of directors may deem relevant.
Warrants
As of December 14, 2018, the Company had 5,090,352
warrants outstanding with a weighted average exercise price and remaining life in years of $5.42 and 3.361 respectively. At December
14, 2018, the warrants had no aggregate intrinsic value. The exercise price of the warrants is subject to adjustment upon
certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change
and dilutive issuances.
Options and Other Stock Awards
On January 4, 2013, the Company’s
stockholders authorized the Company’s 2013 Long-Term Stock Incentive Plan (the “Plan”). The maximum aggregate
number of shares of common stock that may be issued under the Plan, including stock options, stock awards and stock appreciation
rights, is limited to 10% of the shares of common stock outstanding on the first trading day of any fiscal year, less shares or
awards previously issued under the Plan, or 1,771,929 for fiscal year 2018. Currently, we have not issued any stock options under
the Plan. As of December 14, 2018, we have issued 1,079,255 shares of common stock under the Plan.
On August 24, 2017, a majority of the
Company’s stockholders approved at the 2017 Annual Stockholders’ Meeting the 2017 Stock Incentive Plan
(“2017 SIP”). The aggregate maximum number of shares of common stock (including shares of common stock underlying
options) that may be issued under the 2017 SIP pursuant to awards of restricted shares of common stock or options are be
limited to 10% of the outstanding shares of common stock, which calculation shall be made on the first (1
st
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business day of each new fiscal year; provided that for fiscal year 2017, only 1,500,000 shares of common stock could be
delivered to participants under the 2017 SIP. Thereafter, the 10% evergreen provision shall govern the 2017 SIP. The number
of shares of common stock that are the subject of awards under the 2017 SIP which are forfeited or terminated, are settled in
cash in lieu of shares of common stock or are settled in a manner such that all or some of such shares covered by an award
are not issued to a participant or are exchanged for awards that do not involve shares of common stock will again immediately
become available to be issued pursuant to awards granted under the 2017 SIP. If shares of common stock are withheld from
payment of an award to satisfy tax obligations with respect to the award, those shares of common stock will be treated as
shares that have been issued under the 2017 SIP and will not again be available for issuance under the 2017 SIP.
Registration Rights
None.
Anti-Takeover Effects of Provisions of the DGCL and our Certificate
of Incorporation and Bylaws
Provisions of the DGCL and our Certificate
of Incorporation and by-laws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise,
or to remove incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of
coercive takeover practices and takeover bids that our board of directors may consider inadequate and to encourage persons seeking
to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of
our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could
result in improved terms for our stockholders.
Section 203 of the DGCL.
We are
subject to Section 203 of the DGCL, which prohibits a Delaware corporation from engaging in any “business combination”
with any interested stockholder for a period of three (3) years after the date that such stockholder became an interested stockholder,
with the following exceptions:
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before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
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upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) 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; or
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on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
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In general, Section 203 defines business
combination to include the following:
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any merger or consolidation involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
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In general, Section 203 defines an “interested
stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or
within three (3) years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding
voting stock of the corporation.
Amendments to Our Certificate of Incorporation.
Under
the DGCL, the affirmative vote of a majority of the outstanding shares entitled to vote thereon and a majority of the outstanding
stock of each class entitled to vote thereon is required to amend a corporation’s certificate of incorporation. Under the
DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled to vote as a class upon a proposed
amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would:
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increase or decrease the aggregate number of authorized shares of such class;
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increase or decrease the par value of the shares of such class; or
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alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely.
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If any proposed amendment would alter or
change the powers, preferences or special rights of one or more series of any class of our capital stock so as to affect them adversely,
but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a
separate class for the purposes of this provision.
Vacancies in the Board of Directors.
Our
by-laws provide that, subject to limitations, any vacancy occurring in our board of directors for any reason may be filled by a
majority of the remaining members of our board of directors then in office, even if such majority is less than a quorum. Each director
so elected shall hold office until the expiration of the term of the other directors. Each such directors shall hold office until
his or her successor is elected and qualified, or until the earlier of his or her death, resignation or removal.
Special Meetings of Stockholders.
Under
our by-laws, special meetings of stockholders may be called at any time by our President whenever so directed in writing by a majority
of the entire board of directors. Special meetings can also be called whenever one-third of the number of shares of our capital
stock entitled to vote at such meeting shall, in writing, request one. Under the DGCL, written notice of any special meeting must
be given not less than ten (10) nor more than sixty (60) days before the date of the special meeting to each stockholder entitled
to vote at such meeting.
No Cumulative Voting.
The DGCL
provides that stockholders are denied the right to cumulate votes in the election of directors unless our Certificate of Incorporation
provides otherwise. Our Certificate of Incorporation does not provide for cumulative voting.
Limitation on Directors’ Liability; Indemnification
Delaware law authorizes Delaware corporations
to limit or eliminate the personal liability of their directors to them and their stockholders for monetary damages for breach
of a director’s fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors
must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations
Delaware law authorizes, directors of Delaware corporations are accountable to those corporations and their stockholders for monetary
damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables Delaware corporations
to limit available relief to equitable remedies such as injunction or rescission. Our Certificate of Incorporation limits the liability
of our directors to us and our stockholders to the fullest extent Delaware law permits. Specifically, no director will be personally
liable for monetary damages for any breach of the director’s fiduciary duty as a director, except for liability:
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For any breach of the director’s duty of loyalty to us or our stockholders;
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For acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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For unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and
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For any transaction from which the director derived an improper personal benefit.
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This provision could have the effect of
reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management
from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might
otherwise have benefited us and our stockholders. Our by-laws provide indemnification to our officers and directors and other specified
persons with respect to their conduct in various capacities. See “Indemnification of Officers and Directors” in this
registration statement.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or person controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
Listing
Our common stock and warrants are listed
on the NASDAQ Capital Market under the symbols NXTD” and “NXTDW,” respectively.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is VStock
Transfer, LLC. The transfer agent’s address is 18 Lafayette Place, Woodmere, NY 11598 and its telephone number is (212) 828-8436.
DESCRIPTION OF DEBT SECURITIES
We may offer debt securities which may
be senior, subordinated or junior subordinated and may be convertible. We may offer general debt obligations, which may be secured
or unsecured, senior or subordinated and convertible into shares of our common stock. In this prospectus, we refer to the senior
debt securities and the subordinated debt securities together as the “debt securities.” We may issue debt securities
under a note purchase agreement or under an indenture to be entered between us and a trustee. We will file the form of debt security
and form of note purchase agreement for debt securities or form of indenture for debt securities with the SEC
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The indentures do not limit the amount of securities that may be issued under it and provides that debt securities may be issued
in one or more series. The senior debt securities will have the same rank as all of our other indebtedness that is not subordinated.
The subordinated debt securities will be subordinated to our senior debt on terms set forth in the applicable prospectus supplement.
In addition, the subordinated debt securities will be effectively subordinated to creditors and preferred stockholders of our subsidiaries.
Our board of directors will determine the terms of each series of debt securities being offered. This prospectus contains only
general terms and provisions of the debt securities. The applicable prospectus supplement will describe the particular terms of
the debt securities offered thereby. You should read any prospectus supplement and any free writing prospectus that we may authorize
to be provided to you related to the series of debt securities being offered, as well as the complete note agreements and/or indentures
that contain the terms of the debt securities.
If we decide to issue debt securities pursuant
to an indenture to be entered into between us and a trustee, we will issue the debt securities offered by this prospectus and any
accompanying prospectus supplement under an indenture to be entered into between us and the trustee identified in the applicable
prospectus supplement. The terms of the debt securities will include those stated in the indenture and those made part of the indenture
by reference to the Trust Indenture Act of 1939, as in effect on the date of the indenture. The indenture will be subject to and
governed by the terms of the Trust Indenture Act of 1939. If we offer debt securities under this prospectus, we will file the form
of indenture with the SEC.
The following description briefly sets
forth certain general terms and provisions of the debt securities that we may offer. The particular terms of the debt securities
offered by any prospectus supplement and the extent, if any, to which these general provisions may apply to the debt securities,
will be described in the related prospectus supplement. Accordingly, for a description of the terms of a particular issue of debt
securities, reference must be made to both the related prospectus supplement and to the following description. Where any provision
in an accompanying prospectus supplement is inconsistent with any provision in this summary, the prospectus supplement will control.
Debt Securities
The aggregate principal amount of debt
securities that may be issued either pursuant to a note purchase agreement or under an indenture is unlimited. The debt securities
may be issued in one or more series as may be authorized from time to time pursuant to a supplemental indenture entered into between
us and the trustee or an order delivered by us to the trustee. For each series of debt securities we offer, a prospectus supplement
accompanying this prospectus will describe the following terms and conditions of the series of debt securities that we are offering,
to the extent applicable:
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Title and aggregate principal amount;
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Whether the debt securities will be senior, subordinated or junior subordinated;
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Applicable subordination provisions, if any;
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Provisions regarding whether the debt securities will be convertible or exchangeable into other securities or property of the Company or any other person;
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Percentage or percentages of principal amount at which the debt securities will be issued;
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Maturity date(s);
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Interest rate(s) or the method for determining the interest rate(s);
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Whether interest on the debt securities will be payable in cash or additional debt securities of the same series;
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Dates on which interest will accrue or the method for determining dates on which interest will accrue and dates on which interest will be payable;
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Whether the amount of payment of principal of, premium, if any, or interest on the debt securities may be determined with reference to an index, formula or other method;
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Redemption, repurchase or early repayment provisions, including our obligation or right to redeem, purchase or repay debt securities under a sinking fund, amortization or analogous provision;
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If other than the debt securities’ principal amount, the portion of the principal amount of the debt securities that will be payable upon declaration of acceleration of the maturity;
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Authorized denominations;
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Form;
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Amount of discount or premium, if any, with which the debt securities will be issued, including whether the debt securities will be issued as “original issue discount” securities;
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The place or places where the principal of, premium, if any, and interest on the debt securities will be payable;
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Where the debt securities may be presented for registration of transfer, exchange or conversion;
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The place or places where notices and demands to or upon the Company in respect of the debt securities may be made;
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Whether the debt securities will be issued in whole or in part in the form of one or more global securities;
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If the debt securities will be issued in whole or in part in the form of a book-entry security, the depository or its nominee with respect to the debt securities and the circumstances under which the book-entry security may be registered for transfer or exchange or authenticated and delivered in the name of a person other than the depository or its nominee;
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Whether a temporary security is to be issued with respect to such series and whether any interest payable prior to the issuance of definitive securities of the series will be credited to the account of the persons entitled thereto;
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The terms upon which beneficial interests in a temporary global security may be exchanged in whole or in part for beneficial interests in a definitive global security or for individual definitive securities;
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The guarantors, if any, of the debt securities, and the extent of the guarantees and any additions or changes to permit or facilitate guarantees of such debt securities;
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Any covenants applicable to the particular debt securities being issued;
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Any defaults and events of default applicable to the debt securities, including the remedies available in connection therewith;
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Currency, currencies or currency units in which the purchase price for, the principal of and any premium and any interest on, such debt securities will be payable;
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Time period within which, the manner in which and the terms and conditions upon which the Company or the purchaser of the debt securities can select the payment currency;
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Securities exchange(s) on which the debt securities will be listed, if any;
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Whether any underwriter(s) will act as market maker(s) for the debt securities;
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Extent to which a secondary market for the debt securities is expected to develop;
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Provisions relating to defeasance;
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Provisions relating to satisfaction and discharge of the indenture;
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Any restrictions or conditions on the transferability of the debt securities;
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Provisions relating to the modification of the indenture both with and without the consent of holders of debt securities issued under the indenture;
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Any addition or change in the provisions related to compensation and reimbursement of the trustee;
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Provisions, if any, granting special rights to holders upon the occurrence of specified events;
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Whether the debt securities will be secured or unsecured, and, if secured, the terms upon which the debt securities will be secured and any other additions or changes relating to such security; and
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Any other terms of the debt securities that are not inconsistent with the provisions of the Trust Indenture Act (but may modify, amend, supplement or delete any of the terms of the indenture with respect to such series of debt securities).
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General
One or more series of debt securities may
be sold as “original issue discount” securities. These debt securities would be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. One
or more series of debt securities may be variable rate debt securities that may be exchanged for fixed rate debt securities.
United States federal income tax consequences
and special considerations, if any, applicable to any such series will be described in the applicable prospectus supplement.
Debt securities may be issued where the
amount of principal and/or interest payable is determined by reference to one or more currency exchange rates, commodity prices,
equity indices or other factors. Holders of such debt securities may receive a principal amount or a payment of interest that is
greater than or less than the amount of principal or interest otherwise payable on such dates, depending upon the value of the
applicable currencies, commodities, equity indices or other factors. Information as to the methods for determining the amount of
principal or interest, if any, payable on any date, the currencies, commodities, equity indices or other factors to which the amount
payable on such date is linked and certain additional United States federal income tax considerations will be set forth in the
applicable prospectus supplement.
The term “debt securities” includes
debt securities denominated in U.S. dollars or, if specified in the applicable prospectus supplement, in any other freely transferable
currency or units based on or relating to foreign currencies.
Subject to the limitations provided in
any indenture and in a prospectus supplement, debt securities that are issued in registered form may be transferred or exchanged
at the principal corporate trust office of the trustee, without the payment of any service charge, other than any tax or other
governmental charge payable in connection therewith.
Governing Law
All debt securities, including debt securities
issued pursuant to an indenture, shall be construed in accordance with and governed by the laws of the state of New York. To the
extent we issue securities pursuant to an indenture, such indenture will be governed by the laws of the state of New York.
DESCRIPTION OF WARRANTS
The following description, together with
the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. While the
terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any series
of warrants in more detail in the applicable prospectus supplement. If we indicate in the prospectus supplement, the terms of any
warrants offered under that prospectus supplement may differ from the terms described below. If there are differences between that
prospectus supplement and this prospectus, the prospectus supplement will control. Thus, the statements we make in this section
may not apply to a particular series of warrants. Specific warrant agreements will contain additional important terms and
provisions and will be incorporated by reference as an exhibit to the registration statement which includes this prospectus.
General
We may issue warrants for the purchase
of common stock, preferred stock, and/or debt securities in one or more series. We may issue warrants independently or together
with common stock, preferred stock, and/or debt securities, and the warrants may be attached to or separate from these securities.
We will issue warrants under one or more
warrant agreements between us and a warrant agent that we will name in the prospectus supplement. We will file the form of warrant
agreement and form of warrant certificate with the SEC, and you should read the form of warrant agreement and form of warrant certificate
for provisions that may be important to you.
We will describe in the applicable prospectus supplement the
terms of the series of warrants, including:
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The offering price and aggregate number of warrants offered;
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The currency for which the warrants may be purchased;
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If applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;
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If applicable, the date on and after which the warrants and the related securities will be separately transferable;
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In the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise;
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The warrant agreement under which the warrants will be issued;
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The effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants;
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Anti-dilution provisions of the warrants, if any;
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The terms of any rights to redeem or call the warrants;
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Any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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The dates on which the right to exercise the warrants will commence and expire or, if the warrants are not continuously exercisable during that period, the specific date or dates on which the warrants will be exercisable;
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The manner in which the warrant agreement and warrants may be modified;
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The identities of the warrant agent and any calculation or other agent for the warrants;
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Federal income tax consequences of holding or exercising the warrants;
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The terms of the securities issuable upon exercise of the warrants;
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Any securities exchange or quotation system on which the warrants or any securities deliverable upon exercise of the warrants may be listed; and
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Any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
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Exercise of Warrants
Each warrant will entitle the holder to
purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable
prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise
the warrants at any time up to 5:00 p.m. eastern time on the expiration date that we set forth in the applicable prospectus supplement.
After the close of business on the expiration date, unexercised warrants will become void.
Holders of the warrants may exercise the
warrants by delivering the warrant certificate representing the warrants to be exercised together with specified information, and
paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement.
We will set forth on the reverse side of the warrant certificate, and in the applicable prospectus supplement, the information
that the holder of the warrant will be required to deliver to the warrant agent.
Until the warrant is properly exercised,
no holder of any warrant will be entitled to any rights of a holder of the securities purchasable upon exercise of the warrant.
Upon receipt of the required payment and
the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office
indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable upon such exercise. If
fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue a new warrant certificate
for the remaining amount of warrants.
Modifications
We may amend the warrant agreements and
the warrant certificates without the consent of the holders of the warrants to cure any ambiguity, to cure, correct or supplement
any defective or inconsistent provision, or in any other manner that will not adversely affect the interests of the holders of
the warrants. We may also modify or amend certain other terms of the warrant agreements and the warrant certificates with the written
consent of the holders of not less than a majority of the then outstanding warrants.
Enforceability of Rights by Holders
of Warrants
Any warrant agent will act solely as our
agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder
of any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will
have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant certificate, including
any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant
may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action its
right to exercise, and receive the securities purchasable upon exercise of, its warrants in accordance with their terms.
DESCRIPTION OF RIGHTS
We may issue rights to purchase shares
of our common stock, preferred stock, debt securities, or other securities. These rights may be issued independently or together
with any other security offered hereby and may or may not be transferable by the holder receiving the rights in such offering.
The applicable prospectus supplement may add, update or change the terms and conditions of the rights as described in this prospectus.
The applicable prospectus supplement will
describe the specific terms of any offering of rights for which this prospectus is being delivered, including the following:
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The price, if any, per right;
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The exercise price payable for common stock, preferred stock, or other securities upon the exercise of the rights;
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The number of rights issued or to be issued to each holder;
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The number and terms of common stock, preferred stock, or other securities which may be purchased per right;
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The extent to which the rights are transferable;
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Any other terms of the rights, including the terms, procedures and limitations relating to the exchange and exercise of the rights;
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The date on which the holder’s ability to exercise the rights shall commence, and the date on which the rights shall expire;
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The extent to which the rights may include an over-subscription privilege with respect to unsubscribed securities; and
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If applicable, the material terms of any standby underwriting or purchase arrangement entered into by us in connection with the offering of such rights.
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Holders may exercise rights as described
in the applicable prospectus supplement. Upon receipt of payment and the rights certificate properly completed and duly executed
at the corporate trust office of the rights agent or any other office indicated in the prospectus supplement, we will, as soon
as practicable, forward the applicable securities purchased upon exercise of the rights. If less than all of the rights issued
in any rights offering are exercised, we may offer any unsubscribed securities directly to persons other than stockholders, to
or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements
with one or more underwriters or other purchasers, pursuant to which the underwriters or other purchasers may be required to purchase
any securities remaining unsubscribed for after such offering, as described in the applicable prospectus supplement.
The description in the applicable prospectus
supplement of any rights that we may offer will not necessarily be complete and will be qualified in its entirety by reference
to the applicable rights certificate, which will be filed with the SEC.
DESCRIPTION OF UNITS
We may issue units comprised of one or
more of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the
unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations
of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included
in the unit may not be held or transferred separately, at any time or at any time before a specified date.
We may evidence units by unit certificates
that we issue under a separate unit agreement. We may issue the units under a unit agreement between us and one or more unit agents.
If we elect to enter into a unit agreement with a unit agent, the unit agent will act solely as our agent in connection with the
units and will not assume any obligation or relationship of agency or trust for or with any registered holders of units or beneficial
owners of units. We will indicate the name and address and other information regarding the unit agent in the applicable prospectus
supplement relating to a particular series of units if we elect to use a unit agent.
We will describe in the applicable prospectus
supplement the terms of the series of units being offered, including:
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The designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
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Any unit agreement under which the units will be issued and any provisions of the unit agreement that differ from those described herein;
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Any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
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Whether the units will be issued in fully registered or global form.
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The other provisions regarding our common
stock, preferred stock, debt securities, warrants and rights as described in this prospectus will apply to each unit to the extent
such unit consists of shares of our common stock, preferred stock, debt securities, warrants and/or rights.
GLOBAL SECURITIES
We may issue some or all of our securities
of any series as global securities. We will register each global security in the name of a depositary identified in the applicable
prospectus supplement. The global securities will be deposited with a depositary or nominee or custodian for the depositary and
will bear a legend regarding restrictions on exchanges and registration of transfer as discussed below and any other matters to
be provided pursuant to the indenture.
As long as the depositary or its nominee
is the registered holder of a global security, that person will be considered the sole owner and holder of the global security
and the securities represented by it for all purposes under the securities and the indenture. Except in limited circumstances,
owners of a beneficial interest in a global security:
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Will not be entitled to have the global security or any securities represented by it registered in their names;
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Will not receive or be entitled to receive physical delivery of certificated securities in exchange for the global security; and
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Will not be considered to be the owners or holders of the global security or any securities represented by it for any purposes under the securities or the indenture.
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We will make all payments of principal
and any premium and interest on a global security to the depositary or its nominee as the holder of the global security. The laws
of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. These
laws may impair the ability to transfer beneficial interests in a global security.
Ownership of beneficial interests in a
global security will be limited to institutions having accounts with the depositary or its nominee, called “participants”
for purposes of this discussion, and to persons that hold beneficial interests through participants. When a global security is
issued, the depositary will credit on its book-entry, registration and transfer system the principal amounts of securities represented
by the global security to the accounts of its participants. Ownership of beneficial interests in a global security will be shown
only on, and the transfer of those ownership interests will be effected only through, records maintained by:
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The depositary, with respect to participants’ interests; or
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Any participant, with respect to interests of persons held by the participants on their behalf.
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Payments by participants to owners of beneficial
interests held through the participants will be the responsibility of the participants. The depositary may from time to time adopt
various policies and procedures governing payments, transfers, exchanges and other matters relating to beneficial interests in
a global security. None of the following will have any responsibility or liability for any aspect of the depositary’s or
any participant’s records relating to, or for payments made on account of, beneficial interests in a global security, or
for maintaining, supervising or reviewing any records relating to those beneficial interests:
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Us or our affiliates;
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The trustee under any indenture; or
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Any agent of any of the above.
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PLAN OF DISTRIBUTION
We may sell the securities being offered
pursuant to this prospectus from time to time in one or more transactions, including, without limitation:
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Through underwriters or dealers;
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Through agents;
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Directly to purchasers;
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In “at the market” offerings within the meaning of Rule 415(a)(4) of the Securities Act to or through a market maker or into an existing trading market on an exchange or otherwise;
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Through a combination of any of these methods; or
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Through any other method permitted by applicable law and described in a prospectus supplement.
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The applicable prospectus supplement will
describe the terms of the offering of the securities, including:
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The name or names of any underwriters, if any, and if required, any dealers or agents;
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The purchase price of the securities and the proceeds we will receive from the sale;
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Any underwriting discounts and other items constituting underwriters’ compensation;
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Any commissions paid to agents;
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Any discounts or concessions allowed or reallowed or paid to dealers;
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Any delayed delivery arrangements;
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Any additional risk factors applicable to the securities that we propose to sell; and
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Any securities exchange or market on which the securities may be listed.
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We may sell the securities from time to
time in one or more transactions at:
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A fixed price or prices, which may be changed;
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Market prices prevailing at the time of sale;
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Prices related to such prevailing market prices; or
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Sale through Underwriters or Dealers
If underwriters are used in the sale, the
underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters.
Unless we inform you otherwise in the applicable prospectus supplement, the obligations of the underwriters to purchase the securities
will be subject to certain conditions, and the underwriters will be obligated to purchase all of the offered securities if they
purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
We will describe the name or names of any
underwriters, dealers or agents and the purchase price of the securities in a prospectus supplement relating to the securities.
In connection with the sale of the securities,
underwriters may receive compensation from us or from purchasers of the securities, for whom they may act as agents, in the form
of discounts, concessions or commissions. Underwriters may sell the securities to or through dealers, and these dealers may receive
compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers
for whom they may act as agents, which is not expected to exceed that customary in the types of transactions involved. Underwriters,
dealers and agents that participate in the distribution of the securities may be deemed to be underwriters, and any discounts or
commissions they receive from us and any profit on the resale of the securities they realize may be deemed to be underwriting discounts
and commissions under the Securities Act. The prospectus supplement will identify any underwriter or agent and will describe any
compensation they receive from us.
Underwriters could make sales in privately
negotiated transactions and/or any other method permitted by law, including sales deemed to be an “at-the-market” offering,
sales made directly on the NASDAQ Capital Market, or such other exchange or automated quotation system on which our securities
trade, or sales made to or through a market maker other than on an exchange. The name of any such underwriter or agent involved
in the offer and sale of our securities, the amounts underwritten, and the nature of its obligations to take our securities will
be described in the applicable prospectus supplement.
Unless otherwise specified in the prospectus
supplement, each series of the securities will be a new issue with no established trading market, other than our common stock,
which is currently listed on the NASDAQ Capital Market. We may elect to list any of the securities on an exchange, but are not
obligated to do so. It is possible that one or more underwriters may make a market in a series of the securities, but underwriters
will not be obligated to do so and may discontinue any market making at any time without notice. Therefore, we can give no assurance
about the liquidity of or the trading market for any of the securities.
In compliance with the guidelines of the
Financial Industry Regulatory Authority, Inc., or FINRA, the maximum aggregate discounts, commissions, agency fees or other items
constituting underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8% of the
aggregate offering price of the securities offered pursuant to this prospectus and any applicable prospectus supplement.
To facilitate the offering of securities,
certain persons participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price
of the securities. This may include over-allotments or short sales of the securities, which involve the sale by persons participating
in the offering of more securities than we sold to them. In these circumstances, these persons would cover such over-allotments
or short positions by making purchases in the open market or by exercising their over-allotment option, if any. In addition, these
persons may stabilize or maintain the price of the securities by bidding for or purchasing securities in the open market or by
imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed if securities
sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to stabilize
or maintain the market price of the securities at a level above that which might otherwise prevail in the open market. These transactions
may be discontinued at any time.
From time to time, we or our affiliates
may engage in transactions with these underwriters, dealers and agents in the ordinary course of business. Underwriters have from
time to time in the past provided, and may from time to time in the future provide, investment banking services to us for which
they have in the past received, and may in the future receive, customary fees.
Direct Sales and Sales through Agents
We may sell the securities directly. In
this case, no underwriters or agents would be involved. We may also sell the securities through agents designated by us from time
to time. In the applicable prospectus supplement, we will name any agent involved in the offer, sale or resale of the offered securities,
and we will describe any commissions payable to the agent. Unless we inform you otherwise in the applicable prospectus supplement,
any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to
institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to
any sale of those securities. We will describe the terms of any sales of these securities in the applicable prospectus supplement.
Remarketing Arrangements
Securities may also be offered and sold,
if so indicated in the applicable prospectus supplement, in connection with a remarketing upon their purchase, in accordance with
a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for us. Any remarketing firm will be identified and the terms of its agreements, if any, with us and
its compensation will be described in the applicable prospectus supplement.
Delayed Delivery Contracts
If we so indicate in the applicable prospectus
supplement, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities
from us at the public offering price under delayed delivery contracts. Institutions with which we may make these delayed delivery
contracts include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable
institutions and others. These contracts would provide for payment and delivery on a specified date in the future. The contracts
would be subject only to those conditions described in the applicable prospectus supplement. The obligations of any purchaser under
any such delayed delivery contract will be subject to the condition that the purchase of the securities shall not at the time of
delivery be prohibited under the laws of the jurisdiction to which the purchaser is subject. The underwriters and other agents
will not have any responsibility with regard to the validity or performance of these delayed delivery contracts. The applicable
prospectus supplement will describe the commission payable for solicitation of those contracts.
General Information
We may have agreements with the underwriters,
dealers, agents and remarketing firms to indemnify them against certain civil liabilities, including liabilities under the Securities
Act, or to contribute with respect to payments that the underwriters, dealers, agents or remarketing firms may be required to make.
Underwriters, dealers, agents and remarketing firms may be customers of, engage in transactions with or perform services for us
in the ordinary course of their businesses.
LEGAL MATTERS
The validity of the issuance of the securities
offered hereby will be passed upon for us by Robinson Brog Leinwand Greene Genovese & Gluck P.C., New York, New York.
EXPERTS
The consolidated financial statements of
Nxt-ID, Inc. and its subsidiaries incorporated by reference from the Company’s Annual Report on Form 10-K as of and for the
years ended December 31, 2017 and 2016 have been incorporated by reference herein in reliance upon the report of Marcum LLP, an
independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Fit Pay, Inc.
as of and for the fiscal year ended December 31, 2016 incorporated by reference herein from the Company’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on November 6, 2017 have been audited by Benjamin & Young, LLP,
independent registered public accountants, to the extent and for the period set forth in their report, and are incorporated by
reference herein in reliance on such report given upon the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a
registration statement on Form S-3 filed under the Securities Act. As permitted by the SEC’s rules, this prospectus
and any prospectus supplement, which form a part of the registration statement, do not contain all the information that is included
in the registration statement. You will find additional information about us in the registration statement. Any statements
made in this prospectus or any prospectus supplement concerning legal documents are not necessarily complete and you should read
the documents that are filed as exhibits to the registration statement or otherwise filed with the SEC for a more complete understanding
of the document or matter.
We will file annual, quarterly and special
reports and other information with the SEC. Our filings with the SEC are available to the public on the SEC’s website at
http://www.sec.gov
.
The information we file with the SEC or contained on or accessible through our corporate web site or any other web site that we
may maintain is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read
and copy, at SEC prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of
which this prospectus is a part, at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington D.C. 20549.
You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC permits us to “incorporate
by reference” into this prospectus the information contained in documents we file with the SEC, which means that we can disclose
important information to you by referring you to those documents. Information that is incorporated by reference is considered to
be part of this prospectus and you should read it with the same care that you read this prospectus. Information that we file later
with the SEC will automatically update and supersede the information that is either contained, or incorporated by reference, in
this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed. We have filed
with the SEC and incorporate by reference in this prospectus, except as superseded, supplemented or modified by this prospectus,
the documents listed below:
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Our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on
April 2, 2018;
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Our Quarterly Reports on Form 10-Q for the three months ended March 31, 2018, filed with the SEC
on May 15, 2018, for the six and three months ended June 30, 2018, filed with the SEC on August 14, 2018, and for the nine and
three months ended September 30, 2018, filed with the SEC on November 14, 2018;
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Our Current Reports on Form 8-K, filed with the SEC on March 9, 2018, May 18, 2018, May 30,
2018, July 27, 2018, August 6, 2018, August 17, 2018, September 20, 2018, September 21, 2018, October 2, 2018, November
19, 2018, and December 7, 2018;
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Our Definitive Proxy Statement on Schedule 14A for our annual meeting of stockholders held on July
31, 2018, filed with the SEC on July 5, 2018; and
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Our Registration Statement on Form 8-A, filed with the SEC on September 9, 2014, including any
amendments or reports filed for the purpose of updating the description of our common stock therein.
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We also incorporate by reference into this
prospectus additional documents we may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date hereof but before the completion or termination of this offering (excluding any information not deemed “filed”
with the SEC). Any statement contained in a previously filed document is deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or in a subsequently filed document incorporated by reference
herein modifies or supersedes the statement, and any statement contained in this prospectus is deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained in a subsequently filed document incorporated by reference
herein modifies or supersedes the statement.
We will provide, without charge, to each
person to whom a copy of this prospectus is delivered, including any beneficial owner, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference herein, including exhibits. Requests should be directed
to:
Nxt-ID, Inc.
1627 U.S. Highway 1
Unit 206
Sebastian, FL 32958
(203) 266-2103
Copies of these filings are also available
on our website at
www.nxt-id.com.
For other ways to obtain a copy of these filings, please refer to “Where
You Can Find More Information” above.
$25,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
Nxt-ID, Inc.
PROSPECTUS
The date of this prospectus is December 17,
2018.
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