UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): January 2, 2019 (December 27, 2018)
FC
Global Realty Incorporated
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(Exact
name of registrant as specified in its charter)
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Nevada
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000-11635
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59-2058100
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(State or other jurisdiction
of incorporation)
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(Commission File
Number)
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(IRS Employer
Identification No.)
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2300
Computer Drive, Building G, Willow Grove, PA
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19090
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(Address of principal
executive offices)
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(Zip Code)
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215-830-1430
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(Registrant’s
telephone number, including area code)
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(Former
name or former address, if changed since last report)
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Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule
12b-2 of the Securities Exchange Act of 1934.
Emerging
Growth Company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
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Item
1.01
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Entry
into a Material Definitive Agreement.
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Amendment
to Merger Agreement
As
previously disclosed, on November 8, 2018, FC Global Realty Incorporated (“FC Global”) entered into an agreement and
plan of merger (the “Merger Agreement”) with FC Merger Sub, Inc., a Maryland corporation and wholly owned subsidiary
of FC Global (“FC Merger Sub”), Gadsden Growth Properties, Inc., a Maryland corporation (“Gadsden”) and
Gadsden Growth Properties, L.P., a Delaware limited partnership (the “Operating Partnership”), pursuant to which,
subject to the terms and conditions of the Merger Agreement, FC Merger Sub will merge with and into Gadsden, with Gadsden surviving
the merger as a wholly owned subsidiary of FC Global (the “Merger”).
On
December 27, 2018, FC Global, FC Merger Sub, Gadsden and the Operating Partnership entered into Amendment No. 1 to Agreement and
Plan of Merger (the “Amendment”) to amend certain provisions of the Merger Agreement described below.
The
parties agreed that notwithstanding disclosure in the respective disclosure letters of each party, the liabilities of Gadsden,
on the one hand, and FC Global on the other, for the litigation and tax matters described in their respective disclosure letters
would each be capped at $1 million and that there would be an adjustment to the merger consideration following the procedures
described in Article VIII of the Merger Agreement if the liabilities of Gadsden or FC Global, as applicable, exceed the $1 million
threshold. Any claim for an adjustment to the merger consideration as a result of the specified tax or litigation liabilities
must be made on or before March 31, 2020 otherwise such claim will expire.
In
addition, the Amendment extends the closing date of the Merger in Section 1.2 of the Merger Agreement to February 28, 2019 and
amends Section 7.1(c) of the Merger Agreement to extend the effectiveness deadline for the joint proxy statement/prospectus to
February 28, 2019.
The
foregoing description of the Merger Agreement and the Amendment is qualified in its entirety by reference to the full text of
those documents, copies of which are attached hereto as Exhibits 2.1 and 2.2, respectively, and are incorporated herein by reference.
OFI
Investments
As
previously disclosed, on September 24, 2018, FC Global entered into a remediation agreement with Opportunity Fund I-SS LLC (“OFI”)
and certain other parties signatory thereto (the “Remediation Agreement”), pursuant to which OFI agreed, among other
things, to purchase $100,000 of shares of FC Global’s Series D Preferred Stock for a purchase price of $0.65 per share on
the last day of each month, commencing on September 30, 2018, until it has purchased an aggregate of $500,000 of shares of Series
D Preferred Stock; provided that, upon closing of any material business combination involving FC Global that is approved by OFI,
OFI agreed to purchase an additional $1,500,000 of shares of Series D Preferred Stock at a price of $0.65 per share. Notwithstanding
the foregoing, from and after the date that stockholder approval of the Remediation Agreement has been obtained, instead of purchasing
shares of Series D Preferred Stock, OFI agreed to purchase shares of Common Stock at a price of $0.65 per share.
As
previously disclosed, on September 28, 2018, the parties completed the first closing under the Remediation Agreement, pursuant
to which OFI provided $100,000 to FC Global in exchange for 155,846 shares of Series D Preferred Stock, and on October 31, 2018,
the parties completed the second closing under the Remediation Agreement, pursuant to which OFI provided $100,000 to FC Global
in exchange for 155,846 shares of Series D Preferred Stock.
As
previously disclosed, on November 29, 2018, FC Global’s stockholders approved the Remediation Agreement and all shares of
Series D Preferred Stock issued to OFI were converted into shares of Common Stock. On the same date, the parties completed the
third closing under the Remediation Agreement, pursuant to which OFI provided $100,000 to FC Global in exchange for 155,846 shares
of Common Stock.
On
December 31, 2018, OFI agreed, notwithstanding the investment schedule set forth in the Remediation Agreement, to provide the
remaining funds to FC Global, and the parties completed a final closing under the Remediation Agreement, pursuant to which OFI
provided $1.6 million to FC Global in exchange for 2,461,538 shares of Common Stock.
On
December 31, 2018, OFI also provided an additional $200,000 to FC Global in exchange for 1,333,333 shares of Common Stock, or
a purchase price of $0.15 per share, pursuant to a letter agreement, dated December 29, 2018, between FC Global and OFI (the “Letter
Agreement).
The
foregoing description of the Remediation Agreement and the Letter Agreement is qualified in its entirety by reference to the full
text of those documents, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein
by reference.
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Item
3.02
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Unregistered
Sales of Equity Securities.
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The
information set forth under Item 1.01 regarding the issuance of shares to OFI under the Remediation Agreement and the Letter Agreement
is incorporated by reference into this Item 3.02. The issuance of these securities is being made in reliance upon an exemption
from the registration requirements of Section 5 of the Securities Act of 1933, as amended.
About
FC Global Realty Incorporated
FC
Global Realty Incorporated (OTC Pink: FCRE; TASE: FCRE), founded in 1980, is transitioning from its former business as a skin
health company to a company focused on real estate development and asset management, concentrating primarily on investments in
and the management and development of income producing real estate assets. FC Global’s objective is to generate current
income and long-term net asset value growth using institutional best practices in evaluating its investments. Additional information
about FC Global may be found online at www.fcglobalrealty.com.
About
Gadsden Growth Properties, Inc.
Gadsden
Growth Properties, Inc. is a Maryland corporation that was formed on August 11, 2016. Gadsden’s business strategy
will focus on the acquisition, development and management of property across retail, medical office and mixed-use investment segments
in secondary and tertiary cities in the United States. Gadsden is a privately-held corporation and its securities do not trade
on any marketplace. Additional information about Gadsden Growth Properties, Inc. may be found online at www.gadsdenreit.com.
Additional
Information and Where to Find It
In
connection with the proposed transaction between FC Global and Gadsden, FC Global will file relevant materials with the SEC, including
a registration statement on Form S-4 that includes a joint proxy statement of FC Global and Gadsden that also constitutes a prospectus
of Gadsden Properties, Inc. (“GPI”), and a definitive joint proxy statement/prospectus will be mailed to stockholders
of FC Global and Gadsden. INVESTORS AND SECURITY HOLDERS OF FC GLOBAL AND GADSDEN ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS
AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement
and the joint proxy statement/prospectus and other documents filed with the SEC by FC Global through the website maintained by
the SEC at
http://www.sec.gov
. Copies of the documents filed with the SEC by FC Global will be available free of charge
within the Investors section of FC Global’s website at
ww.fcglobalrealty.com
.
No
Offer or Solicitation
This
communication is for informational purposes only and not intended to and does not constitute an offer to subscribe for, buy or
sell, the solicitation of an offer to subscribe for, buy or sell or an invitation to subscribe for, buy or sell any securities
or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transaction or
otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable
law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and otherwise in accordance with applicable law.
Participants
in Solicitation
FC
Global, Gadsden, and their respective directors and certain of their respective executive officers may be deemed to be participants
in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers
of FC Global is set forth in its proxy statement for its 2018 annual meeting filed with the SEC on October 25, 2018. Information
about the directors and executive officers of Gadsden will be contained in the joint proxy statement/prospectus. Other information
regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings
or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC
regarding the proposed transaction when they become available.
Forward-Looking
Statements
DISCLOSURE
NOTICE: This document contains “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, related to FC Global, Gadsden
and the proposed acquisition of Gadsden by FC Global. All statements other than statements of historical fact are forward-looking
statements for purposes of federal and state securities laws. These forward-looking statements involve uncertainties that could
significantly affect the financial or operating results of Gadsden, FC Global or the combined company, including the amount of
total assets of the company or combined companies after any transaction. These forward-looking statements may be identified by
terms such as anticipate, believe, foresee, expect, intend, plan, may, will, could and should and the negative of these terms
or other similar expressions. Forward-looking statements in this document include, among other things, statements about the potential
benefits of the proposed acquisition, including future financial and operating results, plans, objectives, expectations and intentions
and the anticipated timing of closing of the acquisition. In addition, all statements that address operating performance, events
or developments that FC Global or Gadsden expects or anticipates will occur in the future, including statements relating to creating
value for stockholders, benefits of the proposed transactions to customers, vendors, employees, stockholders and other constituents
of the combined company, integrating the two companies, cost savings and the expected timetable for completing the proposed transaction,
are forward-looking statements. These forward-looking statements involve substantial risks and uncertainties that could cause
actual results to differ materially from those expressed or implied by such statements. Risks and uncertainties include, among
other things, risks related to the satisfaction of the conditions to closing the acquisition (including the failure to obtain
necessary stockholder approvals) in the anticipated timeframe or at all; risks related to the ability to realize the anticipated
benefits of the acquisition, including the possibility that the expected benefits from the proposed acquisition will not be realized
or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; disruption
from the transaction making it more difficult to maintain business, contractual and operational relationships; the unfavorable
outcome of any legal proceedings that have been or may be instituted against FC Global, Gadsden or GPI; failure to protect proprietary
or personally identifiable data against unauthorized access or unintended release; the ability to retain key personnel; negative
effects of this announcement or the consummation of the proposed acquisition on the market price of the capital stock of FC Global,
and on FC Global’s and Gadsden’s operating results; significant transaction costs, fees, expenses and charges; unknown
liabilities; the risk of litigation and/or regulatory actions related to the proposed acquisition; other business effects, including
the effects of industry, market, economic, political or regulatory conditions; future exchange and interest rates; changes in
tax and other laws, regulations, rates and policies; future business combinations or disposals; and competitive developments.
A
further description of risks and uncertainties relating to FC Global can be found its most recent Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and available at
www.sec.gov
,
and additional risks and uncertainties relating to FC Global, Gadsden and the Merger are contained in the joint proxy statement/prospectus
and other relevant materials to be filed with the SEC regarding the proposed transaction when they become available.
Neither
FC Global nor Gadsden assumes any obligation to update the forward-looking statements contained in this document as the result
of new information or future events or developments.
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Item
9.01
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Financial
Statements and Exhibits.
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(d)
Exhibits
Exhibit
No.
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Description
of Exhibit
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2.1
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Agreement and Plan of Merger, dated November 8, 2018, among FC Global Realty Incorporated, FC Merger Sub, Inc. Gadsden Growth Properties, Inc. and Gadsden Growth Properties, L.P. (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed on November 9, 2018)
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2.2
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Amendment No. 1 to Agreement and Plan of Merger, dated December 27, 2018, among FC Global Realty Incorporated, FC Merger Sub, Inc. Gadsden Growth Properties, Inc. and Gadsden Growth Properties, L.P.
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10.1
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Remediation Agreement, dated September 24, 2018, among FC Global Realty Incorporated, Opportunity Fund I-SS, LLC, Dolev Rafaeli, Dennis M. McGrath and Yoav Ben-Dror (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed on September 26, 2018)
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10.2
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Letter Agreement, dated December 29, 2018, between FC Global Realty Incorporated and Opportunity Fund I-SS, LLC
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, FC Global Realty Incorporated has duly caused this current report
to be signed on its behalf by the undersigned hereunto duly authorized.
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FC
GLOBAL REALTY INCORPORATED
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Date: January 2,
2019
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By:
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/s/
Michael R. Stewart
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Michael R. Stewart
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Chief Executive
Officer
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