UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X]
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Preliminary
Proxy Statement
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[ ]
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[ ]
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Definitive
Proxy Statement
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[ ]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material Pursuant to §240.14a-12
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NanoVibronix,
Inc.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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[X]
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No
fee required.
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[ ]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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[ ]
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Fee
paid previously with preliminary materials.
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[ ]
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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EXPLANATORY
NOTE
This
revised preliminary proxy statement (the “proxy statement”) of NanoVibronix, Inc. (“we,” “us,” “our”
or the “Company”) amends, restates and supersedes the definitive proxy statement filed by the Company with the Securities
and Exchange Commission on April 30, 2021 (the “original proxy statement”) in connection with the Company’s 2021 annual
meeting of stockholders (the “Annual Meeting”).
The
proxy statement is being filed to add proposals to (i) approve an amendment to our Amended and Restated Certificate of Incorporation
to increase the number of shares of our common stock, par value $0.001 per share (the “Common Stock”) authorized for
issuance from 24,109,635 shares to 40,000,000 shares (the “Share Increase Proposal”), and (ii) approve an adjournment of
the Annual Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are not
sufficient votes in favor of the Share Increase Proposal.
The
Board of Directors of the Company (the “Board”) has determined, as a result of the additional proposals, that it would
be in the best interest of the Company to change the date of the Annual Meeting from June 24, 2021 to August 17, 2021. The time of the
Annual Meeting is unchanged and remains at 10:00 a.m. Eastern time.
The
Board has also changed the record date for the Annual Meeting and has fixed the close of business on June 25, 2021 as the new record
date for determining stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.
The
proxy statement should be read in place of the original proxy statement, and amends, restates and supersedes the original proxy statement.
525
Executive Blvd
Elmsford,
NY 10523
(914)
233-3004
____________,
2021
Dear
Stockholder:
You
are cordially invited to attend the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of NanoVibronix, Inc., a Delaware
corporation (“we,” “us,” “our” or the “Company”), which will be held on August 17,
2021, at 10:00 a.m. Eastern time at www.virtualshareholdermeeting.com/NAOV2021. In light of the ongoing developments related to the
novel coronavirus (“COVID-19”), the Company has determined that the Annual Meeting will be a virtual meeting conducted exclusively
via live webcast. You or your proxyholder will be able to attend the virtual Annual Meeting online, vote, view the list of stockholders
entitled to vote at the Annual Meeting and submit questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/NAOV2021
and entering the 16-digit control number included on your proxy card or voting instruction form, as applicable. To receive access to
the virtual Annual Meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account
or by a bank or other holder of record) will need to follow the instructions applicable to them provided in the accompanying proxy statement.
Details regarding the Annual Meeting and the business to be conducted at the Annual Meeting are more fully described in the accompanying
Notice of Annual Stockholders Meeting and proxy statement. You are entitled to vote at our Annual Meeting and any adjournments, continuations
or postponements thereof only if you were a stockholder as of June 25, 2021.
We
are distributing our proxy materials to certain stockholders via the Internet under the U.S. Securities and Exchange Commission (the
“SEC”) “Notice and Access” rules. We believe this approach allows us to provide stockholders with a timely and
convenient way to receive proxy materials and vote, while lowering the costs of delivery and reducing the environmental impact of our
Annual Meeting. We are mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet
Availability”) beginning on or about ___________, 2021, rather than a paper copy of the proxy statement, the proxy card
and our 2020 Annual Report, which includes our annual report on Form 10-K for the fiscal year ended December 31, 2020. The Notice of
Internet Availability contains instructions on how to access the proxy materials, vote and obtain, if desired, a paper copy of the proxy
materials.
Your
vote is very important, regardless of the number of shares of our voting securities that you own. Whether or not you expect to
attend the Annual Meeting online, after receiving the Notice of Internet Availability please vote as promptly as possible to ensure
your representation and the presence of a quorum at the Annual Meeting. As an alternative to voting online during the Annual Meeting,
you may vote via the Internet, by telephone, or by signing, dating and returning the proxy card that is mailed to those that request
paper copies of the proxy statement and the other proxy materials.
If
your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials through your broker
or through another intermediary, please complete and return the materials in accordance with the instructions provided to you
by such broker or such other intermediary, or contact your broker directly in order to obtain a proxy issued to you by your nominee
holder to virtually attend the meeting and vote online during the meeting. Failure to do so may result in your shares not being
eligible to be voted by proxy at the meeting.
On
behalf of the board of directors, I urge you to submit your vote as soon as possible, even if you currently plan to attend the
Annual Meeting online.
Thank
you for your support of our company. I look forward to seeing you online at the Annual Meeting via remote communication.
Sincerely,
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/s/
Brian Murphy
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Brian
Murphy
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Chief
Executive Officer and Director
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NanoVibronix,
Inc.
525
Executive Blvd
Elmsford,
NY 10523
(914)
233-3004
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on August 17, 2021
The
2021 Annual Meeting of Stockholders (the “Annual Meeting”) of NanoVibronix, Inc., a Delaware corporation (“we,”
“us,” “our” or the “Company”), will be held on August 17, 2021, at 10:00 a.m. New York time,
via a live webcast on the Internet. You will be able to virtually attend the Annual Meeting online, vote and submit questions during
the Annual Meeting by visiting www.virtualshareholdermeeting.com/NAOV2021 during the meeting. Only stockholders of record of our common
stock, Series C Convertible Preferred Stock and Series E Convertible Preferred Stock on June 25, 2021 (the “Record Date”)
will be entitled to vote at the Annual Meeting and any adjournments, continuations or postponements thereof that may take place.
We
will consider and act on the following items of business at the Annual Meeting:
(1)
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Election
of six directors to serve on the Company’s board of directors for a term of one year or until their respective successors
are elected and qualified, for which the following are nominees: Brian Murphy, Christopher Fashek, Martin Goldstein, M.D.,
Harold Jacob, M.D., Michael Ferguson and Thomas R. Mika.
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(2)
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Approval of an amendment to our Amended and Restated
Certificate of Incorporation to increase the number of shares of our common stock, par value $0.001 per share (the “common
stock”) authorized for issuance from 24,109,635 shares to 40,000,000 shares (the “Share Increase Proposal”).
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(3)
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Ratification
of the appointment of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December
31, 2021.
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(4)
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Approval,
on an advisory basis, of the compensation paid to our named executive officers.
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(5)
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Approval,
on an advisory basis, of the frequency of future advisory votes on the compensation paid to our named executive officers.
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(6)
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Approval of an adjournment of the Annual Meeting to
a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are not sufficient votes
in favor of the Share Increase Proposal.
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(7)
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Such
other business as may arise and that may properly be conducted at the Annual Meeting or any adjournment or postponement thereof.
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Stockholders
are referred to the proxy statement accompanying this notice for more detailed information with respect to the matters to be considered
at the Annual Meeting. After careful consideration, the board of directors (the “Board”) has determined that each proposal
listed above is in the best interests of the Company and its stockholders and has approved each proposal. The Board recommends a vote
FOR the election of each of the nominees listed in Proposal 1, a vote FOR Proposals 2-4 and 6, and FOR the option of “every
3 years” for Proposal 5.
The
Board has fixed the close of business on June 25, 2021, as the record date (the “Record Date”) for the Annual Meeting.
Only stockholders of record on the Record Date are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting
or at any postponement(s) or adjournment(s) of the Annual Meeting. A complete list of registered stockholders entitled to vote at the
Annual Meeting will be available for inspection online (upon request to us by mail at NanoVibronix, Inc., 525 Executive Blvd, Elmsford,
NY 10523, Attn: Stephen Brown or by calling 914-233-3004 and asking for Stephen Brown) for the 10 calendar days prior to and during the
Annual Meeting and online during the Annual Meeting.
YOUR
VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE IMPORTANT.
Whether
or not you plan to attend the Annual Meeting online, we urge you to vote your shares as promptly as possible by Internet, telephone
or mail. For specific instructions on how to vote your shares, please see the section entitled “About the Annual Meeting”
beginning on page 1 of the proxy statement.
If
your shares are registered in your name, even if you plan to attend the Annual Meeting (or any postponement or adjournment
of the Annual Meeting) online, we request that you complete, date, sign and mail the enclosed form of proxy in accordance with
the instructions set out in the form of proxy and in the proxy statement to ensure that your shares will be represented at the
Annual Meeting.
If
your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials through your broker
or through another intermediary, please complete and return the materials in accordance with the instructions provided to you
by such broker or such other intermediary or contact your broker directly in order to obtain a proxy issued to you by your nominee
holder to virtually attend the Annual Meeting and vote online. Failure to do so may result in your shares not being eligible to
be voted by proxy at the Annual Meeting online.
By
Order of the Board,
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/s/
Brian Murphy
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Brian
Murphy
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Chief
Executive Officer and Director
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________ ____, 2021
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TABLE
OF CONTENTS
NanoVibronix,
Inc.
525
Executive Blvd
Elmsford,
NY 10523
(914)
233-3004
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held on August 17, 2021
Unless
the context otherwise requires, references in this proxy statement to “we,” “us,” “our,” “the
Company,” or “NanoVibronix” refer to NanoVibronix, Inc., a Delaware corporation, and its consolidated subsidiary as
a whole. In addition, unless the context otherwise requires, references to “stockholders” are to the holders of our common
stock, par value $0.001 per share (“common stock”), our Series C Convertible Preferred Stock, par value $0.001 per
share (“Series C Preferred Stock”), and our Series E Convertible Preferred Stock, par value $0.001 per share (“Series
E Preferred Stock”).
The
accompanying proxy is solicited by the Board of Directors (the “Board”) on behalf of NanoVibronix, Inc. to be voted at the
2021 annual meeting of stockholders of the Company (the “Annual Meeting”) to be held virtually via a live webcast on the
Internet on August 17, 2021 at 10:00 a.m. Eastern Time, at the Internet address and for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders (the “Notice”) and at any adjournment(s) or postponement(s) of the Annual Meeting.
This proxy statement and accompanying form of proxy are dated ________, 2021, and are expected to be first sent, given or made
available to stockholders on or about ________, 2021.
If
you held shares of our common stock, Series C Preferred Stock or Series E Preferred Stock at the close of business on June 25, 2021
(the “Record Date”), you are invited to attend the Annual Meeting virtually at
www.virtualshareholdermeeting.com/NAOV2021 and vote on the proposals described in this proxy statement.
The
Company will pay the costs of soliciting proxies from stockholders. We have retained Kingsdale Advisors to assist in the solicitation
of proxies for a fee of $___________ plus reimbursement of expenses. In addition to solicitation by mail and by Kingsdale Advisors, our
directors, officers and employees may solicit proxies on behalf of the Company, without additional compensation, by telephone, facsimile,
mail, on the Internet or in person.
The
executive offices of the Company are located at, and the mailing address of the Company, is 525 Executive Blvd, Elmsford, NY 10523.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE STOCKHOLDER MEETING TO BE HELD ON August 17, 2021:
As
permitted by the “Notice and Access” rules of the U.S. Securities and Exchange Commission (the “SEC”), we are
making this proxy statement, the proxy card and our 2020 Annual Report, which includes our annual report on Form 10-K for the fiscal
year ended December 31, 2020 available to stockholders electronically via the Internet at the following website: www.proxyvote.com. On
or about ________, 2021, we will begin mailing to our stockholders a Notice of Internet Availability of Proxy Materials
(the “Notice of Internet Availability”) that contains instructions on how stockholders may access and review all of the proxy
materials and how to vote. Also on or about ________, 2021, we will begin mailing printed copies of the proxy materials
to stockholders that previously requested printed copies. If you received a Notice of Internet Availability by mail, you will not receive
a printed copy of the proxy materials in the mail unless you request a copy. If you received a Notice of Internet Availability by mail
and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included
in the Notice of Internet Availability.
ABOUT
THE ANNUAL MEETING
What
is a proxy?
A
proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document,
that document is also called a “proxy” or a “proxy card.”
What
is a proxy statement?
A
proxy statement is a document that regulations of the SEC require that we give to you when we ask you to sign a proxy card to
vote your stock at the Annual Meeting.
Why
did I receive a Notice of Internet Availability of Proxy Materials instead of paper copies of the proxy materials?
We
are using the SEC’s Notice and Access model (“Notice and Access”), which allows us to deliver proxy materials over
the Internet, as the primary means of furnishing proxy materials. We believe Notice and Access provides stockholders with a convenient
method to access the proxy materials and vote, while allowing us to conserve natural resources and reduce the costs of printing and distributing
the proxy materials. On or about ________, 2021, we expect to begin mailing to stockholders a Notice of Internet Availability
containing instructions on how to access our proxy materials on the Internet and how to vote online. The Notice of Internet Availability
is not a proxy card and cannot be used to vote your shares. If you received a Notice of Internet Availability this year, you will
not receive paper copies of the proxy materials unless you request the materials by following the instructions on the Notice of Internet
Availability.
What
is the purpose of the Annual Meeting?
At
our Annual Meeting, stockholders will act upon the matters outlined in the Notice, which include the following:
(1)
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Election
of six directors to serve on the Company’s Board for a term of one year or until their respective successors are elected
and qualified, for which the following are nominees: Brian Murphy, Christopher Fashek, Martin Goldstein, M.D., Harold
Jacob, M.D., Michael Ferguson and Thomas R. Mika.
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(2)
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Approval of an amendment to our Amended and Restated
Certificate of Incorporation to increase the number of shares of our common stock authorized for issuance from 24,109,635 shares
to 40,000,000 shares (the “Share Increase Proposal”).
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(3)
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Ratification
of the appointment of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December
31, 2021.
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(4)
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Approval,
on an advisory basis, of the compensation paid to our named executive officers.
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(5)
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Approval,
on an advisory basis, of the frequency of future advisory votes on the compensation paid to our named executive officers.
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(6)
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Approval of an adjournment of the Annual Meeting to
a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are not sufficient votes
in favor of the Share Increase Proposal.
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(7)
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Such
other business as may arise and that may properly be conducted at the Annual Meeting or any adjournment or postponement thereof.
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What
should I do if I receive more than one set of voting materials?
You
may receive more than one Notice of Internet Availability (or, if you requested a printed copy of the proxy materials, this proxy
statement and the proxy card) or voting instruction card. For example, if you hold your shares in more than one brokerage account,
you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are
a stockholder of record and hold shares in a brokerage account, you will receive a Notice of Internet Availability (or, if you
requested a printed copy of the proxy materials, a proxy card) for shares held in your name and a voting instruction card for
shares held in “street name.” Please following the separate voting instructions that you received for your shares
of common stock held in each of your different accounts to ensure that all your shares are voted.
What
is the record date and what does it mean?
The
record date to determine the stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on June 25, 2021 (the “Record Date”). The Record Date is established by the Board as required by Delaware law. On the Record
Date, ________ shares of common stock were issued and outstanding. On the Record Date, 666,667 shares of Series C Preferred Stock
were issued and outstanding, and after application of the beneficial ownership limitation pursuant to the terms of the Series C Preferred
Stock as set forth in the certificate of designation for the Series C Preferred Stock, certain holders of Series C Preferred Stock are
entitled to an aggregate of 666,667 votes on the proposals described in this proxy statement. On the Record Date, 875,000 shares of Series
E Preferred Stock were issued and outstanding, and after application of the beneficial ownership limitation pursuant to the terms of
the Series E Preferred Stock as set forth in the certificate of designation for the Series E Preferred Stock, certain holders of Series
E Preferred Stock are entitled to an aggregate of 495,751 votes on the proposals described in this proxy statement. See “What are
the voting rights of the stockholders?” below.
Who
is entitled to vote at the Annual Meeting?
Holders
of common stock, the Series C Preferred Stock, and the Series E Preferred Stock, subject to the beneficial ownership limitation,
at the close of business on the Record Date, may vote at the Annual Meeting.
What
are the voting rights of the stockholders?
The
Company has three classes of voting stock, common stock, Series C Preferred Stock and Series E Preferred Stock. Each holder of common
stock is entitled to one vote per share of common stock on each matter to be acted upon at the Annual Meeting. Each holder of Series
C Preferred Stock is entitled to the number of votes equal to the number of whole shares of common stock into which the shares of Series
C Preferred Stock held by such holder are then convertible (subject to the 9.99% beneficial ownership limitations) with respect to any
and all matters presented to the stockholders for their action or consideration. Each holder of Series E Preferred Stock is entitled
to the number of votes equal to the number of our common stock equal to the Voting Ratio (subject to the 9.99% beneficial ownership limitations)
with respect to any and all matters presented to the stockholders for their action or consideration. The Voting Ratio, for each share
of Series E Preferred Stock, is equal to $2.00 divided by $3.53. Fractional votes are not, however, permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares into which shares of Series E Preferred Stock held by each Series
E Preferred Stock holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). Holders
of Series C Preferred Stock and Series E Preferred Stock vote together with the holders of common stock as a single class, except as
provided by law and except that the consent of holders of a majority of the outstanding Series C Preferred Stock or Series E Preferred
Stock is required to amend the terms of the Series C Preferred Stock or Series E Preferred Stock, respectively. Holders of our common
stock, Series C Preferred Stock and Series E Preferred Stock will vote together as a single class on all matters described in this proxy
statement. In addition, with respect to the Share Increase Proposal, the holders of our common stock will also vote on such proposal
as a separate class.
The
presence, in person or by proxy, of the holders of a majority of the voting power of the issued and outstanding shares of common stock,
Series C Preferred Stock and Series E Preferred Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum to transact
business. In addition, with respect to the Share Increase Proposal, the presence, in person or by proxy, of the holders of a majority
of the voting power of the issued and outstanding shares of common stock is necessary to constitute a quorum entitled to take action
with respect to the Share Increase Proposal. If a quorum is not present or represented at the Annual Meeting, the Chairman of the
meeting may adjourn the meeting from time to time to another place, if any, date or time.
What
is the difference between a stockholder of record and a “street name” holder?
If
your shares are registered directly in your name with VStock Transfer, LLC, the Company’s stock transfer agent, you are
considered the stockholder of record with respect to those shares. The Notice of Internet Availability has been sent directly
to you by the Company.
If
your shares are held in a stock brokerage account or by a bank or other nominee, the nominee is considered the record holder of
those shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.”
The Notice of Internet Availability have been forwarded to you by your nominee. As the beneficial owner, you have the right to
direct your nominee concerning how to vote your shares by using the voting instructions the nominee included in the mailing or
by following such nominee’s instructions for voting.
What
is a broker non-vote?
Broker
non-votes occur when shares are held indirectly through a broker, bank or other intermediary on behalf of a beneficial owner (referred
to as held in “street name”) and the broker submits a proxy but does not vote for a matter because the broker has
not received voting instructions from the beneficial owner and (i) the broker does not have discretionary voting authority on
the matter or (ii) the broker chooses not to vote on a matter for which it has discretionary voting authority.
With
respect to the Share Increase Proposal (Proposal 2), the ratification of the independent registered public accounting firm
(Proposal 3) and the adjournment of the Annual Meeting (Proposal 6), your broker will have the discretion to vote your shares and, therefore, will be able to vote your shares with
respect to such proposals even if you do not provide your broker with instructions on those proposals.
If
I am a beneficial owner of shares, can my brokerage firm vote my shares?
If
you are a beneficial owner and do not vote via the Internet or telephone or by returning a signed voting instruction card to your broker,
your shares may be voted only with respect to so-called “routine” matters where your broker has discretionary voting authority
over your shares. Under the rules of the New York Stock Exchange (the “NYSE”) that govern how brokers may vote shares for
which they have not received voting instructions from the beneficial owner, brokers will have such discretionary authority to vote on
the Share Increase Proposal (Proposal 2), the ratification of the independent registered public accounting firm (Proposal 3)
and the adjournment of the Annual Meeting (Proposal 6) and may vote “FOR” such proposal. In the absence of specific
instructions from you, your broker does not have discretionary authority to vote your shares with respect to the election of directors
(Proposal 1), the advisory vote on executive compensation (Proposal 4) or the advisory vote on the frequency of future advisory
votes on the compensation paid to our named executive officers (Proposal 5).
We
encourage you to provide instructions to your brokerage firm via the Internet or telephone or by returning your signed voting
instruction card. This ensures that your shares will be voted at the Annual Meeting with respect to all of the proposals described
in this proxy statement.
When
and where is the Annual Meeting and what do I need to be able to attend online?
The
Annual Meeting will be held on August 17, 2021, at 10:00 a.m. Eastern time at www.virtualshareholdermeeting.com/NAOV2021. Any
stockholder who owns our common stock, Series C Preferred Stock or Series E Preferred Stock on the Record Date can attend the Annual
Meeting online.
You
will be able to attend the Annual Meeting online, vote, view the list of stockholders entitled to vote at the Annual Meeting and
submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/NAOV2021. To participate in the
virtual meeting, you will need the 16-digit control number included on your proxy card or voting instruction form, as applicable.
The meeting webcast will begin promptly at 10:00 a.m. Eastern time. We encourage you to access the meeting prior to the start
time and you should allow ample time for the check-in procedures. Because the Annual Meeting will be a completely virtual meeting,
there will be no physical location for stockholders to attend.
How
do I vote my shares?
If
you are a record holder, you may choose one of the following methods to vote your shares:
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Via
Internet: as prompted by the menu found at www.proxyvote.com, follow the instructions to obtain your records and submit an electronic
ballot. Please have your Stockholder Control Number, which can be found on your proxy card, when you access this voting site. You
may vote via the Internet until 11:59 p.m., Eastern Time on August 16, 2021.
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Via
telephone: call 1-800-690-6903 and then follow the voice instructions. Please have your Stockholder Control Number, which can
be found on your proxy card, when you call. You may vote by telephone until 11:59 p.m., Eastern Time on August 16, 2021.
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Via
mail: You may vote by proxy by completing, signing, dating and promptly returning the enclosed proxy card in the postage-paid
envelope. If you submit a signed proxy without indicating your vote, the person voting the proxy will vote your shares according
to the Board’s recommendation.
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Online:
Online during the Annual Meeting at www.virtualshareholdermeeting.com/NAOV2021. You will need your Stockholder Control Number,
which can be found on your proxy card, in hand when you vote online during the Annual Meeting.
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The
proxy is fairly simple to complete, with specific instructions on the electronic ballot, telephone or card. By completing and
submitting it, you will direct the designated persons (known as “proxies”) to vote your stock at the Annual Meeting
in accordance with your instructions. The Board has appointed Brian Murphy, our chief executive officer and director and Stephen
Brown to serve as the proxies for the Annual Meeting.
Your
proxy will be valid only if you complete and return it before the Annual Meeting. If you properly complete and transmit your proxy but
do not provide voting instructions with respect to a proposal, then the designated proxies will vote your shares “FOR”
the election of each of the nominees for Director listed in Proposal 1 and “FOR” each of Proposals 2-4 and
6, in each case as to which you provided no voting instructions, and “FOR” the option of “every 3
years” for Proposal 5. We do not anticipate that any other matters will come before the Annual Meeting, but if any other
matters properly come before the meeting, then the designated proxies will vote your shares in accordance with applicable law and their
judgment.
If
you hold your shares in “street name,” your bank, broker or other nominee should provide to you a request for voting
instructions along with the Company’s proxy solicitation materials. By completing the voting instruction card, you may direct
your nominee how to vote your shares. If you partially complete the voting instruction but fail to complete one or more of the
voting instructions, then your nominee may be unable to vote your shares with respect to the proposal as to which you provided
no voting instructions. See “What is a broker non-vote?” Alternatively, if you want to vote your shares during
the virtual Annual Meeting, you must contact your nominee directly in order to obtain a proxy issued to you by your nominee holder.
Note that a broker letter that identifies you as a stockholder is not the same as a nominee-issued proxy. If you fail to obtain
a nominee-issued proxy prior to the Annual Meeting, you will not be able to vote your nominee-held shares during the Annual Meeting.
Who
counts the votes?
All
votes will be tabulated by the Inspector of Election appointed for the Annual Meeting. Each proposal will be tabulated separately.
Can
I vote my shares at the Annual Meeting?
Yes.
If you are a stockholder of record, you may vote your shares during the meeting by submitting your vote electronically at the
Annual Meeting.
If
you hold your shares in “street name,” you may vote your shares during the Annual Meeting only if you obtain a proxy
issued by your bank, broker or other nominee giving you the right to vote the shares.
Even
if you currently plan to attend the virtual Annual Meeting, we recommend that you also return your proxy or voting instructions
as described above so that your votes will be counted if you later decide not to attend the Annual Meeting or are unable to attend.
What
are my choices when voting?
When
you cast your vote on:
Proposal
1:
|
You
may vote for all director nominees or may withhold your vote as to one or more director nominees.
|
|
|
Proposal
2:
|
You
may vote for the proposal, against the proposal or abstain from voting on the proposal.
|
|
|
Proposal 3:
|
You may vote for the proposal, against the proposal or abstain from voting
on the proposal.
|
|
|
Proposal
4:
|
You
may vote for the proposal, against the proposal or abstain from voting on the proposal.
|
|
|
Proposal
5:
|
You
may vote for an advisory vote on executive compensation every one, two or three years or to abstain from voting on the proposal.
|
|
|
Proposal 6
|
You may vote for the proposal, against the proposal or abstain from voting
on the proposal.
|
What
are the Board’s recommendations on how I should vote my shares?
The
Board recommends that you vote your shares as follows:
“FOR” the
election of each of the nominees listed in Proposal 1.
“FOR”
Proposals 2-4 and 6.
“FOR”
the option of “every 3 years” for Proposal 5.
What
if I do not specify how I want my shares voted?
If
you are a record holder who returns a completed proxy that does not specify how you want to vote your shares on one or more proposals,
the proxies will vote your shares for each proposal as to which you provided no voting instructions, and such shares will
be voted in the following manner:
“FOR”
the election of each of the nominees listed in Proposal 1.
“FOR”
Proposals 2-4 and 6.
“FOR”
the option of “every 3 years” for Proposal 5.
If
you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other
nominee will be unable to vote those shares with respect to the election of directors (Proposal 1), the approval of the advisory vote
on executive compensation (Proposal 4), and the advisory vote on how frequently our stockholders should vote on the compensation
of our named executive officers (Proposal 5). See “What is a broker non-vote?”
Can
I change my vote?
Yes.
If you are a record holder, you may revoke your proxy at any time by any of the following means:
●
|
Attending
the virtual Annual Meeting and submitting your vote electronically. Your attendance at the Annual Meeting will not by itself
revoke a proxy. You must vote your shares by ballot at the virtual Annual Meeting to revoke your proxy.
|
|
|
●
|
Completing
and submitting a new valid proxy bearing a later date.
|
|
|
●
|
Giving
written notice of revocation to the Company addressed to Brian Murphy, our Chief Executive Officer and a director, at the Company’s
address above, which notice must be received before 6:00 p.m., New York time on August 16, 2021.
|
If
you are a “street name” holder, your bank, broker or other nominee should provide instructions explaining how you
may change or revoke your voting instructions.
What
votes are required to approve each proposal?
Assuming
the presence of a quorum, the following sets forth the voting requirement with respect to each Proposal:
Proposal
1 — Election of Directors
|
|
The
affirmative “FOR”
vote of the holders of a plurality of the votes cast at the Annual Meeting is required
for the election of the director nominees, i.e., the six director nominees who receive
the most votes will be elected.
|
Proposal
2 — Share Increase Proposal
|
|
The
(i) affirmative “FOR” vote of the holders of a majority of the outstanding shares
of our common stock, voting separately as a single class, and (ii) affirmative “FOR”
vote of the holders of a majority of the outstanding shares of our common stock, Series C
Preferred Stock (subject to beneficial ownership limitations) and Series E Preferred Stock
(subject to beneficial ownership limitations), voting together as a single class.
|
Proposal
3 — Ratification of Appointment of Auditor
|
|
The
affirmative “FOR”
vote of a majority of the votes cast “FOR” or “AGAINST”
the proposal.
|
Proposal
4 — Advisory vote on compensation
|
|
The
affirmative “FOR” vote of a majority of the votes cast “FOR” or “AGAINST” the proposal.
|
Proposal
5 — Advisory vote on frequency of advisory votes on compensation
|
|
The
number of years (1, 2 or 3) that receives the highest number of votes will be deemed to be
preferred by our stockholders.
|
Proposal
6 — Adjournment Proposal
|
|
The
affirmative “FOR” vote of a majority of votes cast “FOR” and “AGAINST”
the matter at the Annual Meeting.
|
Please
note that the votes on Proposal 4 and Proposal 5 are non-binding advisory votes.
How
are abstentions and broker non-votes treated?
Abstentions
are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at the meeting. Abstentions
and votes withheld from director nominees will not be counted with respect to the vote and will have no effect on the election of directors
(Proposal 1), the ratification of the independent registered public accounting firm (Proposal 3), the approval of the advisory
vote on executive compensation (Proposal 4), the advisory vote on how frequently our stockholders should vote on the compensation
of our named executive officers (Proposal 5), and the approval of an adjournment of the Annual Meeting (Proposal 6). Abstentions will have the same practical
effect as a vote against the Share Increase Proposal (Proposal 2).
Broker
non-votes are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at the meeting.
Failure to instruct your broker how to vote with respect to the election of directors (Proposal 1), the approval of the advisory vote
on executive compensation (Proposal 4), and the advisory vote on how frequently our stockholders should vote on the compensation
of our named executive officers (Proposal 5) will have no effect on the outcome of the votes because broker non-votes are not
considered shares entitled to vote. A broker non-vote will have the same practical effect as a vote against the Share Increase Proposal
(Proposal 2). However, if you do not give your broker specific instructions on how to vote your shares with respect to the Share
Increase Proposal (Proposal 2), the ratification of the independent registered public accounting firm (Proposal 3) or the adjournment
of the Annual Meeting (Proposal 6), your broker may vote your shares at its discretion. A failure to instruct your broker on how
to vote your shares with respect to the Share Increase Proposal (Proposal 2), the ratification of the independent registered public accounting
firm (Proposal 3) or the adjournment of the Annual Meeting (Proposal 6) will not necessarily count as a vote against any such proposal.
Do
I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Annual Meeting?
No.
None of our stockholders has any dissenters’ or appraisal rights with respect to the matters to be voted on at the Annual
Meeting.
When
will the next stockholder advisory vote on executive compensation occur?
As
further described in “PROPOSAL 5: APPROVAL, ON AN ADVISORY BASIS, OF THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS,” the Board is asking the Company’s stockholders to vote at the Annual Meeting
on a proposal regarding the frequency of the vote on future Say-on-Pay proposals, as required by Section 14A of the Exchange Act. Subject
to adoption by the Board of a different frequency for an advisory vote on executive compensation in accordance with the recommendation
of the Company’s stockholders pursuant to Proposal 5 or otherwise, the Company currently expects to hold future advisory
votes on executive compensation every three years, and the next “say-on-pay” vote is expected to occur at the annual meeting
of our stockholders in 2024.
What
are the solicitation expenses and who pays the cost of this proxy solicitation?
Our
Board is asking for your proxy and we will pay all of the costs of asking for stockholder proxies. We have retained Kingsdale Advisors
to assist in the solicitation of proxies for a fee of $___________ plus reimbursement of expenses. In addition to solicitation by mail
and by Kingsdale Advisors, our directors, officers and employees may solicit proxies on behalf of the Company, without additional compensation,
by telephone, facsimile, mail, on the Internet or in person. We will reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation material to the beneficial owners of common stock
and collecting voting instructions.
Is
this proxy statement the only way that proxies are being solicited?
No.
In addition to the solicitation of proxies by use of the Notice of Internet Availability, officers and employees of the Company and
representatives of Kingsdale Advisors may solicit the return of proxies, either by mail, telephone, telecopy, e-mail or through personal
contact. Our officers and employees will not receive additional compensation for their efforts but will be reimbursed for out-of-pocket
expenses. Brokerage houses and other custodians, nominees and fiduciaries, in connection with shares of the common stock registered in
their names, will be requested to forward solicitation material to the beneficial owners of shares of common stock.
Are
there any other matters to be acted upon at the Annual Meeting?
Management
does not intend to present any business at the Annual Meeting for a vote other than the matters set forth in the Notice and has
no information that others will do so. If other matters requiring a vote of the stockholders properly come before the Annual Meeting,
it is the intention of the persons named in the form of proxy to vote the shares represented by the proxies held by them in accordance
with applicable law and their judgment on such matters.
Where
can I find voting results?
We
expect to publish the voting results in a current report on Form 8-K, which we expect to file with the SEC within four business
days after the Annual Meeting.
Who
can help answer my questions?
The
information provided above in this “Question and Answer” format is for your convenience only and is merely a summary of the
information contained in this proxy statement. We urge you to carefully read this entire proxy statement, including the documents we
refer to in this proxy statement. If you have any questions, or need additional materials, please feel free to contact Stephen Brown
by email at steve@nanovibronix.com or phone at 914-233-3004. In addition, please feel free to contact the firm assisting us in the
solicitation of proxies, Kingsdale Advisors. Brokers, banks and other nominees may call 416-867-2272. Stockholders may call toll-free
1-877-657-5856. Or you may contact Kingsdale Advisors by email at contactus@kingsdaleadvisors.com.
What
is “householding” and how does it affect me?
With
respect to eligible stockholders who share a single address, we may send a single copy of the proxy materials to that address
unless we received instructions to the contrary from any stockholder at that address. This practice, known as “householding,”
is designed to reduce our printing and postage costs. However, if a stockholder of record residing at such address wishes to receive
a separate proxy statement and other proxy materials in the future, he or she may contact us by mail at NanoVibronix, Inc., 525
Executive Blvd, Elmsford, NY 10523, Attn: Brian Murphy or by calling 914-233-3004 and asking for Brian Murphy. Eligible stockholders
of record receiving multiple copies of our proxy materials can request householding by contacting us in the same manner. Stockholders
who own shares through a bank, broker or other nominee can request householding by contacting such nominee.
We
hereby undertake to deliver promptly, upon written or oral request, a copy of the proxy materials to a stockholder at a shared
address to which a single copy of the document was delivered. Requests should be directed to Brian Murphy at the address or phone
number set forth above.
PROPOSAL
1: ELECTION OF DIRECTORS
The
Board has nominated six directors for election at the Annual Meeting by the stockholders (each referred to herein as a “Company
Nominee” and, collectively as the “Company Nominees”). The Board manages our company’s business and affairs,
exercises all corporate powers and establishes corporate policies. Our Amended and Restated Certificate of Incorporation (“Certificate
of Incorporation”) and Amended and Restated Bylaws (the “Bylaws”) provide that the Board will consist of such
number of directors as may be determined from time to time by resolution of the majority of the whole Board, which is currently
fixed at six directors. Proxies cannot be voted for a greater number of persons than the number of Company Nominees named in the
proxy statement.
Each
member of our Board is elected for a one-year term and is elected at each annual meeting of stockholders. If a quorum is present,
the Company Nominees will be elected by a plurality of the voting power of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors. Abstentions and broker non-votes have no effect on the vote.
The six Company Nominees receiving the highest number of affirmative votes will be elected directors of the Company. Shares of
common stock, Series C Preferred Stock and Series E Preferred Stock entitled to vote at the Annual Meeting represented by executed
proxies will be voted, if authority to do so is not withheld, for the election of the six nominees named below. Should any Company
Nominee become unable or unwilling to accept nomination or election, the proxy holders may vote the proxies for the election,
in his or her stead, of any other person the Board may nominate or designate. Each Company Nominee has agreed to serve, if elected,
and the Board has no reason to believe that any Company Nominee will be unable to serve.
Directors
and Company Nominees
The
following table sets forth the name, age and position of each director currently serving on the Board and each Company Nominee for election
as a director as of June 25, 2021:
The
biographies for the Company Nominees are as follows:
Name
|
|
Age
|
|
Position
|
Brian
Murphy
|
|
64
|
|
Chief
Executive Officer and Director
|
Harold
Jacob, M.D.
|
|
67
|
|
Chief
Medical Officer and Director
|
Christopher
Fashek
|
|
71
|
|
Chairman
of the Board
|
Martin
Goldstein, M.D.
|
|
53
|
|
Director
|
Michael
Ferguson
|
|
50
|
|
Director
|
Thomas
R. Mika
|
|
69
|
|
Director
|
Brian
Murphy, Chief Executive Officer and Director. Mr. Murphy has served as our chief executive officer and director since October
2016. Mr. Murphy has over 25 years of senior sales, operations and general management experience in medical device and medical
technology companies, including ATI Medical Equipment Corporation, Mountain Medical Equipment Inc. and Healthdyne Technologies
Inc. From 2012 to 2016, Mr. Murphy served in various roles at MiMedx Group, Inc., where he initiated and managed the commercial
sales and national accounts efforts within the advanced wound care segment. From 2010 to 2012, Mr. Murphy was the chief executive
officer of O2 Insights, Inc., a start-up wound care diagnostics company, and led the sale of the company to Systagenix Ltd. in
June 2012. From 2008 to 2010, Mr. Murphy served as vice president of sales for ConvaTec and led the negative pressure wound therapy
business. From 1992 to 2008, Mr. Murphy served a total of 17 years at Kinetic Concepts, Inc. (KCI) in various positions overseeing
sales, operations and general management. Mr. Murphy holds a bachelor of arts degree in communications from Southern Illinois
University. Mr. Murphy’s qualifications to serve on our Board include his significant sales, operations and general management
experience in medical device and medical technology companies.
Harold
Jacob, M.D., Chief Medical Officer and Director. Dr. Jacob has served as our chief medical officer since March 1, 2014, and
as our director since September 2003. From September 2003 to February 4, 2014, Dr. Jacob served as chairman of our Board and from
September 2003 to March 1, 2014, Dr. Jacob served as our chief executive officer. Dr. Jacob also performed the functions of a
principal financial officer until April 1, 2014. Dr. Jacob is our co-founder and has worked extensively in medical device development.
Dr. Jacob also served part-time as an attending gastroenterologist at Shaare Zedek Medical Center in Jerusalem, Israel from 2004
to March 2011. Since April 2011, he has been an attending physician in Gastroenterology at Hadassah University Hospital in Jerusalem,
Israel. From 1999 to the present, Dr. Jacob has served as the president of Medical Instrument Development Inc., which provides
consulting services to start-up and early stage companies and patents its own proprietary medical devices. From 1997 to 2003,
Dr. Jacob served as director of medical affairs at Given Imaging Ltd., a company that developed the first swallowable wireless
pill camera for inspection of the intestines. Dr. Jacob also formerly served as a director for Oramed Pharmaceuticals Inc., a
pharmaceutical company focused on the development of innovative orally ingestible capsule medication. We believe that Dr. Jacob’s
qualifications to serve on our Board include his years of experience in the biomedical industry and with us and his experience
serving in management roles of various companies.
Christopher
Fashek, Chairman of the Board. Mr. Fashek has served as our director and Chairman of the Board since November 2016. Mr. Fashek
is an accomplished healthcare executive with a record of leading global medical-device and pharmaceutical businesses. Mr. Fashek
led the team that introduced V.A.C.® therapy, a negative pressure wound therapy, to both, the clinical community, and patients
with serious or complex wounds. From June 2018, to 2020, Mr. Fashek has served as chief executive officer and a director of Brain
Sentinel, Inc. From July 2016 to June 2017, Mr. Fashek served as chief executive officer of Atteris Healthcare, LLC. Mr. Fashek
currently served as a director of World Craniofacial Foundation (WCF) and the IDN Summit. From 1995 to 2007, he was at KCI as
the vice chairman, chief executive officer, and president of KCI USA. From 2008 to 2011, he was the chairman of the board of directors
at Systagenix, Ltd. From 2014 to 2015, he was the chairman of the board of directors and chief executive officer of Spiracur,
Inc. He currently serves as chairman of MedTech Solutions Group, LLC, a startup in San Antonio, Texas. He has a bachelor of arts
degree from Upsala College and Master of Business Administration from Fairleigh Dickinson University. Mr. Fashek’s extensive
experience as an executive and leadership positions in the global medical device and pharmaceutical businesses, as well as his
network of industry partners, provide him the appropriate experience to serve on our Board.
Mr.
Fashek is recognized as developing highly productive and profitable leadership teams and corporate cultures, while taking multiple
healthcare products from idealization to commercialization, as well as turning around under-performing corporations to profitability.
Martin
Goldstein, M.D., Director. Dr. Goldstein has served as our director since March 25, 2015
and has been a practicing urologist for more than 20 years with particular expertise in the management of stone disease. Dr. Goldstein
is an accomplished healthcare entrepreneur. He is the President of New Jersey Urology, the largest urology group practice in the
country. He also serves as Senior Vice President of Corporate Development and Acquisitions of Urology Management Associates, a
private equity backed entity providing administrative practice management services to independent urology groups. Dr. Goldstein
is a co-founder and executive board member of Metropolitan Surgery Center, a large multispecialty ambulatory surgery center. Dr.
Goldstein brings to our Board his medical practice expertise. He is expected to make a valuable contribution in connection with
marketing and facilitating the acceptance of our product offerings within the medical community. He has provided assistance with
the U.S. Food and Drug Administration regulatory approval process of our products, particularly our urology offerings, and will
continue to advise on new product development and innovations.
Michael
Ferguson, Director. The Honorable Mr. Ferguson has served as our director since April 27, 2015. Mr. Ferguson is currently
a senior advisor at BakerHostetler, serving as the leader of their Federal Policy team. In January 2009, Mr. Ferguson founded
Ferguson Strategies, LLC, a government affairs and strategic business consulting firm, where he served as the chief executive
officer and chairman. From 2001 to January 2009, he served in the U.S. House of Representatives, representing New Jersey’s
7th congressional district. While in Congress, he was a member of the House Energy and Commerce Committee, which has wide jurisdiction
over the healthcare, telecommunications and energy industries. He served as vice chairman of the panel’s Health Subcommittee,
where he became a key member on health care issues and helped to ensure passage of the Medicare Part D prescription drug benefit
in 2003. In addition, he served as a member of the Telecommunications and Internet Subcommittee as well as the Oversight and Investigations
Subcommittee. Mr. Ferguson was also a member of the House Financial Services Committee, where he cosponsored the Sarbanes-Oxley
Act of 2002 and helped enact the initial terrorism risk insurance law. Mr. Ferguson was the former chairman of the Board of Commissioners
of the New Jersey Sports and Exhibition Authority and also serves as a senior fellow of the Center for Medicine in the Public
Interest’s Odyssey Initiative for Biomedical Innovation and Human Health. He has also served on various corporate advisory
boards and committees, including for Pfizer, Inc., the National Italian American Foundation and the United States Golf Association.
Mr. Ferguson received a bachelor’s degree in government from the University of Notre Dame and a master’s of public
policy degree with a specialization in education policy from Georgetown University. Mr. Ferguson also formerly served as the Chairman
of the Board of Ohr Pharmaceutical Inc. and brings to the Board his extensive background in government affairs, health care policy,
and business strategy gained from his experiences in Congress and business consulting, which we believe will assist in strengthening
and advancing our strategic focus and regulatory compliance.
Thomas
R. Mika, Director. Mr. Mika has served as our director since April 27, 2015. Mr. Mika has over 30 years of senior management,
finance and consulting experience. Mr. Mika is currently executive vice president and chief financial officer of POET Technologies,
Inc. (TSX Venture: PTK, OTCQX:POETF) and previously served as chairman of the board of Rennova Health, Inc. (NASDAQ: RNVA) and
as chief executive officer of its wholly owned subsidiary, CollabRx, Inc. (NASDAQ: CLRX). Rennova Health is a vertically integrated
public healthcare holding company that merged with CollabRx in November 2015 and became listed on the NASDAQ. CollabRx, formerly
known as Tegal Corporation (NASDAQ: TGAL), is a clinical decision-support company that delivers expert solutions in precision
oncology and genomic medicine. Mr. Mika was the chairman and chief executive officer of CollabRx and its predecessor company since
March 2005. From 1992 to 2002, Mr. Mika served on the company’s Board, which included periods of service as the chairman
of the compensation committee and a member of the audit committee. Previously, Mr. Mika co-founded IMTEC, a boutique investment
and consulting firm whose areas of focus included health care, pharmaceuticals, media and information technology. As a partner
of IMTEC, Mr. Mika served clients in the United States, Europe and Japan over a period of 20 years, taking on the role of chief
executive officer in several ventures. Earlier in his career, Mr. Mika was a managing consultant with Cresap, McCormick &
Paget and a policy analyst for the National Science Foundation. Mr. Mika holds a bachelor of science degree in Microbiology from
the University of Illinois at Urbana-Champaign and a master of business administration degree from the Harvard Graduate School
of Business. Mr. Mika’s qualifications to serve on our Board include his significant strategic and business insight from
his prior service on the Board of other publicly held companies, as well as his substantial senior management, finance and consulting
experience.
Required
Vote and Board Recommendation
If
a quorum is present and voting, the six Company Nominees receiving the highest number of votes will be elected as directors. If
you hold your shares in your own name and abstain from voting on the election of directors, your abstention will have no effect
on the vote. If you hold your shares through a broker and you do not instruct the broker on how to vote for the six nominees,
your broker will not have the authority to vote your shares. Abstentions and broker non-votes will each be counted as present
for purposes of determining the presence of a quorum but will not have any effect on the outcome of the vote.
The
Board recommends that you vote “FOR” each Company Nominee.
|
CORPORATE
GOVERNANCE
NanoVibronix,
Inc., with the oversight of the Board and its committees, operates within a comprehensive plan of corporate governance for the
purpose of defining independence, assigning responsibilities, setting high standards of professional and personal conduct and
assuring compliance with such responsibilities and standards. We regularly monitor developments in the area of corporate governance.
Code
of Business Conduct and Ethics
We
have adopted a code of business conduct and ethics that applies to all of our officers, directors and employees. The code of business
conduct and ethics addresses, among other things, competition and fair dealing, conflicts of interest, financial matters and external
reporting, our funds and assets, confidentiality and corporate opportunity requirements and the process for reporting violations
of the code of business conduct and ethics, employee misconduct, improper conflicts of interest or other violations. A copy of
the code of ethics was attached as Exhibit 14.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,
filed with the Securities and Exchange Commission on March 31, 2017. If we amend or grant a waiver of one or more of the provisions
of our code of business conduct and ethics, we intend to satisfy the requirements under Item 5.05 of Form 8-K regarding the disclosure
of amendments to, or waivers from, provisions of our code of business conduct and ethics that apply to our principal executive,
financial and accounting officers by posting the required information on our website at www.nanovibronix.com within four business
days following the date of such amendment or waiver.
Board
Composition
Our
Certificate of Incorporation and Bylaws provide that our Board will consist of such number of directors as determined from time
to time by resolution adopted by our Board. The size of our Board is currently fixed at six directors. Subject to any rights applicable
to any then outstanding preferred stock, any vacancies or newly created directorships resulting from an increase in the authorized
number of directors may be filled by a majority of the directors then in office. Each member of our Board is elected for a one-year
term and is elected at each annual meeting of stockholders.
We
have no formal policy regarding Board diversity. Our Board believes that each director should have a basic understanding of our
principal operational and financial objectives and plans and strategies, our results of operations and financial condition and
relative standing in relation to our competitors. We take into consideration the overall composition and diversity of the Board
and areas of expertise that director nominees may be able to offer, including business experience, knowledge, abilities and customer
relationships. Generally, we will strive to assemble a Board that brings to us a variety of perspectives and skills derived from
business and professional experience as we may deem are in our and our stockholders’ best interests. In doing so, we will
also consider candidates with appropriate non-business backgrounds.
Director
Independence
We
are currently listed on The NASDAQ Capital Market and therefore rely on the definition of independence set forth in the NASDAQ
Listing Rules (“NASDAQ Rules”). Under the NASDAQ Rules, a director only qualifies as an “independent director”
if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director.
In
order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not,
other than in his or her capacity as a member of the audit committee, the board of directors, or any other board
committee: (1) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any
of its subsidiaries or (2) be an affiliated person of the listed company or any of its subsidiaries.
Our
Board undertook a review of its composition, the composition of its committees and the independence of each director. Based upon
information requested from and provided by each director concerning his or her background, employment and affiliations, including
family relationships, our Board has determined that Christopher Fashek, Michael Ferguson, Martin Goldstein, M.D. and Thomas R.
Mika, or four of our six directors, do not have a relationship (other than being a director and/or a stockholder) that would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors
is “independent” as that term is defined under the NASDAQ Rules.
Our
Board also determined that (i) Messrs. Thomas Mika, Michael Ferguson and Christopher Fashek, who compose our audit committee,
(ii) Messrs. Christopher Fashek, Thomas Mika and Michael Ferguson, who compose our compensation committee, and (iii) Messrs. Michael
Ferguson, Martin Goldstein and Christopher Fashek, who compose our nominating and corporate governance committee, each satisfy
the independence standards for those committees established by the applicable rules and regulations of the SEC and the NASDAQ
Rules. In making this determination, our Board considered the relationships that each non-employee director has with us and all
other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership
of our capital stock by each non-employee director. We intend to comply with all size and independence requirements for committees
within the applicable time periods.
Board
Committees, Meetings and Attendance
During
the year ended December 31, 2020, the Board held 4 meetings. We expect our directors to attend Board meetings, meetings of any
committees and subcommittees on which they serve and each annual meeting of stockholders, either in person or by teleconference.
During the year ended December 31, 2020, each director attended at least 75% of the total number of meetings held by the Board
and Board committees of which such director was a member. Last year’s annual meeting was attended by one director.
Our
Board currently has three standing committees which consist of an audit committee, a nominating and corporate governance committee
and a compensation committee, each of which has the composition and responsibilities described below.
Each
of these committees operates under a charter that has been approved by our Board. The current charter of each of these committees
is available on our website at www.nanovibronix.com in the “Governance” section under “Investors.”
The reference to our website address does not constitute incorporation by reference of the information contained at or available
through our website, and you should not consider it to be a part of this proxy statement.
Audit
Committee. The audit committee consists of Messrs. Thomas Mika (chair). Michael Ferguson and Christopher Fashek, each of whom
our Board has determined to be financially literate and qualify as an independent director under Sections 5605(a)(2) and 5605(c)(2)
of the NASDAQ Rules and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
In addition, Mr. Thomas Mika qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5)(ii)
of Regulation S-K. Our Board also determined that each member of our audit committee can read and understand fundamental financial
statements in accordance with applicable requirements. In arriving at these determinations, the Board examined each audit committee
member’s scope of experience and the nature of their employment in the corporate finance sector.
The
function of the audit committee is to assist the Board in its oversight of (1) the integrity of our financial statements, (2)
our compliance with legal and regulatory requirements, (3) the qualifications, independence and performance of our independent
auditors and (4) audit and non-audit fees and services.
The
audit committee met three times during the year ended December 31, 2020.
Nominating
and Corporate Governance Committee. The nominating and corporate governance committee consist of Messrs. Michael Ferguson
(chair), Martin Goldstein and Christopher Fashek, each of whom our Board has determined qualifies as an independent director under
Section 5605(a)(2) of the NASDAQ Rules.
The
primary function of the nominating and corporate governance committee is to identify individuals qualified to become board members,
consistent with criteria approved by the Board, and select the director nominees for election at each annual meeting of stockholders.
The
nominating and corporate governance committee did not meet during the year ended December 31, 2020.
Compensation
Committee. The compensation committee consists of Messrs. Christopher Fashek (chair), Thomas Mika and Michael Ferguson, each
of whom our Board has determined qualifies as an independent director under Sections 5605(a)(2) and 5605(d)(2) of the NASDAQ Rules,
as an “outside director” for purposes of Section 162(m) of the Internal Revenue Code and as a “non-employee
director” for purposes of Section 16b-3 under the Exchange Act. The function of the compensation committee will be to discharge
the Board’s responsibilities relating to compensation of our directors and executives and our overall compensation programs.
The
primary objective of the compensation committee will be to develop and implement compensation policies and plans that are appropriate
for us in light of all relevant circumstances and which provide incentives that further our long-term strategic plan and are consistent
with our culture and the overall goal of enhancing enduring stockholder value.
The
compensation committee met four times during the year ended December 31, 2020. We did not engage any consultants in determining
or recommending the amount or form of executive and director compensation during the year ended December 31, 2020.
Family
Relationships and Involvement in Certain Legal Proceedings
There
are no family relationships among our directors and executive officers, or person nominated or chosen by the Company to become
a director or executive officer. To our knowledge, there have been no material legal proceedings as described in Item 401(f) of
Regulation S-K that are material to an evaluation of the ability or integrity of any of our directors or executive officers, or
person nominated to become a director or executive officer (in the last ten years) or our control persons (in the last year).
Director
Nominations
Our
nominating and corporate governance committee considers all qualified candidates identified by members of the Board, by senior
management and by stockholders. The nominating and corporate governance committee follows the same process and uses the same criteria
for evaluating candidates proposed by stockholders, members of the Board and members of senior management. We did not pay fees
to any third party to assist in the process of identifying or evaluating director candidates during the year ended December 31,
2020.
Our
Bylaws contain provisions that address the process by which a stockholder may nominate an individual to stand for election to
the Board at our Annual Meeting. To recommend a nominee for election to the Board, a stockholder must submit his or her recommendation
to the Secretary at our corporate offices at 525 Executive Blvd, Elmsford, NY 10523. Such nomination must satisfy the notice,
information and consent requirements set forth in our Bylaws and must be received by us prior to the date set forth under “Stockholder
Proposals” below. A stockholder’s recommendation must be accompanied by the information with respect to stockholder
nominees as specified in our Bylaws, including among other things, the name, age, address and occupation of the recommended person,
the proposing stockholder’s name and address, the ownership interests of the proposing stockholder and any beneficial owner
on whose behalf the nomination is being made (including the number of shares beneficially owned, any hedging, derivative, short
or other economic interests and any rights to vote any shares) and any material monetary or other relationships between the recommended
person and the proposing stockholder and/or the beneficial owners, if any, on whose behalf the nomination is being made.
In
evaluating director nominees, the nominating and corporate governance committee considers the following factors:
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the
appropriate size and diversity of our Board;
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our
needs with respect to the particular knowledge, skills and experience of nominees, including experience in corporate finance,
technology, business, administration and sales, in light of the prevailing business conditions and the knowledge, skills and
experience already possessed by other members of the Board;
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experience
with accounting rules and practices, and whether such a person qualifies as an “audit committee financial expert”
pursuant to SEC rules; and
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balancing
continuity of our Board with periodic injection of fresh perspectives provided by new Board members.
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Our
Board believes that each director should have a basic understanding of our principal operational and financial objectives and
plans and strategies, our results of operations and financial condition and our relative standing in relation to our competitors.
In
identifying director nominees, the Board will first evaluate the current members of the Board willing to continue in service.
Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service
will be considered for re-nomination.
If
any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election,
the Board will identify another nominee with the desired skills and experience described above. The Board takes into consideration
the overall composition and diversity of the Board and areas of expertise that director nominees may be able to offer, including
business experience, knowledge, abilities and customer relationships. Generally, the Board will strive to assemble a Board that
brings to us a variety of perspectives and skills derived from business and professional experience as it may deem are in our
and our stockholders’ best interests. In doing so, the Board will also consider candidates with appropriate non-business
backgrounds.
Board
Leadership Structure
The
Board is committed to promoting our effective, independent governance. Our Board believes it is in our best interests and the
best interests of our stockholders for the Board to have the flexibility to select the best director to serve as chairman at any
given time, regardless of whether that director is an independent director or the chief executive officer. Consequently, we do
not have a policy governing whether the roles of chairman of the Board and chief executive officer should be separate or combined.
This decision is made by our Board, based on our best interests considering the circumstances at the time.
Currently,
the offices of the chairman of the Board and the chief executive officer are held by two different people. Christopher Fashek
is our independent, non-executive chairman of the Board, and Brian Murphy is our chief executive officer. The chief executive
officer will be responsible for our day-to-day leadership and performance, while the chairman of the Board will provide guidance
to the chief executive officer and set the agenda for board meetings and preside over meetings of the Board. We believe that separation
of the positions will reinforce the independence of the Board in its oversight of our business and affairs, and create an environment
that is more conducive to objective evaluation and oversight of management’s performance, increasing management accountability
and improving the ability of the Board to monitor whether management’s actions are in our best interests and those of our
stockholders.
Role
in Risk Oversight
Our
Board oversees an enterprise-wide approach to risk management, designed to support the achievement of business objectives, including
organizational and strategic objectives, to improve long-term organizational performance and enhance stockholder value. The involvement
of our Board in setting our business strategy is a key part of its assessment of management’s plans for risk management
and its determination of what constitutes an appropriate level of risk for the company. The participation of our Board in our
risk oversight process includes receiving regular reports from members of senior management on areas of material risk to our company,
including operational, financial, legal and regulatory, and strategic and reputational risks, including cybersecurity.
The
Board continually reviews the Company’s controls and procedures that involve cybersecurity matters to determine the potential
material impact to our financial results, operations, and/or reputation to insure such incidents are immediately reported by management
to the Board, or individual members or committees thereof, as appropriate, in accordance with our escalation framework.
While
our Board has the ultimate responsibility for the risk management process, senior management and various committees of our Board
will also have responsibility for certain areas of risk management.
Our
senior management team is responsible for day-to-day risk management and regularly reports on risks to our full Board or a relevant
committee. Our finance and regulatory personnel serve as the primary monitoring and evaluation function for company-wide policies
and procedures, and manage the day-to-day oversight of the risk management strategy for our ongoing business. This oversight includes
identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance
and reporting levels.
The
audit committee will focus on monitoring and discussing our major financial risk exposures and the steps management has taken
to monitor and control such exposures, including our risk assessment and risk management policies. As appropriate, the audit committee
will provide reports to and receive direction from the full Board regarding our risk management policies and guidelines, as well
as the audit committee’s risk oversight activities.
In
addition, the compensation committee will assess our compensation policies to confirm that the compensation policies and practices
do not encourage unnecessary risk taking. The compensation committee will review and discuss the relationship between risk management
policies and practices, corporate strategy and senior executive compensation and, when appropriate, report on the findings from
the discussions to our Board. Our compensation committee intends to set performance metrics that will create incentives for our
senior executives that encourage an appropriate level of risk-taking that is commensurate with our short-term and long-term strategies.
Communications
with Directors
The
Board welcomes communication from our stockholders. Stockholders and other interested parties who wish to communicate with a member
or members of our Board or a committee thereof may do so by addressing correspondence to the Board member, members or committee,
c/o NanoVibronix, Inc., 525 Executive Blvd, Elmsford, NY 10523, ATTN: Brian Murphy, Chief Executive Officer. Our Chief Executive
Officer will review and forward correspondence to the appropriate person or persons.
All
communications received as set forth in the preceding paragraph will be opened by the Chief Executive Officer for the sole purpose
of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising,
promotions of a product or service or patently offensive material will be forwarded promptly to the addressee(s). In the case
of communications to the Board or any group or committee of directors, the Chief Executive Officer will make sufficient copies
of the contents to send to each director who is a member of the group or committee to whom the communication is addressed. If
the amount of correspondence received through the foregoing process becomes excessive, our Board may consider approving a process
for review, organization and screening of the correspondence by the corporate secretary or another appropriate person.
DIRECTOR
COMPENSATION
The
following table shows the compensation earned by persons who served on our Board during the fiscal year ended December 31, 2020,
who are not one of our named executive officers. Other than as set forth in the table and described more fully below, we did not
pay any compensation, reimburse any expense of, make any equity awards or non-equity awards to, or pay any other compensation
to any of the other members of our Board for their services rendered in such period.
Director
Compensation Table
Name
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Fees earned
or paid
in cash ($)
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Option
Awards ($) (1)
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Total ($)
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Christopher Fashek (2)
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157,500
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160,278
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317,778
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|
|
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|
|
|
|
|
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Thomas Mika (3)
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|
—
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|
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19,490
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|
|
|
19,490
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|
|
|
|
|
|
|
|
|
|
|
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Michael Ferguson (4)
|
|
|
—
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|
|
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36,773
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|
|
|
36,773
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|
|
|
|
|
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|
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|
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Martin Goldstein (5)
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|
—
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49,755
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49,755
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|
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Harold Jacob, M. D. (6)
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|
—
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|
|
|
—
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|
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|
—
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(1)
In accordance with SEC rules, the amounts in this column reflect the dollar amounts to be recognized for financial statement reporting
purposes with respect to the 2020 fiscal year in accordance with ASC Topic 718. Fair value is based on the Black-Scholes option
pricing model using the market price of the underlying shares at the grant date. For additional discussion of the valuation assumptions
used in determining stock-based compensation and the grant date fair value for stock options, see “Management’s Discussion
and Analysis of Financial Condition and Results of Operation - Critical Accounting Policies - Stock-based compensation”
and Note 3—”Significant Accounting Policies” and Note 6—”Stockholders’ Equity” to our
audited consolidated financial statements for the fiscal year ended December 31, 2020, included in our annual report on Form 10-K
for the fiscal year ended December 31, 2020.
(2)
As of December 31, 2020, Mr. Fashek had outstanding options representing the right to purchase 212,000 shares of our common stock
and no outstanding stock awards of shares of common stock.
(2)
As of December 31, 2020, Mr. Mika had outstanding options representing the right to purchase 160,000 shares of our common stock
and no outstanding stock awards of shares of common stock.
(3)
As of December 31, 2020, Mr. Ferguson had outstanding options representing the right to purchase 147,500 shares of our common
stock and no outstanding stock awards of shares of common stock.
(4)
As of December 31, 2020, Mr. Goldstein had outstanding options representing the right to purchase 204,000 shares of our common
stock and no outstanding stock awards of shares of common stock.
(5)
As of December 31, 2020, Dr. Jacob had outstanding options representing the right to purchase 119,285 shares of our common stock
and no outstanding stock awards of shares of common stock.
On
October 13, 2016, we entered into an agreement with Christopher Fashek to serve as the chairman of our Board. Under this agreement
Mr. Fashek was paid $100,000 per year payable in semi-monthly installments. On November 1, 2018, the Compensation committee voted
to increase Mr. Fashek’s consulting fee to $150,000 per year. Mr. Fashek is also entitled to receive a year-end bonus of
up to $25,000 to be determined by the compensation committee.
On
November 2, 2020, the Company entered into an option cancellation and release agreement with each of Brian Murphy, Christopher
Fashek, Martin Goldstein, Michael Ferguson, Stephen Brown, and Thomas Mika (collectively, the “Option holders”), pursuant
to which the parties agreed to cancel options to purchase an aggregate of 804,788 shares of common stock of the Company at exercise
prices ranging from $2.57 to $6.00 (the “Options”) previously granted to each of the Optionholders. In exchange for
the cancellation of the Options, the Company paid $1.00 to each Optionholder.
Outside
of compensation to our chairman, Christopher Fashek, we paid no compensation to our non-employee directors for the one-year period
ended December 31, 2020.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Review,
Approval or Ratification of Transactions with Related Parties
Generally,
we do not enter into related party transactions unless the members of the Board who do not have an interest in the potential transaction
have reviewed the transaction and determined that (i) we would not be able to obtain better terms by engaging in a transaction
with a non-related party and (ii) the transaction is in our best interest. In approving or rejecting any such proposal, our Board
considers all of the relevant facts and circumstances of the related party transaction and the related party’s relationship
and interest in the transaction. This policy applies generally to any transaction in which we are to be a participant and the
amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the previous
two completed fiscal years, and in which any related person had or will have a direct or indirect material interest. This policy
is not currently in writing.
The
audit committee is charged with reviewing, approving and overseeing any transaction between the Company and any related person
(as defined in Item 404 of Regulation S-K) and any other potential conflict of interest situations in accordance with Company
policies and procedures. All of the transactions described below were entered into prior to the establishment of our audit committee
and were evaluated in accordance with the policy described in the paragraph above. Prior to approving such transactions, the material
facts as to a director’s or officer’s relationship or interest as to the agreement or transaction were disclosed to
our Board. Our Board took this information into account when evaluating the transaction and in determining whether such transaction
was fair to us and in the best interest of all of our stockholders.
Transactions
with Related Parties
Other
than compensation agreements and other arrangements which are described as required under “Director Compensation”
and “Executive Compensation” and the transactions described below, since January 1, 2018, there has not been, and
there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which
the amount involved exceeded or will exceed the lesser of $120,000 or the average of our total assets at year-end for the last
two completed fiscal years and in which any director, executive officer, holder of 5% or more of any class of our capital stock,
or any member of their immediate family had or will have a direct or indirect material interest.
Exchange
of common stock for preferred stock
In
2018, we exchanged 250,000 shares of common stock for 250,000 shares of Series C Preferred Stock with Globis Capital Partners,
LLC., one of our significant stockholders. In 2019, we exchanged 275,000 shares of common stock for 250,000 shares of Series C
Preferred Stock and 15,000 shares of Series E Preferred Stock with Globis Capital Partners LLC.
Sales
of common stock and Series E Preferred Stock
On
June 21, 2019, we entered into and closed a private placement Securities Purchase Agreement with certain existing stockholders,
including the sale of 225,000 shares of our Series E Preferred Stock and seven year warrants to purchase 225,000 shares of our
Series E Preferred Stock to Globis Capital LLC and the sale of 500,000 shares of our Series E Preferred Stock and seven year warrants
to purchase 500,000 shares of our Series E Preferred Stock to entities affiliated with Orin Hirschman, a beneficial owner of more
than 5% of our common stock, relating to the sale to such existing stockholders of 1,600,000 shares of our Series E Preferred
Stock, and seven year warrants to purchase 1,600,000 shares of our Series E Preferred Stock at an exercise price of $2.50 per
share, at a purchase price per unit of $2.00 (the “June Offering”), for aggregate proceeds of $3,200,000 (excluding
the exercise of the warrants issued in the June Offering).
On
July 31, 2019, we entered into and closed a private placement Securities Purchase Agreement with certain existing
stockholders, the sale of 210,000 shares of our Series E Preferred Stock and seven year warrants to purchase 210,000 shares
of our Series E Preferred Stock to Globis Capital LLC, relating to the sale to such existing investors of 210,000 shares of
our Series E Preferred Stock and seven year warrants to purchase 210,000 shares of our Series E Preferred Stock at an
exercise price of $2.50 per share, at a purchase price per unit of $2.00 (the “July Preferred Offering”), for
proceeds of $420 (excluding the exercise of the warrants issued in the July Preferred Offering). Each share of Series E
Preferred Stock is convertible at any time and from time to time at the option of a holder of Series E Preferred Stock into
one share of our common stock, provided that each holder would be prohibited from converting Series E Preferred Stock into
shares of our common stock if, as a result of such conversion, any such holder, together with its affiliates, would own more
than 9.99% of the total number of shares of our common stock then issued and outstanding. This limitation may be waived with
respect to a holder upon such holder’s provision of not less than 61 days’ prior written notice to us.
In
November 2019, we sold 25,000 shares of common stock to Christopher Fashek, our Chairman, at $2.00 per share.
Warrant
Exercises
On
January 21, 2021, Company entered into letter agreements (the “Letter Agreements”) with certain existing accredited
investors to exercise certain outstanding warrants (the “Existing Warrants”) to purchase up to an aggregate of 1,205,967
shares of the Company’s common stock at an exercise price per share of $1.165 (the “Exercise”). Certain of the
Existing Warrants (the “Registered Existing Warrants”) and the shares of common stock underlying the Registered Existing
Warrants have been registered pursuant to a registration statement on Form S-3 (File No. 333-251264) and a registration statement
on Form S-1 (File No. 333-218871). In consideration for the exercise of the Existing Warrants for cash, the exercising holders
will receive new unregistered warrants to purchase up to an aggregate of 1,205,967 shares of common stock (the “New Warrants”)
at an exercise price of $1.04 per share and with an exercise period of seven years from the initial closing date of January 22,
2021. The gross proceeds to the Company from the Exercise were approximately $1.4 million. The Company currently intends to use
the net proceeds from the Exercise for working capital and general corporate purposes.
Option
Cancellation
On
November 2, 2020, we entered into an option cancellation and release agreement with the several Option holders, pursuant to which
the parties agreed to cancel the Options previously granted to each of the Option holders. In exchange for the cancellation of
the Options, we paid $1.00 to each Option holder. See “Director Compensation.”
Board
members resignation and severance agreement
On
March 25, 2015, we entered into an agreement with Dr. Goldstein, a member of our Board, pursuant to which, as consideration for
his efforts developing, pursuing approval of, and/or raising market awareness and acceptance of our UroShield product and CathBot
product and any other future vibrating urology catheter-related product, Dr. Goldstein is entitled to a fee of $62.50 per unit
of such products sold by us in the United States or Canada during the term of the agreement, less applicable deductions and tax
withholdings. At our option, the per unit fees may be paid in the form of cash or shares of our common stock. If any portion is
paid in cash, within 30 days of receipt, Dr. Goldstein must purchase an amount of common stock in the open market, subject to
any limitations or restrictions that may apply under applicable laws, such that the purchase price of the common stock purchased
plus the value of any common stock provided as payment of the per unit fees in the given quarter equals at least 50% of the per
unit fees paid for that quarter (less applicable taxes). The term of the agreement continues until terminated. Either party may
terminate the agreement for any reason by providing 90 days prior written notice to the other party.
Dr.
Zumeris served our director from September 2003 to July 2018. On July 4, 2018, we and Dr. Zumeris and his wife, Janina (Ina)
Zumeris entered into a Separation and Release Agreement (the “Separation Agreement”). Upon meeting certain
milestones to our satisfaction and fulfilling other obligations under the Separation Agreement, (i) Dr. Zumeris and Janina
Zumeris, was entitled to receive as consulting payments an aggregate of approximately $18,000 per month for 12 months,
commencing 30 days after the Termination Date; (ii) our management, beginning on November 4, 2018, was required to use our
best efforts to allow the sale of the Company’s securities owned by Dr. Zumeris, provided that such sale would be in
compliance with the applicable U.S. securities laws and regulations, and provided further, that, if our shares of common
stock held by Dr. Zumeris had not been sold at a price lower than $4.45 during the fourteen month period from July 4, 2018,
and the value of the unsold securities Dr. Zumeris owned plus the value of cash received by Dr. Zumeris from the sale of our
securities during such fourteen month period (the “Aggregate Amount”), in aggregate, was less than $950,000, then
we were required to make up the difference between $950,000 and the Aggregate Amount by extending the term of engagement of
Dr. Zumeris and Janina Zumeris’s consulting services. In addition, if we (i) granted a license for the skin
rejuvenation technology, then we were required pay Dr. Zumeris 10% from the payments received by the Company until an
aggregate amount of $100,000,000 was paid to Dr. Zumeris, (ii) sold the skin rejuvenation technology and/or the rights to
such as a standalone product, we were required to pay Dr. Zumeris $100,000 from the proceeds of such sale, or (iii) sold the
skin rejuvenation devices, we were required pay Dr. Zumeris $5,000 per unit an aggregate amount of $100,000 has been paid to
Dr. Zumeris.
As
of December 31, 2018, Dr. Zumeris exercised options under $4.45 a share; and the Company did not record a liability for this transaction
in 2019. During the year ended December 31, 2018, the Company incurred expenses of $108,000 associated with the Separation Agreement.
During the year ended December 31, 2019, the Company incurred expenses of $37,000 associated with the Separation Agreement.
On
December 17, 2019, a lawsuit was filed by a former officer and director, Jona Zumeris, in the Haifa Israel District Financial
Court, seeking damages of approximately $900,000 for breach of the Separation Agreement executed on July 4, 2018. In January 2021,
the parties reached a settlement in which the Company paid the plaintiff approximately $366,000 as settlement in full.
Transactions
with Significant Stockholders
In
January and February 2015, we entered into securities purchase agreements with certain investors providing for the issuance of
shares of common stock, Series C Preferred Stock and warrants to purchase shares of our common stock (such warrants, the “Two-Year
Warrants”). Pursuant to these agreements, we issued 666,667 shares of Series C Preferred Stock, Two-Year Warrants to purchase
266,667 shares of common stock at an exercise price of $3.00 per share and Two-Year Warrants to purchase 266,667 shares of common
stock at an exercise price of $6.00 per share, for aggregate consideration of $2,000,000, to a subsidiary of IDT Corporation,
a beneficial owner of more than 5% of our common stock, and 166,667 shares of Series C Preferred Stock, Two-Year Warrants to purchase
66,666 shares of common stock at an exercise price of $3.00 per share and Two-Year Warrants to purchase 66,666 shares of common
stock at an exercise price of $6.00 per share, for aggregate consideration of $500,000, to entities controlled by Paul Packer.
Effective
January 27, 2017, we entered into amendments to the Two-Year Warrants to extend the expiration date of the Two-Year Warrants for
two additional years. Pursuant to the warrant amendment, the Two-Year Warrants to purchase 266,667 shares of common stock at $3.00
per share and the Two-Year Warrants to purchase 266,667 shares of common stock at $6.00 per share expired on January 29, 2019,
and the Two-Year Warrants to purchase 140,000 shares of common stock at $3.00 per share and the Two-Year Warrants to purchase
140,000 shares of common stock at $6.00 per share expired on February 10, 2019, and the Two-Year Warrants to purchase 13,333 shares
of common stock at $3.00 per share and the Two-Year Warrants to purchase 13,333 shares of common stock at $6.00 per share expired
on April 15, 2019. The exercise price and all other terms of the original Two-Year Warrants remained the same. Holders of the
Two-Year Warrants who entered into the warrant amendment with us included (i) a subsidiary of IDT Corporation, a beneficial owner
of more than 5% of our common stock, who holds Two-Year Warrants to purchase 266,667 shares of common stock at $3.00 per share
and Two-Year Warrants to purchase 266,667 shares of common stock at $6.00 per share, and (ii) entities controlled by Mr. Packer
and Mr. Packer, who holds Two-Year Warrants to purchase 66,666 shares of common stock at $3.00 per share and Two-Year Warrants
to purchase 66,666 shares of common stock at $6.00 per share.
Effective
as of January 29, 2019, we amended certain two-year warrants (the “Two-Year Warrants”) originally issued in January
and February 2015 with an exercise price of either $3.00 or $6.00 per share to extend the expiration dates of the Two-Year Warrants
for two additional years (such amendment, the “Warrant Amendment”). Pursuant to the Warrant Amendment, (i) the expiration
dates for the Two-Year Warrants to purchase 266,667 shares of common stock at $3.00 per share and the Two-Year Warrants to purchase
266,667 shares of common stock at $6.00 per share were extended to January 29, 2021, (ii) the expiration dates for the Two-Year
Warrants to purchase 140,000 shares of common stock at $3.00 per share and the Two-Year Warrants to purchase 140,000 shares of
common stock at $6.00 per share were extended to February 10, 2021, and (iii) the expiration dates for the Two-Year Warrants to
purchase 13,333 shares of common stock at $3.00 per share and the Two-Year Warrants to purchase 13,333 shares of common stock
at $6.00 per share were extended to February 23, 2021. All other terms of the original warrants remain the same.
In
addition, the Warrant Amendment amended the exercise price with respect to the Two-Year Warrants with an exercise price of $3.00
per share to $3.35 per share. The exercise price of the Two-Year Warrants with an exercise price of $6.00 per share was unchanged.
All other terms of the original warrants remain the same. Holders of the Two-Year Warrants who entered into the Warrant Amendment
include Globis Capital Partners, L.P. and Paul Packer, an affiliate of Globis Capital Partners, L.P.
Holders
of the warrants who entered into the amendment with us included the following affiliates of the Company: (i) a subsidiary of IDT
Corporation, a greater than five percent stockholder of the Company, who holds warrants to purchase 266,667 shares of common stock
at $3.35 per share and warrants to purchase 266,667 shares of common stock at $6.00 per share, and (ii) entities controlled by
Mr. Paul Packer and Mr. Packer, a greater than five percent stockholder of the Company, who holds warrants to purchase 66,666
shares of common stock at $3.35 per share and warrants to purchase 66,666 shares of common stock at $6.00 per share.
On
March 1, 2017, we completed a bridge financing, pursuant to which we received from Mr. Packer and entities controlled by Mr. Packer
$250,000 of loans and issued to Mr. Packer and entities controlled by Mr. Packer convertible promissory notes (“2018 Notes”)
in an aggregate principal amount of $250,000 and seven-year warrants (“2018 Warrants”) to purchase an aggregate of
100,000 shares of common stock at an initial exercise price of $5.90 per share, subject to adjustment, and are immediately exercisable.
On
May 3, 2017, we completed a bridge financing, pursuant to which we received from Mr. Packer $30,000 of loans and issued to Mr.
Packer 2018 Notes in an aggregate principal amount of $30,000 and 2018 Warrants to purchase an aggregate of 12,000 shares of common
stock at an initial exercise price of $5.90 per share, subject to adjustment, and were immediately exercisable.
On
June 3, 2017, we completed a bridge financing, pursuant to which we received from an entity controlled by Mr. Packer $500,000
of loans and issued to an entity controlled by Mr. Packer 2018 Notes in an aggregate principal amount of $500,000 and 2018 Warrants
to purchase an aggregate of 200,000 shares of common stock at an initial exercise price of $5.90 per share, subject to adjustment,
and were immediately exercisable.
On
November 7, 2017 Mr. Packer and entities controlled by Mr. Packer purchased approximately 51 shares of our Series D Convertible
Preferred Stock (“Series D Preferred Stock”) as part of our underwritten public offering that closed on November 7,
2018 and also received seven-year warrants to purchase additional 38,265 shares of our common stock with an exercise price of
$6.95 per share.
On
November 8, 2017, the 2018 Notes owned by Mr. Packer and entities controlled by Mr. Packer were converted into 74,601 shares of
our common stock and 130,782 shares of our Series D Preferred Stock. Mr. Packer and entities controlled by Mr. Packer also received
seven-year warrants to purchase additional 154,037 shares of our common stock with an exercise price of $6.95 per share.
On
March 29, 2019, we completed a bridge financing, pursuant to which we issued to Globis Capital Partners, L.P convertible
notes on the aggregate principal amount of $125,000 (the “2019 Notes”) and seven-year warrants (the
“Seven-Year Warrant”) to purchase an aggregate of 50,000 shares of our common stock or Series C Preferred Stock
at an exercise price of the lesser of: (a) 80% (i.e., a 20% discount) of the exercise price per share of the warrants to
purchase shares of our capital stock issued in our first equity financing following the date of issuance, or (b) $4.80, with
a stipulation that in no event will the exercise price be less than $3.00 per warrant share.
The
principal amount and all accrued but unpaid interest on the 2019 Notes were due and payable on the date (the “Maturity Date”)
that is the earlier of the (i) 5-year anniversary of the date of issuance, or (ii) the date we complete an equity financing pursuant
to which we issue and sell shares of capital stock resulting in aggregate proceeds of at least $2,000,000 (a “Qualified
Financing”). The 2019 Notes bore interest at a rate of 6% per annum, payable on the Maturity Date. To the extent not previously
converted, on the Maturity Date, the investors were eligible to receive, at the option of each the investor, either (a) cash equal
to the original principal amount of the 2019 Notes and interest then accrued and unpaid thereon, or (b) shares of our common
stock or Series C Preferred Stock, at a price per share equal to the lesser of: (x) 80% of the amount equal to the quotient obtained
by dividing (i) our estimated value as of the Maturity Date, as determined in good faith by our Board, by (ii) the aggregate number
of outstanding shares of our common stock, as of the Maturity Date on a fully diluted basis, and (y) $4.00 per share, as such
amount may be adjusted for any stock split, stock dividend, reclassification or similar events affecting our capital stock. Upon
consummation of a Qualified Financing, each investor was eligible to elect to have the outstanding principal and accrued but unpaid
interest thereon converted into (a) shares of the same class and series of equity securities sold in such Qualified Financing,
(b) shares of Series C Preferred Stock or (c) common stock, at a price per share equal to the lesser of: (a) 80% of the price
per share at which such securities are sold in such Qualified Financing and (b) $4.00 per share, as such amount may be adjusted
for any stock split, stock dividend, reclassification or similar events affecting our capital stock.
On
May 10, 2019, we completed additional amounts of bridge financing with the same terms, pursuant to which we issued to Global Capital
Partners, L.P. convertible notes on the aggregate principal amount of $125,000 and seven-year warrants to purchase an aggregate
of 50,000 shares.
In
June 2019, we paid off the 2019 Notes and interest then accrued and unpaid thereon with funds raised from a Qualified Financing.
On
June 21, 2019, we closed a private placement of shares of our Series E Preferred Stock, and seven year warrants to purchase shares
of our Series E Preferred Stock with certain existing stockholders, including the sale of 240,000 shares of our Series E Preferred
Stock and seven-year warrants to purchase 240,000 shares of our Series E Preferred Stock at an exercise price of $2.50 per share
to Global Capital Partners, L.P., at a purchase price per unit of $2.00.
On
July 31, 2019, we closed a private placement of our common stock (or Series E Preferred Stock, as applicable) and seven year warrants
to purchase shares of our common stock (or Series E Preferred Stock, as applicable) with certain existing stockholders, including
the sale of 210,000 shares of our Series E Preferred Stock and seven-year warrants to purchase 210,000 shares of our Series E
Preferred Stock at an exercise price of $2.50 per share to Globis Capital Partners, L.P., at a purchase price per unit of $2.00.
Upon
liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, each holder of the Series E Preferred
Stock shall be entitled to receive the amount of cash, securities or other property to which such holder would be entitled to
receive with respect to such shares of Series E Preferred Stock if such shares had been converted to our common stock immediately
prior to such liquidation.
Shares
of Series E Preferred Stock are not entitled to receive any dividends, unless and until specifically declared by the Board. However,
holders of Series E Preferred Stock are entitled to receive dividends on shares of Series E Preferred stock equal (on an as-if-converted-to-common-stock
basis) to and in the same form as dividends actually paid on shares of the common stock when such dividends are specifically declared
by the Board. We are not obligated to redeem or repurchase any shares of Series E Preferred Stock. Shares of Series E Preferred
Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.
Subject
to the beneficial ownership limitations, each holder of Series E Preferred Stock shall be entitled to the number of votes equal
to the number of shares of our common stock equal to the Voting Ratio. The Voting Ratio, for each share of Series E Preferred
Stock is equal to $2.00 divided by $3.53.
As
of ___________, 2021, there are no proposed transactions with related persons.
EXECUTIVE
OFFICERS
The
following table sets forth the names, ages and positions of our executive officers and certain significant employees as of June 25,
2021:
Name
|
|
Age
|
|
Position
|
Brian
Murphy
|
|
64
|
|
Chief
Executive Officer and Director
|
Stephen
Brown
|
|
64
|
|
Chief
Financial Officer
|
Harold
Jacob, M.D.
|
|
66
|
|
Chief
Medical Officer and Director
|
Brian
Murphy Please see biography of Mr. Murphy on page 8 of this proxy statement.
Harold
Jacob, M.D. Please see biography of Dr. Jacob on page 9 of this proxy statement.
Stephen
Brown. Mr. Brown has served as our chief financial officer since October 5, 2020. Previously, Mr. Brown served as the Company’s
Chief Financial Officer from February 3, 2015 through April 30, 2019 and continued to serve as a financial consultant for the
Company until his appointment as Chief Financial Officer on October 5, 2020. Mr. Brown previously served as Chief Financial Officer
for IDT Corporation (NYSE: IDT) from April 1995 to January 2009, during which time he oversaw the initial public offering of a
start-up telecommunications company and guided it through the spin-offs of two subsidiaries, various public offerings and bank
facilities. During his tenure at IDT, Mr. Brown also served on IDT’s board of directors for six years and on the board of
directors of Net2Phone Inc. for five years. Mr. Brown was also the founder and chairman of IDT Entertainment Inc., a movie studio
and media subsidiary of IDT. From 2009 to the present, Mr. Brown has served as a managing partner of The Mcguffin Group Financial,
a financial and business consulting firm concentrating on advising early stage and micro-cap companies. He is also a partner in
an accounting and tax practice, Brown, Brown and Associates. Mr. Brown was formerly a certified public accountant, is a member
of the Academy of Television Arts and Sciences and serves on the board of directors for several educational institutions, including
on the Board of Governors for Touro College.
EXECUTIVE
COMPENSATION
The
following table sets forth the names and positions of: (i) each person who served as our principal executive officer during the
year ended December 31, 2020; (ii) our most highly compensated executive officer, other than our principal executive officer,
who was serving as an executive officer, as determined in accordance with the rules and regulations promulgated by the SEC, as
of December 31, 2020, with compensation of $100,000 or more, and (iii) an additional individual for whom disclosure would have
been provided pursuant to clause (ii) but for the fact that the individual was not serving as our executive officer at December
31, 2020 (collectively our “Named Executive Officers”):
Name
|
|
Position
|
Brian
Murphy
|
|
Chief
Executive Officer
|
Stephen
Brown
|
|
Chief
Financial Officer
|
Summary
Compensation Table
Name and Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)(1)
|
|
|
Option Awards
($)(2)
|
|
|
All Other Compensation
($)
|
|
|
Total
($)(2)
|
|
Brian Murphy
|
|
|
2020
|
|
|
|
231,000
|
|
|
|
90,000
|
|
|
|
43,599
|
|
|
|
|
|
|
|
364,599
|
|
|
|
|
2019
|
|
|
|
231,000
|
|
|
|
57,231
|
|
|
|
223,461
|
|
|
|
|
|
|
|
511,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Brown (3)
|
|
|
2020
|
|
|
|
49,500
|
|
|
|
20,000
|
|
|
|
27,485
|
|
|
|
138,000
|
(4)
|
|
|
234,985
|
|
|
|
|
2019
|
|
|
|
75,000
|
|
|
|
—
|
|
|
|
20,531
|
|
|
|
112,500
|
(5)
|
|
|
208,031
|
|
(1)
|
Represents
incentive compensation payments earned.
|
(2)
|
In
accordance with SEC rules, the amounts in this column reflect the dollar amounts to be recognized for financial statement
reporting purposes with respect to the twelve-month period ended December 31, 2020 in accordance with ASC Topic 718. Fair
value is based on the Black-Scholes option pricing model using the market price of the underlying shares at the grant date.
For additional discussion of the valuation assumptions used in determining stock-based compensation and the grant date fair
value for stock options, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation
- Critical Accounting Policies - Stock-based compensation” and Note 3—”Significant Accounting Policies”
and Note 7—”Stockholders’ Equity (Deficiency)” to our audited consolidated financial statements for
the fiscal year ended December 31, 2020, included in the 2020 Annual Report.
|
(3)
|
Mr.
Brown resigned as our chief financial officer on May 31, 2019 and continued to serve as a financial consultant for thereafter.
Mr. Brown was appointed again our chief financial officer, effective October 5, 2020.
|
(4)
|
Includes
$138,000 paid pursuant to a consulting arrangement during 2020 before Mr. Brown’s employment by the Company on October
5, 2020.
|
(5)
|
Includes
$112,500 paid pursuant to a consulting arrangement during 2019 after Mr. Brown’s resignation as chief financial officer
and an employee on May 31, 2019.
|
Narrative
Disclosure to Summary Compensation Table
Employment
Agreements
We
have entered into agreements with each of our Named Executive Officers. A description of each of these agreements follows.
Brian
Murphy
On
October 13, 2016, we entered into an employment agreement with Mr. Murphy, effective as of the same date. Under the terms of the
employment agreement, the term of Mr. Murphy’s employment as the chief executive officer of the Company is three years unless
earlier terminated. The employment agreement expired on October 13, 2019. After that date, Mr. Murphy became an employee at will.
Under
the employment agreement, Mr. Murphy was entitled to an annual base salary of $181,000 less applicable payroll deductions and
tax withholdings for all services rendered by him under the employment agreement. Notwithstanding the foregoing, his base salary
was automatically increased to: (i) $200,000, less applicable payroll deductions and tax withholdings, effective as of January
1 of the calendar year immediately following any calendar year during which we generated gross sales (as determined in accordance
with generally accepted accounting principles consistently applied) exceeding $1,000,000; and (ii) $225,000, less applicable payroll
deductions and tax withholdings, effective as of January 1 of the calendar year immediately following any calendar year during
which we generated gross sales (as determined in accordance with generally accepted accounting principles consistently applied)
exceeding $2,000,000.
Pursuant
to the employment agreement, commencing in 2017, Mr. Murphy was eligible to receive an annual bonus (“Performance Bonus”)
during each year of the term of the agreement. For 2019 and 2020, Mr. Murphy was eligible to receive a target bonus in an amount
of up to $100,000, less applicable payroll deductions and tax withholdings, based on the extent to which Mr. Murphy has met performance
criteria for the year, as determined in good faith by the Board, which shall be paid in the calendar year after the calendar year
to which the Performance Bonus relates within thirty (30) days of our issuance of our audited financial statements on Form 10-K.
In 2019 and 2020, Mr. Murphy received a target bonus in an amount of $57,231 and $90,000, respectively.
Mr.
Murphy’s employment agreement also contained certain noncompetition, non-solicitation, non-disparagement, confidentiality
and assignment of work product requirements for Mr. Murphy.
On
November 1, 2018, the compensation committee voted to increase Mr. Murphy’s annual base salary to $231,000 per year and
a discretionary annual bonus of $100,000 to be decided by the compensation committee annually.
In
addition, Mr. Murphy is eligible to receive certain stock options, restricted stock, stock appreciation rights or similar stock-based
rights granted to Mr. Murphy as set forth separately in applicable award agreements.
For
the year ended December 31, 2020, the compensation committee approved a performance bonus of $90,000.
Stephen
Brown
In
2019, Mr. Brown’s salary and bonus was determined by the chairman of the Board with consultation from members of the Board.
Mr.
Brown resigned as our chief financial officer on May 31, 2019. On July 1, 2019, we entered into a consulting agreement with The
Mcguffin Group LLC, pursuant to which Mr. Brown was entitled to $12,500 per month, paid monthly, for his services as a finance
consultant. He was also entitled to an annual bonus consistent with bonuses received by consultant in previous years. This agreement
was terminated on October 5, 2020.
On
October 5, 2020, we entered into an Employment Agreement with Stephen Brown, pursuant to which we appointed Mr. Brown as Chief
Financial Officer, effective October 5, 2020, with a term to continue in effect until terminated by either party. As consideration
for his services as Chief Financial Officer, Mr. Brown is entitled to receive (i) an annual base salary of $200,000, less applicable
payroll deductions and tax; (ii) reimbursement of any reasonable and customary, documented out-of-pocket expenses actually incurred
by Mr. Brown in connection with the performance of his services under the Employment Agreement; and (iii) an annual bonus of $25,000,
if earned, as determined by us in our sole discretion. Mr. Brown is also eligible to receive certain grants of incentive stock
options to purchase shares of our common stock.
For
the year ended December 31, 2020, the compensation committee approved a performance bonus of $20,000.
Retirement,
Health, Welfare and Additional Benefits
All
of our Named Executive Officers are eligible to participate in our employee benefit plans and programs, including medical benefits,
to the same extent as our other full-time employees, subject to the terms and eligibility requirements of those plans.
2004
Global Share Option Plan
In
November 2004, our Board adopted the 2004 Global Share Option Plan, pursuant to which 400,000 shares of our common stock are reserved
for issuance as awards to employees, directors, consultants and other service providers. The purpose of the 2004 Global Share
Option Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees, to encourage
a sense of proprietorship and stimulate an active interest of such persons in our development and financial success. The 2004
Global Share Option Plan which was administered by our Board expired on February 28, 2014.
NanoVibronix,
Inc. 2014 Long-Term Incentive Plan
On
February 28, 2014, our stockholders approved the NanoVibronix, Inc. 2014 Long-Term Incentive Plan (the “2014 Plan”),
which was adopted by our Board on February 19, 2014.
Under
the 2014 Plan, we originally reserved a total of five million (5,000,000) shares of our common stock for issuance pursuant to
awards to key employees, key contractors, and non-employee directors, of which, the maximum number of shares of common stock covering
awards of stock options or stock appreciation rights that could be granted to certain of our executive officers during any calendar
year was one million (1,000,000) shares. On May 7, 2014, we effected a one-for-seven reverse stock split of our common stock.
Consequently, the number of shares of our common stock reserved for issuance pursuant to awards under the 2014 Plan was reduced
to seven hundred fourteen thousand two hundred eighty-six (714,286) shares, and the maximum number of shares of our common stock
covered by awards of stock options or stock appreciation rights that could be granted to certain of our executive officers during
any calendar year was reduced to one hundred forty-two thousand eight hundred fifty-seven (142,857) shares. On June 13, 2018,
the stockholders approved an amendment to the 2014 Plan to increase the number of shares of our common stock reserved for issuance
pursuant to awards under the 2014 Plan by an additional seven hundred and fifty thousand (750,000) shares of our common stock
to one million four hundred sixty-four thousand two hundred eighty-six (1,464,286) shares.
On
June 13, 2019, the stockholders approved a second amendment to increase (i) the number of shares of our common stock available
for issuance pursuant to awards under the 2014 Plan by four hundred thousand (400,000) shares of our common stock, to a total
of one million eight hundred and sixty-four thousand two hundred eighty-six (1,864,286) shares of our common stock and (ii) the
maximum number of shares of our common stock covering awards of stock options or stock appreciation rights that could be granted
to certain of our executive officers during any calendar year was increased to three hundred fifty-four thousand two hundred fourteen
(354,214).
The
2014 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted
stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly,
in combination, or in tandem, and which may be paid in cash, shares of our common stock, or a combination of cash and shares of
our common stock. We have reserved a total of 1,864,286 shares of our common stock for awards under the 2014 Plan, 100% of which
may be delivered pursuant to incentive stock options.
The
purpose of the 2014 Plan is to provide an incentive to attract and retain services of key employees, key contractors, and outside
directors whose services are considered valuable, to encourage a sense of proprietorship and to stimulate active interest of such
persons in our development and financial success. The 2014 Plan is intended to serve as an “umbrella” plan for us
and our subsidiaries worldwide. Therefore, if so required, appendices may be added to the 2014 Plan in order to accommodate local
regulations in foreign countries that do not correspond to the scope of the 2014 Plan. Unless terminated earlier by the Board,
the 2014 Plan will expire on February 19, 2024. As of December 31, 2020, there were 115,742 options available for future issuance
under the 2014 Plan.
Description
of the 2014 Plan
Purpose.
The purpose of the 2014 Plan is to enable us to remain competitive and innovative in our ability to attract and retain the
services of key employees, key contractors, and non-employee directors. The 2014 Plan provides for the granting of incentive stock
options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards,
dividend equivalent rights, and other awards, which may be granted singly, in combination, or in tandem, and which may be paid
in cash or shares of our common stock. The 2014 Plan is expected to provide flexibility to our compensation methods in order to
adapt the compensation of key employees, key contractors, and non-employee directors to a changing business environment, after
giving due consideration to competitive conditions and the impact of applicable tax laws.
Effective
Date and Expiration. The 2014 Plan was originally approved by our Board on February 19, 2014, and became effective upon stockholder
approval on February 28, 2014. The 2014 Plan will terminate on February 19, 2024, unless sooner terminated by our Board. No award
may be made under the 2014 Plan after its termination date, but awards made prior to the termination date may extend beyond that
date.
Share
Authorization. Subject to certain adjustments, the number of shares of our common stock that are reserved for issuance
pursuant to awards under the 2014 Plan is one million eight hundred and sixty-four thousand two hundred eighty- six
(1,864,286) shares, of which 100% may be delivered pursuant to incentive stock options. Subject to certain adjustments, with
respect to any participant who is an officer of our company and subject to Section 16 of the Exchange Act, or a
“covered employee” as defined in Section 162(m)(3) of the Internal Revenue Code of 1986, as amended (the
“Code”), a maximum of three hundred fifty four thousand two hundred fourteen (354,214) shares may be granted in
any one year in the form of stock options or stock appreciation rights to such participant.
Shares
to be issued may be made available from authorized but unissued shares of our common stock, shares held by us in our treasury,
or shares purchased by us on the open market or otherwise. During the term of the 2014 Plan, we will at all times reserve and
keep enough shares available to satisfy the requirements of the 2014 Plan. If an award under the 2014 Plan is cancelled, forfeited,
or expires, in whole or in part, the shares subject to such forfeited, expired, or cancelled award may again be awarded under
the 2014 Plan. In the event that previously acquired shares are delivered to us in full or partial payment of the option price
for the exercise of a stock option granted under the 2014 Plan, the number of shares available for future awards under the 2014
Plan shall be reduced only by the net number of shares issued upon the exercise of the stock option or settlement of an award.
Awards that may be satisfied either by the issuance of common stock or by cash or other consideration shall be counted against
the maximum number of shares that may be issued under the 2014 Plan only during the period that the award is outstanding or to
the extent the award is ultimately satisfied by the issuance of shares. An award will not reduce the number of shares that may
be issued pursuant to the 2014 Plan if the settlement of the award will not require the issuance of shares, as, for example, a
stock appreciation right that can be satisfied only by the payment of cash. Only shares forfeited back to us; shares cancelled
on account of termination, expiration, or lapse of an award; shares surrendered in payment of the option price of an option; or
shares withheld for payment of applicable employment taxes and/or withholding obligations resulting from the exercise of a stock
option shall again be available for grant as incentive stock options under the 2014 Plan, but shall not increase the maximum number
of shares described above as the maximum number of shares that may be delivered pursuant to incentive stock options.
Administration.
The 2014 Plan is administered by the compensation committee of our Board (the “Committee”). At any time there
is no Committee to administer the 2014 Plan, any reference to the Committee is a reference to the Board. The Committee will determine
the persons to whom awards are to be made; determine the type, size, and terms of awards; interpret the 2014 Plan; establish and
revise rules and regulations relating to the 2014 Plan and any sub-plans, including, without limitation, any sub-plans for awards
made to participants who are not residents of the United States; establish performance goals for awards and certify the extent
of their achievement; and make any other determinations that it believes necessary for the administration of the 2014 Plan. The
Committee may delegate certain duties to one or more of our officers as provided in the 2014 Plan.
Eligibility.
Employees (including any employee who is also a director or an officer), contractors, and non-employee directors of us or
our subsidiaries whose judgment, initiative, and efforts contributed to or may be expected to contribute to our successful performance
are eligible to participate in the 2014 Plan. As of the Record Date, we had 5 employees, 7 contractors, and 5 directors who would
be eligible for awards under the 2014 Plan.
Stock
Options. The Committee may grant either incentive stock options (“ISOs”) qualifying under Section 422 of the Code
or nonqualified stock options, provided that only employees of us and our subsidiaries (excluding subsidiaries that are not corporations)
are eligible to receive ISOs. Stock options may not be granted with an option price less than 100% of the fair market value of
a share of common stock on the date the stock option is granted. If an ISO is granted to an employee who owns or is deemed to
own more than 10% of the combined voting power of all classes of our stock (or any parent or subsidiary), the option price shall
be at least 110% of the fair market value of a share of common stock on the date of grant. The Committee will determine the terms
of each stock option at the time of grant, including, without limitation, the methods by or forms in which shares will be delivered
to participants. The maximum term of each option, the times at which each option will be exercisable, and provisions requiring
forfeiture of unexercised options at or following termination of employment or service generally are fixed by the Committee, except
that the Committee may not grant stock options with a term exceeding 10 years or, in the case of an ISO granted to an employee
who owns or is deemed to own more than 10% of the combined voting power of all classes of our stock (or any parent or subsidiary),
a term exceeding five years.
Outstanding
Equity Awards at Fiscal Year End
The
following table provides information on the holdings of stock options of the Named Executive Officer at December 31, 2020. This
table includes unexercised and unvested options awards. Each outstanding award is shown separately.
|
|
Option Awards
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
|
Date of
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
Name
|
|
Grant
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Murphy (1)
|
|
October 1, 2020
|
|
|
50,000
|
|
|
|
160,000 (2)
|
|
|
|
0.72
|
|
|
|
October 2, 2030
|
|
|
|
December 23, 2020
|
|
|
40,000
|
|
|
|
-
|
|
|
|
0.84
|
|
|
|
December 24, 2030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Brown (1)
|
|
October 1, 2020
|
|
|
50,000
|
|
|
|
-
|
|
|
|
0.72
|
|
|
|
October 2, 2030
|
|
|
|
December 23, 2020
|
|
|
10,000 (3)
|
|
|
|
40,000 (3)
|
|
|
|
0.84
|
|
|
|
December 24, 2030
|
|
(1)
On November 2, 2020, we entered into an option cancellation and release agreement with Brian Murphy and Stephen Brown, pursuant
to which the parties agreed to cancel options to purchase an aggregate of 296,020 shares of our common stock at exercise prices
ranging from $2.57 to $6.00 (the “Options”) previously granted to each of the Option holders. In exchange for the
cancellation of the Options, we paid $1.00 to each Option holder.
(2)
These options vest 20% on March 23, 2021, 20% on June 23, 2021, 20% on September 23, 2021 and 20% on December 23, 2021.
(3)
These options vest 20% on March 23, 2021, 20% on June 23, 2021, 20% on September 23, 2021 and 20% on December 23, 2021.
Equity
Compensation Plan Information
The
following table provides certain information as of December 31, 2020 with respect to our equity compensation plans under which
our equity securities are authorized for issuance:
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Plan Category
|
|
Number of securities to
be issued upon exercise of
outstanding options,
warrants, and rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
|
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a))
|
|
Equity compensation plans approved by security holders (1)
|
|
|
1,748,544
|
|
|
$
|
1.59
|
|
|
|
—
|
|
Equity compensation plans not approved by security holders
|
|
|
-
|
|
|
|
-
|
|
|
|
—
|
|
Total
|
|
|
1,748,544
|
|
|
$
|
1.59
|
|
|
|
—
|
|
(1)
|
Represents
shares available for issuance under the 2014 Plan.
|
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information with respect to the beneficial ownership of our common stock as of the Record Date by:
●
|
each
person known by us to beneficially own more than 5.0% of our common stock;
|
●
|
each
of our directors;
|
|
|
●
|
each
of the Named Executive Officers; and
|
|
|
●
|
all
of our directors and executive officers as a group.
|
The
percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination
of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if
that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment
power, which includes the power to dispose of or to direct the disposition of the security.
Except
as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power
with respect to all shares beneficially owned and each person’s address is c/o NanoVibronix, Inc., 525 Executive Blvd, Elmsford,
NY 10523. As of ________, 2021, we had ____________ shares of common stock, 666,667 shares of Series C Preferred Stock,
154 shares of Series D Preferred Stock and 875,000 shares of Series E Preferred Stock outstanding. In addition to the shares of common
stock reported below, as described in the footnotes below the table, one stockholder beneficially owns 100% of our issuable and issued
Series C Preferred Stock and one stockholder beneficially owns 100% of our issuable and issued Series E Preferred Stock.
Name of Beneficial Owner
|
|
Number of
Shares
Beneficially
Owned (1)
|
|
|
Percentage
of Shares Outstanding (1)
|
|
5% Owners
|
|
|
|
|
|
|
|
|
Paul Packer (2)
|
|
|
2,244,916
|
(3)
|
|
|
8.7
|
%
|
Shavit 2, LLC (4)
|
|
|
1,750,000
|
(5)
|
|
|
6.8
|
%
|
Directors and Officers
|
|
|
|
|
|
|
|
|
Stephen Brown
|
|
|
80,000
|
(6)
|
|
|
*
|
|
Harold Jacob, M.D.
|
|
|
198,411
|
(7)
|
|
|
1.0
|
%
|
Martin Goldstein, M.D.
|
|
|
180,000
|
(8)
|
|
|
1.0
|
%
|
Michael Ferguson
|
|
|
113,500
|
(9)
|
|
|
*
|
|
Thomas R. Mika
|
|
|
124,000
|
(10)
|
|
|
1.0
|
%
|
Christopher Fashek
|
|
|
189,000
|
(11)
|
|
|
1.0
|
%
|
Brian Murphy
|
|
|
170,000
|
(12)
|
|
|
1.0
|
%
|
All directors and executive officers as a group (7 persons)
|
|
|
1,054,911
|
|
|
|
4.2
|
%
|
*
Represents ownership of less than 1%.
|
(1)
|
Shares
of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assume the exercise of
all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable
or exercisable within 60 days of June 25, 2021. Shares issuable pursuant to the exercise of stock options and warrants exercisable
within 60 days are deemed outstanding and held by the holder of such options or warrants for computing the percentage of outstanding
common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common
stock beneficially owned by any other person.
|
|
|
|
|
(2)
|
Mr.
Packer’s address is 805 Third Avenue, 15th Floor, New York, NY 10022.
|
|
(3)
|
Comprised
of (i) 78,157 shares of common stock owned by Paul Packer, 276,359 shares of common stock owned by Globis Capital Partners,
L.P., and 298,087 shares of common stock owned by Globis Asia L.P and (ii) 30,000 shares of common stock that may be purchased
upon the exercise of stock options held by Mr. Packer and (iii) 58,258 shares of common stock that may be purchased upon the
exercise of stock warrants held by Mr. Packer, 1,205,968 shares of common stock that may be purchased upon the exercise of
stock warrants held by Globis Capital Partners, L.P., and 298,087 shares of common stock that may be purchased upon the exercise
of stock warrants held by Globis Asia L.P.
|
|
|
|
|
(4)
|
Shavit
2, LLC’s address is 805 Third Avenue, 15th Floor, New York, NY 10022.
|
|
|
|
|
(5)
|
Comprised
of 875,000 shares of common stock issuable upon conversion of 875,000 Series E preferred stock owned and 875,000 shares of
common stock that that may be purchased upon the exercise of stock warrants.
|
|
|
|
|
(6)
|
Comprised
of 80,000 shares of stock that may be purchased by Mr. Brown upon exercise of stock options that are currently exercisable
or exercisable within 60 days following June 25, 2021.
|
|
|
|
|
(7)
|
Comprised
of (i) 64,178 shares of common stock held by Medical Instrument Development Inc., an entity controlled by Dr. Jacob, (ii) 25,662
shares of common stock held by Dr. Jacob, and (iii) 108,571 shares of common stock that may be purchased by Dr. Jacob
upon the exercise of stock options.
|
|
|
|
|
(8)
|
Comprised
of 180,000 shares of stock that may be purchased by Dr. Goldstein upon exercise of stock options that are currently exercisable
or exercisable within 60 days following June 25, 2021.
|
|
|
(9)
|
Comprised
of 113,500 shares of stock that may be purchased by Mr. Ferguson upon exercise of stock options that are currently exercisable
or exercisable within 60 days following June 25, 2021.
|
|
|
|
|
(10)
|
Comprised
of 124,000 shares of stock that may be purchased by Mr. Mika upon exercise of stock options that are currently exercisable
or exercisable within 60 days following June 25, 2021.
|
|
|
|
|
(11)
|
Comprised
of 25,000 shares of common stock held by Mr. Fashek and 164,000 shares of stock that may be purchased by Mr. Fashek upon exercise
of stock options that are currently exercisable or exercisable within 60 days following June 25, 2021.
|
|
|
|
|
(12)
|
Comprised
of 170,000 shares of stock that may be purchased by Mr. Murphy upon exercise of stock options that are currently exercisable
or exercisable within 60 days following June 25, 2021.
|
REPORT
OF THE AUDIT COMMITTEE
The
audit committee assists the Board in its general oversight of the Company’s financial reporting processes. The audit committee
charter describes in greater detail the full responsibilities of the audit committee. During each fiscal year, the audit committee
reviews the Company’s financial statements, management reports, internal control over financial reporting and audit matters.
In connection with these reviews, the audit committee meets with management and independent public accountants at least once each
quarter. The audit committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its
tasks. These meetings include, whenever appropriate, executive sessions in which the audit committee meets separately with the
independent public accountants, financial management personnel and legal counsel.
As
part of its review of audit matters, the audit committee supervises the relationship between the Company and its independent registered
public accountants, including: having direct responsibility for their appointment, compensation and retention; reviewing the scope
of their audit services; approving audit and non-audit services; and confirming the independence of the independent public accountants.
Together with senior members of the Company’s financial management team, the audit committee reviewed the overall audit
scope and plans of the independent public accountants, the results of external audit examinations, and evaluations by management
of the Company’s internal control over financial reporting and the quality of the Company’s financial reporting.
In
addition, the audit committee reviewed key initiatives and programs aimed at designing and maintaining an effective internal and
disclosure control structure. As part of this process, the audit committee continued to monitor the scope and adequacy of the
steps taken to maintain the effectiveness of internal procedures and controls.
In
performing all of these functions, the audit committee acts in an oversight capacity. The audit committee reviews and
discusses the quarterly and annual consolidated financial statements with management, and the Company’s independent
public accountants prior to their issuance. In its oversight role, the audit committee relies on the work and assurances of
the Company’s management, which is responsible for establishing and maintaining adequate internal control over
financial reporting, preparing the financial statements and other reports and maintaining policies relating to legal and
regulatory compliance, ethics and conflicts of interest. Marcum LLP, is responsible for performing an independent audit of
the consolidated financial statements and expressing an opinion on the conformity of those financial statements with
accounting principles generally accepted in the United States of America. The audit committee has reviewed and discussed the
Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2020, and the
independent auditor’s report on those financial statements, with management and with our independent auditor, Marcum
LLP.
The
audit committee has reviewed with the independent public accountants the matters required to be discussed by Statement on Auditing
Standards No. 16, as amended, “Communication with audit committees,” including a discussion with management and the
independent public accountants of the quality (and not merely the acceptability) of the Company’s accounting principles,
the reasonableness of significant estimates and judgments and the disclosures in the Company’s financial statements. In
addition, the audit committee reviewed and discussed with Marcum LLP matters related to its independence, including a review of
audit and non-audit fees and the written disclosures in the letter from Marcum LLP, to the audit committee required by applicable
requirements of the Public Company Accounting Oversight Board regarding the independent public accountant’s communication
with the audit committee concerning independence. The audit committee concluded that Marcum LLP is independent from the Company
and its management.
Taking
all these reviews and discussions into account, the audit committee recommended to the Board that the audited financial statements
be included in NanoVibronix, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, for filing with
the SEC.
AUDIT
COMMITTEE
|
|
Thomas
Mika, Chair
Michael
Ferguson
Christopher
Fashek
|
The
Report of the audit committee set forth in this proxy statement shall not be deemed to be “soliciting material” or
to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act, or to the liabilities of Section
18 of the Securities Exchange Act of 1934, as amended. In addition, it shall not be deemed incorporated by reference by any statement
that incorporates this proxy statement by reference into any filing under the Securities Act of 1933, as amended, or the Exchange
Act, as amended, except to the extent that we specifically incorporate this information by reference.
PROPOSAL
2: APPROVAL OF THE AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
Proposed
Amendment
Our
authorized capital stock presently consists of 24,109,635 shares of common stock, par value $0.001 per share (“common stock”)
and 11,000,000 shares of preferred stock, par value $0.001 per share.
Our
Board has approved, and is recommending to the stockholders for approval at the Annual Meeting, an amendment to our Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of common stock. The proposed amendment would increase the number
of authorized shares of common stock from 24,109,635 shares to 40,000,000 shares. The number of authorized shares of preferred stock
would not be affected by the proposed amendment. If approved, the first sentence of Article Fourth of our Amended and Restated Certificate
of Incorporation will be amended to read in its entirety as follows:
“FOURTH.
The total number of shares of all classes of stock which the Corporation shall have the authority to issue is fifty-one million (51,000,000),
consisting of forty million (40,000,000) shares of Common Stock, par value $0.001 per share (the “Common Stock”) and
eleven million (11,000,000) shares of preferred stock, par value of $0.001 per share (“Preferred Stock”).”
The
additional shares of our common stock for which authorization is sought will have the same voting rights, the same rights to dividends
and distributions, and will be identical in all other respects to the shares of our common stock now authorized.
Reasons
for the Proposed Amendment
We
have currently issued all of the shares of common stock that are authorized under our Amended and Restated Certificate of
Incorporation. Accordingly, we have no shares of common stock currently available for issuance, which will limit our ability to
raise funds in the future to the extent necessary. As of June 25, 2021, _________ shares of common stock were reserved for issuance
or issuable upon conversion of outstanding shares of preferred stock or exercise of outstanding warrants and equity awards. We
currently do not have a sufficient number of authorized shares of common stock available for such future issuances. We are required to record a derivative liability because the Company’s total potentially dilutive shares exceed
our authorized share limit.
If
the Share Increase Proposal is approved, our Board will have the authority to issue approximately __________ additional
shares of common stock without further stockholder approval, except as may be required for a particular transaction by applicable law
or regulation or by any securities exchange on which our shares of common stock are listed.
The
additional shares of common stock may be used for such corporate purposes as may be determined by our Board from time to time to be necessary
or desirable. These purposes may include: (i) issuance of common stock upon conversion or exercise of our outstanding securities as described
above, (ii) raising capital through the sale of common stock or other securities convertible into or exchangeable or exercisable for
common stock, (iii) acquiring other businesses or assets in exchange for common stock or other securities convertible into or exchangeable
or exercisable for common stock, (iv) attracting and retaining employees by the issuance of additional securities under the Company’s
equity compensation plans and agreements and (v) other corporate purposes.
Our
Board believes that the authorized number of shares of common stock should be increased to provide our Board of Directions with the ability
to issue additional shares of common stock for the corporate purposes described above without potentially having to incur the delay and
expense incident to obtaining special stockholder approval each time an opportunity requiring the issuance of shares of our common stock
may arise. Such a delay might cause us to lose an opportunity or make it more expensive for us to take advantage of an opportunity. Although
our Board has no present plans to issue any additional shares of common stock, except in connection with our outstanding convertible
preferred stock, our existing equity awards and incentive plans or as required upon exercise of our outstanding warrants, the Board believes
that the proposed increase in the number of authorized shares of common stock is necessary to provide us with the necessary flexibility
to pursue corporate opportunities.
Possible
Effects of the Proposed Amendment
The
authorization of additional shares of common stock sought by this proposal would not have any immediate dilutive effect upon the proportionate
voting power or rights of our existing stockholders; however, to the extent that the additional authorized shares of common stock are
issued in the future, such issuance may decrease existing stockholders’ percentage equity ownership and, depending upon the price
of which they are issued, could be dilutive to existing stockholders and have a negative effect upon the market price of the common stock.
Our stockholders do not have preemptive rights, which means they do not have the right to purchase shares in any future issuance of common
stock in order to maintain their proportionate ownership of common stock.
The
amendment to increase the number of authorized shares of our common stock could have the effect of discouraging or preventing attempts
to take over control of the Company. For example, in the event of a hostile attempt to take over control of the Company, it may be possible
for us to impede the attempt by issuing shares of common stock, which would dilute the voting power of the other outstanding shares and
increase the potential cost to acquire control of us. The proposed amendment therefor may have the effect of discouraging unsolicited
takeover bids and potentially limiting the opportunity for our stockholders to dispose of their shares at a premium which may otherwise
be available in a takeover attempt or merger proposal. To the extent that it impedes any such attempts, the proposed amendment may serve
to perpetuate our current management, including our Board. The amendment is not being proposed in response to any known effort or threat
to acquire control of the Company and is not part of a plan by management to adopt a series of amendments to our Amended and Restated
Certificate of Incorporation and bylaws having an anti-takeover effect.
If
the proposed amendment is adopted, it will become effective upon filing of a Certificate of Amendment to our Amended and Restated Certificate
of Incorporation with the Secretary of State of Delaware.
Required
Vote and Board Recommendation
If
a quorum is present and voting, the approval of this proposal requires (i) the affirmative “FOR” vote of the holders of a
majority of the outstanding shares of our common stock, voting separately as a single class, and (ii) the affirmative “FOR”
vote of the holders of a majority of the outstanding shares of our common stock, Series C Preferred Stock (subject to beneficial ownership
limitations) and Series E Preferred Stock (subject to beneficial ownership limitations), voting together as a single class. Each of the
failure to vote by proxy or to vote in person (which would include voting online at the virtual Annual Meeting), an abstention and a
broker non-vote will have the same practical effect as shares voted against this proposal. The NYSE has informed us that a vote on this
proposal will be a “routine” matter. Therefore, we do not expect any broker non-votes on this proposal and a failure to instruct
your broker, bank or other nominee on how to vote your shares will not necessarily count as a vote against this proposal.
The
Board recommends that you vote “FOR” the approval of the Share Increase Proposal (Proposal 2).
|
PROPOSAL
3: RATIFICATION OF APPOINTMENT OF MARCUM LLP AS OUR
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
audit committee of the Board has selected Marcum LLP as our independent registered public accounting firm for the fiscal year
ending December 31, 2021, and the Board has directed that management submit the selection of independent registered public accountants
for ratification by the stockholders at the Annual Meeting.
Stockholder
ratification of the selection of Marcum LLP as our independent registered public accounting firm is not required by our Bylaws
or otherwise. However, the Board is submitting the selection of Marcum LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection, the audit committee will reconsider whether or not
to retain Marcum LLP. Even if the selection is ratified, the Audit Committee, at its discretion, may direct the appointment of
a different independent registered public accounting firm at any time during the year if it determines that such a change would
be in the best interests of the Company and its stockholders.
Fees
to Independent Registered Public Accounting Firm
The
following is a summary of the fees billed to us by Marcum LLP for the year ended December 31, 2020 and 2019:
|
|
Year Ended
December 31, 2020
|
|
|
Year Ended
December 31, 2019
|
|
Audit fees
|
|
$
|
208,000
|
|
|
$
|
130,000
|
|
Audit-related fees
|
|
$
|
-
|
|
|
$
|
-
|
|
Tax fees
|
|
$
|
—
|
|
|
$
|
—
|
|
All other fees
|
|
$
|
109,000
|
|
|
$
|
15,000
|
|
Total
|
|
$
|
317,000
|
|
|
$
|
145,000
|
|
Audit
Fees. This category includes the fees related to the audit of our annual financial statements and the review of our interim
quarterly financial statements and services that are normally provided by our independent registered public accounting firm in
connection with its engagements for those years. This category also includes advice on audit and accounting matters that arose
during, or as a result of, the audit or the review of our interim financial statements.
Audit-Related
Fees. This category typically consists of assurance and related services by our independent registered public accounting firm
that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under
“Audit Fees.” The services for the fees disclosed under this category include consents regarding equity issuances.
Tax
Fees. This category typically consists of professional services rendered by our independent registered public accounting firm
for tax compliance and tax advice.
All
Other Fees. This category includes aggregate fees billed in each of the last two fiscal years for products and services provided
by Marcum LLC other than the services reported in the categories above.
A
representative of Marcum LLP will be present telephonically at the Annual Meeting, will have the opportunity to make a statement
if they so desire and will be available to respond to appropriate questions.
Pre-Approval
Policies and Procedures
Under
the audit committee’s pre-approval policies and procedures, the audit committee is required to pre-approve the audit and
non-audit services performed by our independent registered public accounting firm. On an annual basis, the audit committee pre-approves
a list of services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval
from the audit committee. In addition, the audit committee sets pre-approved fee levels for each of the listed services. Any type
of service that is not included on the list of pre-approved services must be specifically approved by the audit committee or its
designee. Any proposed service that is included on the list of pre-approved services but will cause the pre-approved fee level
to be exceeded will also require specific pre-approval by the audit committee or its designee.
The
audit committee has delegated pre-approval authority to the audit committee chairman and any pre-approved actions by the audit
committee chairman as designee are reported to the audit committee for approval at its next scheduled meeting.
All
of the services rendered by Marcum LLC were pre-approved by the audit committee.
The
Board considered the audit fees, audit-related fees, tax fees and other fees paid to our accountants, as disclosed above, and
determined that the payment of such fees was compatible with maintaining the independence of the accountants.
Required
Vote and Board Recommendation
The affirmative “FOR” vote of a majority
of the votes cast “FOR and “AGAINST” the matter at the Annual Meeting is required to adopt the proposal to ratify
the appointment of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. Each
of the failure to vote by proxy or to vote in person (which would include voting online at the virtual Annual Meeting), an abstention
and a broker non-vote will have no effect on the voting results for this Proposal 3.
The
Board recommends a vote “FOR” the ratification of Marcum LLP as our independent public accounting firm
for the 2021 fiscal year.
|
PROPOSAL
4: Approval, on an advisory basis, of the compensation paid to our
named executive officers
Pay
that reflects performance and alignment of pay with the long-term interests of our stockholders are key principles that underlie
our compensation program. The Dodd-Frank Act enables our stockholders to approve, on an advisory basis, the compensation of our
named executive officers as disclosed in this Proxy Statement in accordance with the SEC’s rules. The proposal, commonly
known as a “say-on-pay” proposal, is required under Section 14A of the Exchange Act (which was put in place by the
Dodd-Frank Act) and gives our stockholders the opportunity to express their views on the Company’s executive compensation.
Because this vote is an advisory vote, this proposal is not binding upon the Company, our Board or upon the compensation committee
of the Board; however, the Board values the opinions expressed by stockholders in their vote on this proposal and will review
the voting results. To the extent there is any significant vote against the compensation of our named executive officers as disclosed
in this Proxy Statement, we will consider our stockholders’ concerns and the Board will evaluate whether any actions are
necessary to address these concerns.
We
are asking our stockholders to indicate their support for our named executive officer compensation program as described in this
Proxy Statement in accordance with the compensation disclosure rules of the SEC. This vote is not intended to address any specific
item of compensation, but rather the overall compensation of our named executive officer and the policies and practices described
in this Proxy Statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual
Meeting:
“RESOLVED,
that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K,
including the compensation tables and the related narrative discussion in this Proxy Statement, is hereby APPROVED.”
As
required by the Dodd-Frank Act, this vote does not overrule any decisions by our Board and will not create or imply any change
to or any additional fiduciary duties of the Board.
As
further described in Proposal 5, the Board is asking the Company’s stockholders to vote at the Annual Meeting on a proposal
regarding the frequency of the vote on future say-on-pay proposals as required by Section 14A of the Exchange Act. Subject to adoption
by the Board of a different frequency for an advisory vote on executive compensation in accordance with the recommendation of the Company’s
stockholders pursuant to Proposal 5 or otherwise, we currently expect to hold future advisory votes on executive compensation
every three years, and the next “say-on-pay” vote is expected to occur at the annual meeting of our stockholders in 2024.
Required
Vote and Board Recommendation
The affirmative “FOR”
vote of a majority of the votes cast “FOR and “AGAINST” the matter at the Annual Meeting is required for approval
of, on an advisory basis, the executive compensation. This is a non-binding advisory vote. If your shares are held by a broker and you
do not give the broker specific instructions on how to vote your shares, your broker may not vote your shares at its discretion. Abstentions
and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect
on the outcome of the vote on this proposal.
The
Board recommends that you vote “FOR” the advisory vote on executive compensation disclosed in this
Proxy Statement, including the compensation tables and the related narrative disclosure.
|
PROPOSAL
5: APPROVAL, ON AN ADVISORY BASIS, OF THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION PAID TO OUR NAMED EXECUTIVE
OFFICERS
The
Dodd-Frank Act also provides that stockholders must be given the opportunity to vote, on a non-binding, advisory basis, for their
preference as to how frequently we should seek future advisory votes on the compensation of our named executive officers as disclosed
in accordance with the compensation disclosure rules of the SEC, which we refer to as an advisory vote on executive compensation.
By voting with respect to this proposal, stockholders may indicate whether they would prefer that we conduct future advisory votes
on executive compensation once every one, two, or three years. Stockholders also may, if they wish, abstain from casting a vote
on this proposal.
The
Board believes that a frequency of “every three years” for the advisory vote on executive compensation is the optimal
interval for conducting and responding to a “say on pay” vote. In determining to recommend that stockholders vote
for a frequency of once every three years, the Board considered how an advisory vote at this frequency will provide our stockholders
with sufficient time to evaluate the effectiveness of our overall compensation policies and practices in the context of our long-term
business results for the corresponding period, while avoiding over-emphasis on short-term variations in compensation and business
results. An advisory vote occurring once every three years will also permit our stockholders to observe and evaluate the impact
of any changes to our executive compensation policies and practices that have occurred since the last advisory vote on executive
compensation, including changes made in response to the outcome of a prior advisory vote on executive compensation. We will continue
to engage with our stockholders regarding our executive compensation program during the period between advisory votes on executive
compensation. Stockholders who have concerns about executive compensation during the interval between “say on pay”
votes are welcome to bring their specific concerns to the attention of the Board. Please refer to “Corporate Governance”
in this Proxy Statement for information about communicating with the Board.
Although
this advisory vote on the frequency of the “say on pay” vote is non-binding, the Board will take into account the
outcome of the vote when considering the frequency of future advisory votes on executive compensation.
As
required by the Dodd-Frank Act, this vote does not overrule any decisions by the Board and will not create or imply any change
to or any additional fiduciary duties of the Board.
Required
Vote and Board of Directors Recommendation
For
the advisory vote on how frequently our stockholders should vote on the compensation of our named executive officers, the number
of years (1, 2 or 3) that receives the highest number of votes will be deemed to be preferred by our stockholders. This is a non-binding
advisory vote. If your shares are held by a broker and you do not give the broker specific instructions on how to vote your shares,
your broker may not vote your shares at its discretion. Abstentions and broker non-votes will each be counted as present for purposes
of determining the presence of a quorum but will not have any effect on the outcome of the vote on this proposal.
The
Board recommends that you vote “FOR” the option of “every 3 years” for
future advisory votes on executive compensation.
|
PROPOSAL
6: APPROVAL OF AN ADJOURNMENT OF THE ANNUAL MEETING
The
Company is asking its stockholders to approve an adjournment of the Annual Meeting from time to time, if necessary or appropriate, to
permit further solicitation of proxies and vote of proxies in the event there are not sufficient votes in favor of the Share Increase
Proposal (Proposal 2).
Required
Vote and Board Recommendation
The
affirmative “FOR” vote of a majority of the votes cast “FOR and “AGAINST” the matter at the Annual Meeting
is required to approve this proposal. Each of the failure to vote by proxy or to vote in person (which would include voting online at
the virtual Annual Meeting), an abstention and a broker non-vote will have no effect on the voting results for this Proposal 6. The NYSE
has informed us that a vote on this proposal will be a “routine” matter. Therefore, we do not expect any broker non-votes
on this proposal and a failure to instruct your broker, bank or other nominee on how to vote your shares will not necessarily count as
a vote against this proposal.
The
Board recommends that you vote “FOR” the adjournment of the Annual Meeting as described above.
|
OTHER
BUSINESS
The
Board knows of no other business to be brought before the Annual Meeting. If, however, any other business should properly come
before the Annual Meeting, the persons named in the accompanying proxy will vote the proxy in accordance with applicable law and
as they may deem appropriate in their discretion, unless directed by the proxy to do otherwise.
SUBMISSION
OF FUTURE STOCKHOLDER PROPOSALS
Pursuant
to Rule 14a-8 under the Exchange Act (“Rule 14a-8”), a stockholder who intends to present a proposal at our next annual meeting
of stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing
no later than ___________, after which date such stockholder proposal will be considered untimely. Such proposal must be
submitted to the attention of Secretary, at our corporate offices at 525 Executive Blvd, Elmsford, NY 10523.
Stockholders
wishing to nominate a director or submit proposals to be presented directly at our next annual meeting instead of by inclusion in next
year’s proxy statement must follow the submission criteria and deadlines set forth in our Bylaws concerning stockholder nominations
and proposals. Stockholder nominations for director and other proposals that are not to be included in such materials must be received
by our Secretary in writing at our corporate offices at 525 Executive Blvd, Elmsford, NY 10523, no earlier than __________
and no later than the close of business on ___________. Any such stockholder proposals or nominations for director must
also satisfy the requirements set forth in our Bylaws. To be eligible for inclusion in our proxy materials, stockholder proposals must
also comply with the requirements of Rule 14a-8. Stockholders are also advised to review our Bylaws, which contain additional advance
notice requirements, including requirements with respect to advance notice of stockholder proposals and director nominations. A proxy
granted by a stockholder will give discretionary authority to the proxies to vote on any matters introduced pursuant to the above advance
notice Bylaw provisions, subject to applicable rules of the SEC.
A
copy of our 2020 Annual Report on Form 10-K is available without charge (except for exhibits, which are available upon payment
of a reasonable fee) upon written request to NanoVibronix, Inc., Attention: Chief Executive Officer, 525 Executive Blvd, Elmsford,
NY 10523.
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