Filed Pursuant to Rule 424(b)(5)
Registration No. 333-228624
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 17, 2018)
2,469,136 Shares of Common Stock
Warrants to Purchase 2,469,136 Shares
of Common Stock
We are offering 2,469,136 shares (which
we refer to herein as the Shares and each a Share) of our common stock, par value $0.0001 per share (which we refer to herein as
the Common Stock), and warrants (which we refer to herein as the Warrants and each a Warrant) to purchase 2,469,136 shares of Common
Stock pursuant to this prospectus supplement and the accompanying base prospectus. The Shares will be offered to the public at
$0.81 per share, for gross proceeds to us of $2,000,000 before expenses payable by us. The sales will be made in accordance with
the Securities Purchase Agreement entered into between us and the investors (which we refer to herein as the Purchase Agreement).
We will pay all of the expenses incident to
the registration, offering and sale of the Shares and Warrants under this prospectus supplement and the accompanying base prospectus.
For no additional consideration, each investor
will receive a Warrant to purchase one (1) of a share of Common Stock for each Share purchased for cash in this offering. The Warrants
will be exercisable immediately upon issuance (which we refer to as the Initial Exercise Date), at an exercise price of $1.05 per
share and will expire on the fifth (5
th
) anniversary of the Initial Exercise Date. The Warrants are not and will not
be listed for trading on any national securities exchange.
We estimate the expenses of this offering will
be approximately $100,000.
Our Common Stock is listed on the NASDAQ Capital
Market under the symbol “NXTD.” On April 3, 2019, the last reported sale price of our Common Stock on the NASDAQ Capital
Market was $1.05 per share.
As of the date of this
prospectus supplement, the aggregate market value of our outstanding Common Stock held by non-affiliates, or our public
float, was approximately $30,215,071.92, which amount is based on 22,890,206 outstanding shares of Common Stock held by
non-affiliates and a per share price of $1.32, which was the last reported sale price of our Common Stock on February 19,
2019. Pursuant to General Instruction I.B.6. of Form S-3, so long as our public float remains below $75.0 million, in no
event will we sell securities with a value of more than one-third of our public float in any 12-month period under the
registration statement of which this prospectus is a part. During the previous 12 calendar months prior to and including the
date of this prospectus supplement, we have offered $10,059,259 of our securities pursuant to General Instruction
I.B.6 of Form S-3.
As of January 1, 2019, we are no longer
are an “emerging growth company” as the term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS
Act”) and, as such, have elected to comply with certain reduced public company reporting requirements for this and future
filings.
You should read carefully this prospectus
supplement, the accompanying base prospectus and the documents incorporated by reference into this prospectus supplement and the
accompanying base prospectus before you invest. The investors are deemed to be an “underwriter” for the offering within
the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended.
Delivery of the Shares and Warrants is
expected to be made on or about April 4, 2019.
Our business and an investment in our
shares of Common Stock involve a high degree of risk. See “Risk Factors” beginning on page S-9
of this
prospectus supplement, on page 5 of the accompanying base prospectus and the risk factors described in the documents incorporated
by reference into this prospectus supplement and the accompanying base prospectus for more information.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying base prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
April 4, 2019
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts, this prospectus
supplement and the accompanying base prospectus, both of which are part of a registration statement on Form S-3 that we filed with
the U.S. Securities and Exchange Commission (the “SEC”) using a “shelf” registration process.
The two parts of this document include:
(1) this prospectus supplement, which describes the specific details regarding this offering of the Shares; and (2) the accompanying
base prospectus, which provides a general description of the securities we may offer, some of which may not apply to this offering.
Generally, when we refer to this “prospectus,” we are referring to both documents combined. If information in this
prospectus supplement is inconsistent with the accompanying base prospectus, you should rely on this prospectus supplement. You
should read this prospectus supplement together with the additional information described below under the heading “Where
You Can Find More Information” and “Incorporation of Documents by Reference.”
Any statement made in this prospectus supplement
or in a document incorporated or deemed to be incorporated by reference into this prospectus supplement will be deemed to be modified
or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement
or in any other subsequently filed document that is also incorporated by reference into this prospectus supplement modifies or
supersedes that statement. Any statements so modified or superseded will be deemed not to constitute a part of this prospectus
supplement except as so modified or superseded. In addition, to the extent of any inconsistencies between the statements in this
prospectus supplement and similar statements in any previously filed report incorporated by reference into this prospectus supplement,
the statements in this prospectus supplement will be deemed to modify and supersede such prior statements.
The registration statement that contains
this prospectus supplement, including the exhibits to the registration statement and the information incorporated by reference,
contains additional information about the securities offered under this prospectus supplement. That registration statement can
be read on the SEC website or at the SEC offices mentioned below under the heading “Where You Can Find More Information.”
We are responsible for the information
contained and incorporated by reference in this prospectus supplement, the accompanying base prospectus and any related free writing
prospectus we prepare or authorize. We have not authorized anyone to provide you with different or additional information, and
we take no responsibility for any other information that others may give you. If you receive any other information, you should
not rely on it.
This prospectus supplement and the accompanying
base prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered
securities to which this prospectus supplement relates, nor do this prospectus supplement and the accompanying base prospectus
constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction.
You should not assume that the information
in this prospectus supplement and the accompanying base prospectus is accurate at any date other than the date indicated on the
cover page of this prospectus supplement or that any information we have incorporated by reference is correct on any date subsequent
to the date of the document incorporated by reference. Our business, financial condition, results of operations or prospects may
have changed since that date.
You should not rely on or assume the accuracy
of any representation or warranty in any agreement that we have filed in connection with this offering or that we may otherwise
publicly file in the future because any such representation or warranty may be subject to exceptions and qualifications contained
in separate disclosure schedules, may represent the parties’ risk allocation in the particular transaction, may be qualified
by materiality standards that differ from what may be viewed as material for securities law purposes or may no longer continue
to be true as of any given date.
Unless stated otherwise or the context
otherwise requires, references in this prospectus supplement and the accompanying base prospectus to the “Company,”
“Nxt-ID,” “we,” “us” or “our” refer to Nxt-ID, Inc.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus supplement, the accompanying
base prospectus and the documents incorporated by reference herein, including the sections entitled “Risk Factors”,
contain “forward-looking statements” within the meaning of Section 21(E) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”).
These forward-looking statements include, without limitation: statements regarding proposed new products or services; statements
concerning litigation or other matters; statements concerning projections, predictions, expectations, estimates or forecasts for
our business, financial and operating results and future economic performance; statements of management’s goals and objectives;
statements concerning our competitive environment, availability of resources and regulation; trends affecting our financial condition,
results of operations or future prospects; our financing plans or growth strategies; and other similar expressions concerning matters
that are not historical facts. Words such as “may”, “will”, “should”, “could”,
“would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”,
“future”, “intends”, “plans”, “believes” and “estimates,” and variations
of such terms or similar expressions, are intended to identify such forward-looking statements.
Forward-looking statements should not be
read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by which,
that performance or those results will be achieved. Forward-looking statements are based on information available at the time they
are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and
uncertainties that could cause actual performance or results to differ materially from what is expressed in or suggested by the
forward-looking statements.
Forward-looking statements speak only as
of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements,
no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Investors
should review our subsequent reports filed with the SEC described in the sections of this prospectus supplement and the accompanying
base prospectus entitled “Where You Can Find More Information” and “Incorporation of Documents by Reference,”
all of which are accessible on the SEC’s website at
www.sec.gov
.
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information
contained or incorporated by reference in this prospectus supplement and the accompanying base prospectus. This summary does not
contain all the information you should consider before investing in our securities. You should carefully read this entire prospectus
supplement, the accompanying base prospectus and the documents incorporated by reference herein and therein before making a decision
about whether to invest in our securities.
Our Company
Nxt-ID is a technology company engaged
in the development of proprietary products and solutions that serve multiple end markets, including the security, healthcare, financial
technology (“FinTech”) and the Internet of Things (“IoT”) markets. With extensive experience in access
control, biometric and behavior-metric identity verification, security and privacy, encryption and data protection, payments, miniaturization,
and sensor technologies, we develop and market groundbreaking solutions for payment, IoT, and healthcare applications.
Two of Nxt-ID’s subsidiaries operate
in the mobile and IoT-related markets: LogicMark, LLC (“LogicMark”), a manufacturer and distributor of non-monitored
and monitored personal emergency response systems (“PERS”) that are sold through dealers, distributors and the United
States Department of Veterans Affairs (the “VA”), and Fit Pay, Inc. (“Fit Pay”), a proprietary technology
platform that delivers end-to-end solutions to device manufacturers for contactless payment capabilities, credential management,
authentication and other secure services within the IoT ecosystem, which we acquired on May 23, 2017.
On September 21, 2018, the Company announced
that it intends to separate its payments, authentication and credential management business into an independent company and distribute
shares of the newly created company to its shareholders through the execution of a spin-off, which the Company believes will qualify
as a tax free distribution. Through these lines of business, Nxt-ID creates and markets technologies that are at the center of
the rapidly expanding IoT space. Our core competencies leverage emerging business opportunities with significant high-growth potential,
as well as revenue-producing lines of business with clear paths to expansion.
With technologies that validate and connect
users to devices, and devices to ecosystems, we are playing a central role in the expansion of IoT ecosystems, focusing on the
areas of healthcare. Our strategic initiatives include: (1) monetizing our core technologies; (2) focusing on key addressable market
segments and verticals; and (3) executing clear go-market strategies for our products and services.
Healthcare
Overview
With respect to the healthcare market,
our business initiatives are driven by LogicMark, which serves a market that enables two-way communication, medical device connectivity
and patient data tracking of key vitals through sensors, biometrics, and security to make home health care a reality. There are
three (3) major trends driving this market: (1) an increased desire for connectivity; specifically, a greater desire for connected
devices by people over 60 years of age who now represent the fastest growing demographic for social media; (2) the growth of “TeleHealth”,
which is the means by which telecommunications technologies are meeting the increased need for health systems to better distribute
doctor care across a wider range of health facilities, making it easier to treat and diagnose patients; and (3) rising healthcare
costs – as health spending continues to outpace the economy, representing between 6% and 7% of the overall economy, the need
to reduce hospital readmissions, increase staffing efficiency and improve patient engagement remain the highest priorities. Together,
these trends have produced a large and growing market for us to serve. LogicMark has built a successful business on emergency communications
in healthcare. We have a strong business relationship with the VA today, serving veterans who suffer from chronic conditions that
often require emergency assistance. This business is steady and growing, producing record revenue in 2018. Our strategic plan calls
for expanding LogicMark’s business into other healthcare verticals as well as retail and enterprise channels in order to
better serve the expanding demand for connected and remote healthcare solutions.
Home healthcare, which includes health
monitoring and management using IoT and cloud-based processing, is an emerging area for LogicMark. The long-term trend toward more
home-based healthcare is a massive shift that is being driven by demographics (an aging population) and basic economics. People
also value autonomy and privacy which are important factors in determining which solutions will suit the market. Consumers are
beginning to enjoy the benefits of smart home technologies and online digital assistants. One of the promising applications of
our VoiceMatch™ technology is enabling secure commands for restricted medical access. This solution, when coupled with Nxt-ID
BioCloud™, combines biometrics with encryption and distributed access control.
Our Healthcare Monitoring Market Opportunity
PERS devices are used to call for help
and medical care during an emergency. These devices are also used by a wide patient pool, as well as the general population, to
ensure safety and security when living or traveling alone. The global medical alert systems market caters to different end-users
across the healthcare industry, including individual users, hospitals and clinics, assisted living facilities and senior living
facilities. The growing demand for home healthcare devices is mainly driven by an aging population and rising healthcare costs
worldwide. We believe that this will spur the usage of medical alert systems across the globe, as they offer safety and medical
security while being affordable and accessible.
The PERS market is divided into three (3)
device segments: landline-based PERS, mobile PERS, and standalone devices. The global PERS market is projected to grow at a compound
annual growth rate (“CAGR”) of 5.83% to $8.4 billion in 2020, benefiting from strong demographic tailwinds. According
to IndustryARC, North America and Europe are the largest markets for PERS, accounting for approximately 40% and 37% of total
sales, respectively, in 2020. According to IndustryARC, improvements in healthcare infrastructure and emerging economies will fuel
growth and significantly improve the relative market share of the Asia Pacific and the rest of world regions.
Our Health Care Products
LogicMark produces a range of products
within the PERS market and has differentiated itself by offering non-monitored products, which only require a one-time purchase
fee, instead of a recurring monthly contract. As a result, we believe LogicMark’s products are typically the most cost-effective
PERS option. LogicMark’s non-monitored solution offers a significant value proposition over monitored solutions.
The cost of ownership of a monitored solution,
which includes a monthly service fee, can be as much as $1,500 – $3,000 over a five-year period. This compares to a one-time
purchase of a LogicMark non-monitored device, which provides a similar level of security for a purchase price as low as one tenth
of that amount.
LogicMark offers both traditional (
i.e.
,
landline) and mPERS (
i.e.
, cell-based) options. Our non-monitored products are sold primarily through the VA and healthcare
distributors.
LogicMark offers monitored products that
are primarily sold by dealers and distributors for the monitored product channel. LogicMark sells its devices to the dealers and
distributors, who in turn offer the devices to consumers as part of their product/service offering. The service providers charge
consumers a monthly monitoring fee for the associated monitoring service. These products are monitored by a third-party central
station.
Payments and Financial Technology
Overview
On September 21, 2018, we announced that
our board of directors approved a plan to separate our payments and financial technology business from its healthcare business
into an independent publicly traded company. We will distribute shares of the newly created company to our shareholders through
the execution of a spin-off. As a result, we reclassified our financial technology business to discontinued operations for all
periods reported. Our payment and financial technology business is comprised of our Fit Pay subsidiary and the intellectual property
developed by Nxt-ID, Inc., including the Flye Smartcard and the Wocket.
We
conduct our payments business through Fit Pay, Inc., a wholly owned subsidiary of Nxt-ID, which was acquired in May 2017. Fit Pay’s
core technology is a proprietary platform that enables contactless payment capabilities, allowing its customers, which include
manufacturers of “smart devices,” to add payment capabilities to their products. Fit Pay connects its customers to
leading payment card networks, including Visa, Mastercard, Maestro and Discover, and to credit card issuing banks, globally.
It
successfully commercialized its third-party token service provider platform with the launch of the Garmin Pay™, which is
powered by Fit Pay’s
platform. Fit Pay’s technology and tokenization service
enables the contactless payment
feature that is included in smartwatches manufactured by Garmin International, Inc. (“Garmin”).
The payment feature, which went live in the fall of 2017, is now included in 11 of Garmin’s smartwatches
.
In January 2019, Fit Pay extended its contactless payment functionality to another major brand, announcing that its Token Requester
Management Platform (“TRM Platform”) is also enabling SwatchPAY! on four (4) new watches announced by Swatch AG.
In addition, the geographic and issuer
footprint for Garmin Pay™ is expanding and now is a network of more than 280 issuing banks in 34 countries with additions
being made regularly. This represents a significant increase from year-end 2017, at which time the network included 60 issuing
banks in 8 countries. As a part of this growth, Fit Pay announced recent agreements with Chase, Westpac, Discover and Mastercard’s
Maestro network in Europe. This expansion of the Garmin Pay™ network increases the overall revenue opportunity of this flagship
customer and establishes banking and network relationships that may be leveraged for future payment solution offerings.
Fit Pay’s TRM Platform offers an
opportunity for a whole new range of devices to become payment-enabled, without the manufacturer of such devices having to invest
in and develop such capabilities. Fit Pay is continuously developing new products to leverage its TRM Platform and expanding its
network of payment card issuers and issuing banks. Fit Pay also develops proprietary payment devices that it expects to offer through
business-to-business and direct-to-consumer channels. These new products will leverage the TRM Platform and expand Fit Pay’s
reach to new customers and emerging markets, such as cryptocurrency and other connected devices and products, generally referred
to as the Internet of Things (“IoT”).
Fit Pay’s initial consumer product
offering is a platform extension and contactless payment device called Flip™, which enables Bitcoin holders to make contactless
payment transactions at millions of retail locations with value exchanged from their cryptocurrency. Fit Pay believes the product
represents an opportunity to bring to market a unique offering in an emerging market segment.
It was also announced in October 2018 that
Fit Pay is a technology partner for Visa’s Token Service for credential-on-file (“COF”) token requestors.
Through this program, Fit Pay will be able to tokenize COF digital payments on behalf of merchant and payment ecosystem clients,
greatly expanding the addressable market for its platform services. Fit Pay leverages the EMVCo Payment Tokenization Standard to
“tokenize” or replace sensitive personal information, such as payment card numbers and expiration dates, with a unique
digital identifier or “token.” Tokenizing COF records offers increased security for consumers and merchants by never
exposing personal information and therefore potentially lowering fraud related expenses to payment card networks and issuing banks.
In addition to enhancing security, Fit
Pay’s technology will allow financial institutions to seamlessly update expired or compromised payment credentials at one
point of reference, thereby eliminating a significant point of friction for consumers and merchants. Fit Pay believes these additional
services will be buoyed by the overall growth in digital payments.
Together, Fit Pay believes these opportunities
position its emerging payment and financial technology business for growth as it monetizes its core TRM Platform technology and
expands its products and services to new markets and customers.
As an early and established entrant into
the contactless and digital payments market, Fit Pay believes that it is well-positioned to take advantage of both the growth of
payment-enabled devices and the consumer demand for new methods of payments.
Strategic Product and Service Offerings
Fit Pay offers a range of technology platform
services and products. These include:
Token
Requestor Manager Platform (TRM Platform) Integrations
With Fit Pay’s TRM Platform, manufacturers
can add contactless payment capabilities to their products with very little start up time, no investment in software development,
and instant access to the leading card networks.
The TRM Platform provides IoT and wearable
devices with contactless payment capabilities and full digital wallet functionality. It enables consumers to simply tap and pay
at near field communication (“NFC”) enabled point-of-sale (“POS”) terminals or ATMs using an existing credit,
debit or prepaid card account. The TRM Platform uses tokenization, a payment security technology that replaces cardholders’
account information with a unique digital identifier (a “token”), to transact highly secure contactless payments and
authentication services. Fit Pay leverages embedded secure element chip technology within devices to offer a payment solution that
is very power and memory efficient. This frees devices from needing to be tethered to a host device or connected to the Internet
to transact payments, creating a convenient and completely frictionless payment experience for consumers.
Fit Pay serves as the primary connection
point between card networks, banks, merchants and the wearable user. It has built a payment ecosystem that includes device manufacturers,
the Visa, Mastercard, Maestro, Discover card networks (with additional networks expected to be added), and more than 280 issuing
banks in 34 countries, including the largest markets worldwide. Issuing banks accepting payments from devices connected to the
TRM Platform include Bank of America, Capital One, U.S. Bank and Wells Fargo in the United States, and BonusCard, Cornérbank,
ANZ and NAB (National Australia Bank), among others, elsewhere.
Ecommerce and Credential-on-file Tokenization
Fit Pay’s real-time ecommerce tokenization
allows retailers to offer their customers fast, secure transactions—no matter how they shop–removing card data from
the payment process and reducing risk. By tokenizing card-on-file transactions for everything from utility bills to gym memberships,
card data can be removed from merchant databases, reducing risk and giving consumers more control.
Connected Devices
Fit Pay designs, develops and produces
connected, proprietary payment and credential management devices that generate or have the potential to generate revenue with:
monthly “subscription” fees, reload, interchange, and exchange fees, as well as revenue generated from the sale of
the device itself. These devices include:
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Full-function and passive contactless payment devices
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White-labeled connected cards with cryptocurrency and file vaults
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Contactless cryptocurrency payments
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Fit Pay offers these devices through strategic
partnership and distribution channels. Prototypes of certain offerings are undergoing testing and the network devices certification
process. It anticipates commercial distribution through selected partners will begin in 2019.
Financial Services
Fit Pay offers general purpose reloadable
(or “GPR”) prepaid account capabilities on devices connected to the TRM Platform as an added feature of its core TRM
Platform as well as the basis for stand-alone product offerings. The GPR program provides the opportunity to give consumers with
contactless payment-enabled devices the convenience of storing funds directly on their devices. The GPR program provides consumers
with the ease and security of contactless payments. The GPR accounts will be available to device OEMs that integrate their
products with the TRM Platform. The program allows consumers to load their Fit Pay-enabled IoT or wearable device with a prepaid
value for contactless purchases. A digital wallet allows the user to re-load the account, set top-off thresholds and manage account
settings. As a part of the GPR program, Fit Pay earns certain recurring account-based fees for the use, management and maintenance
of the accounts.
Cryptocurrency, Blockchain Payments
and Loyalty
Fit Pay is extending its platform to integrate
with the latest financial technology, including cryptocurrency, blockchain payments and loyalty programs.
In 2018, Fit Pay announced Flip™,
a new contactless payment device that will enable cryptocurrency holders to use the value of their currency to make purchases at
millions of retail locations. The new device leverages an expansion of the TRM Platform to connect cryptocurrencies to the payment
ecosystem. Flip™ uses value exchanged from Bitcoin to make traditional payment transactions.
Flip™ is NFC-enabled, allowing it
to transact payments at any retail point of sale location that accepts contactless payments. Flip™ will store a preloaded
amount of U.S. dollars that are exchanged from a user’s existing cryptocurrency account. It includes a digital wallet that
allows users to set how much value they would like their Flip™ to hold and when they would like it to reload, and to suspend
the account should the device become lost or stolen. Flip™ accepts value exchanged from Bitcoin and will potentially expand
to other cryptocurrencies in the future.
Credential Provisioning and Management
Fit Pay’s TRM Platform is built to
securely authenticate and provision any credential, making it ideal for digital hotel room keys, transit, ticketing, access, and
other use cases. Fit Pay believes that each of these markets represents an area of potential future growth.
Corporate Information
History
We were incorporated in the state of Delaware
on February 8, 2012. We are engaged in the development of proprietary products, services and solutions for security that serve
multiple end markets, including the security, healthcare, finance and IoT markets.
On June 25, 2012, we acquired 100% of the
membership interests in 3D-ID LLC (“3D-ID”), a limited liability company that we formed in Florida in February 2011
and that was previously owned by the Company’s founders. By acquiring 3D-ID, we gained the rights to a portfolio of patented
technology in the field of three-dimensional facial recognition and imaging including 3D facial recognition products for access
control, as well as the law enforcement and travel and immigration sectors. 3D-ID is an early stage company engaged in the design,
research and development, integration, analysis, modeling, system networking, sales and support of intelligent surveillance, three-dimensional
facial recognition and three-dimensional imaging devices and systems primarily for identification and access control in the security
industries. As our acquisition of 3D-ID was a transaction between entities under common control in accordance with Accounting Standards
Codification (“ASC”) 805, “Business Combinations”, we recognized the net assets of 3D-ID at their carrying
amounts in our accounts on the date that 3D-ID was organized, which was February 14, 2011.
On July 25, 2016, we completed the acquisition
of LogicMark, LLC (“LogicMark”) pursuant to an Interest Purchase Agreement by and among the Company, LogicMark and
the holders of all of the membership interests of LogicMark (the “LogicMark Sellers”), dated May 17, 2016 (the “Interest
Purchase Agreement”). Pursuant to the Interest Purchase Agreement, we acquired all of the membership interests of LogicMark
from the LogicMark Sellers for (i) $17.5 million in cash consideration, (ii) $2.5 million in a secured promissory note (the “LogicMark
Note”) issued to LogicMark Investment Partners, LLC, as representative of the LogicMark Sellers (the “LogicMark Representative”),
(iii) 78,740 shares of our Common Stock, which were issued upon signing of the Interest Purchase Agreement (the “LogicMark
Shares”), and (iv) warrants (the “LogicMark Warrants”) to purchase an aggregate of 157,480 shares of Common Stock
(the “LogicMark Warrant Shares”) for no additional consideration. Such warrants were exercised on July 27, 2016. In
addition, we were required to pay the LogicMark Sellers earn-out payments of (i) up to $1,500,000 for calendar year 2016 and (ii)
up to $5,000,000 for calendar year 2017 if LogicMark met certain gross profit targets set forth in the Interest Purchase Agreement.
The earn-out payment related to 2016 and the remaining balance owed on the LogicMark Note including accrued interest were both
paid in July 2017. Based on LogicMark’s operating results for the year ended December 31, 2017, the 2017 earnout amount owed
by the Company was $3,156,088. As a result, we reduced the amount of contingent consideration due to the LogicMark Sellers by $1,843,912.
We paid the 2017 earnout amount of $3,156,088 to the LogicMark Sellers in the second quarter of 2018.
On
May 23, 2017, we completed a merger (the “Merger”) pursuant to an executed Agreement and Plan of Merger (the “Merger
Agreement”) by and among the Company, Fit Merger Sub, Inc., a wholly-owned subsidiary of the Company (the “Merger Sub”),
Fit Pay, Inc. (“Fit Pay”), Michael Orlando (“Orlando”), Giesecke & Devrient Mobile Security America,
Inc. (“G&D”), the other stockholders of Fit Pay (the “Other Holders”) and Michael Orlando in his capacity
as stockholder representative representing the Other Holders (the “Stockholder Representative,” and together with Orlando
and G&D, the “Fit Pay Sellers”). In connection with the Merger, Fit Pay merged with and into the Merger Sub, with
the Merger Sub continuing as the surviving entity and a wholly-owned subsidiary of the Company.
The Company’s wholly-owned subsidiary, LogicMark, manufactures
and distributes non-monitored and monitored personal emergency response systems sold through the United States Department of Veterans
Affairs, healthcare durable medical equipment dealers and distributors and monitored security dealers and distributors. The Company’s
wholly-owned subsidiary, Fit Pay, has a proprietary technology platform that delivers payment, credential management, authentication
and other secure services to the IoT ecosystem. The platform uses tokenization, a payment security technology that replaces cardholders’
account information with a unique digital identifier, to transact highly secure contactless payment and authentication services.
On
September 21, 2018, we announced that our board of directors approved a plan to separate the Company’s financial technology
business from its healthcare business into a new, independent publicly traded company. The Company will distribute shares of the
newly created company to the Company’s stockholders through the execution of a spin-off. As a result, the Company reclassified
its financial technology business to discontinued operations for all periods reported. The Company’s financial technology
business is comprised of its Fit Pay subsidiary and the intellectual property developed by Nxt-ID, Inc., including the Flye Smartcard
and the Wocket.
In connection with the Fit Pay acquisition, Mr. Orlando became
our Chief Operating Officer, as well as the President of Fit Pay, effective as of May 23, 2017.
Other
Our principal executive offices are located
at 1627 U.S. 1, Unit 206, Sebastian, FL 32958, and our telephone number is (203) 266-2103. Our website address is
www.nxt-id.com
.
The information contained therein or connected thereto shall not be deemed to be incorporated into this Report. The information
on our website is not part of this Report.
As of January 1, 2019, we are no longer
an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
THE OFFERING
Securities Offered by Us
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2,469,136 Shares and Warrants to purchase 2,469,136 shares of Common stock.
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Warrants
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The Warrants represent the right to purchase one (1) share of Common Stock for each Share purchased for cash in this offering. The Warrants will be exercisable immediately upon issuance at an exercise price of $1.05 per share and will expire on the fifth (5
th
) anniversary of the Initial Exercise Date.
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Common Stock Outstanding before the Offering
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26,441,188 shares.
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Common Stock Outstanding after the Offering (including the shares of Common Stock underlying the Warrants)
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31,379,460 shares.
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Use of Proceeds
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We estimate that the net proceeds from the sale of the Shares offered by us will be approximately $2 million, based on the offering price of $0.81 per share, after estimated offering expenses payable by us. We intend to use the proceeds from this offering for working capital and other general corporate purposes.
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Risk Factors
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Investing in our securities involves a high degree of risk, including the risks that are described in the “Risk Factors” section beginning on page S-9 of this prospectus supplement, the “Risk Factors” section beginning on page 5 of the accompanying base prospectus, and the risk factors described in the documents incorporated by reference into this prospectus supplement and the accompanying base prospectus. You should carefully consider these risks before investing in our Common Stock.
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Trading Symbol
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Our Common Stock is traded on the NASDAQ Capital Market under the symbol “NXTD.” The Warrants will not be listed for trading on any national securities exchange.
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RISK FACTORS
Investing in our securities involves
a high degree of risk. You should carefully consider and evaluate all of the information contained in this prospectus supplement,
the accompanying base prospectus and in the documents we incorporate by reference into this prospectus supplement and the accompanying
base prospectus before you decide to purchase our securities. In particular, you should carefully consider and evaluate the risks
and uncertainties described under the heading “Risk Factors” in this prospectus supplement and the accompanying base
prospectus. Any of the risks and uncertainties set forth in this prospectus supplement and the accompanying base prospectus, as
updated by annual, quarterly and other reports and documents that we file with the SEC and incorporate by reference into this prospectus
supplement or the accompanying base prospectus could materially and adversely affect our business, results of operations and financial
condition, which in turn could materially and adversely affect the value of our Common Stock. As a result, you could lose all or
part of your investment.
Risks Related to this Offering of Securities
Our insiders and affiliated parties
beneficially own a significant portion of our Common Stock.
As of the date of this prospectus supplement,
our executive officers, directors and affiliated parties beneficially own approximately 13.43% of our Common Stock. As a result,
our executive officers, directors and affiliated parties will have significant influence to:
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elect or defeat the election of our directors;
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amend or prevent amendment of our certificate of incorporation or bylaws;
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effect or prevent a merger, sale of assets or other corporate transaction; and
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affect the outcome of any other matter submitted to the stockholders for vote.
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In addition, any sale of a significant
amount of our Common Stock held by our directors and executive officers, or the possibility of such sales, could adversely affect
the market price of our Common Stock. Management’s stock ownership may discourage a potential acquirer from making a tender
offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from
realizing any gains from our Common Stock.
Investors will incur immediate and substantial dilution
as a result of this offering.
Investors purchasing securities in this
offering will incur immediate and substantial dilution in net tangible book value per share. Based on the per Share offering price
of $0.81 for the Shares, purchasers of the Shares will effectively incur dilution of approximately $1.45 per share in the net tangible
book value of their purchased shares of Common Stock, or approximately (179.06)% at the offering price of the Shares. In addition,
purchasers of the Shares in this offering will have contributed approximately 3.0% of the aggregate price paid by all purchasers
of our Common Stock and will own approximately 8.9% of our Common Stock outstanding after this offering. Furthermore,
you may experience further dilution to the extent that shares of our Common Stock are issued upon the exercise of outstanding stock
options and warrants. See “Dilution.”
The market price for our Common Stock
is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, and lack
of profits, which could lead to wide fluctuations in the price of our Common Stock. You may be unable to sell your shares of Common
Stock at or above your purchase price, which may result in substantial losses to you.
The market for our Common Stock is characterized
by significant price volatility when compared to the securities of larger, more established companies that trade on a national
securities exchange and have large public floats, and we expect that the price of our Common Stock will continue to be more volatile
than the securities of such larger, more established companies for the indefinite future. The volatility in the price of our Common
Stock is attributable to a number of factors. First, as noted above, our Common Stock is, compared to the securities of such larger,
more established companies, sporadically and thinly traded. The price of our Common Stock could, for example, decline precipitously
in the event that a large number of shares of our Common Stock is sold on the market without commensurate demand. Secondly, we
are a speculative or “risky” investment due to our lack of profits to date. As a consequence of this enhanced risk,
more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack
of progress, be more inclined to sell their shares of Common Stock on the market more quickly and at greater discounts than would
be the case with the securities of a larger, more established company that trades on a national securities exchange and has a large
public float. Many of these factors are beyond our control and may decrease the market price of our Common Stock regardless of
our operating performance.
If we are not able to comply with
the applicable continued listing requirements or standards of the NASDAQ Capital Market, our Common Stock could be delisted from
such exchange.
Our Common Stock is currently listed on
the NASDAQ Capital Market (“NASDAQ”). In order to maintain such listing, we must satisfy minimum financial and other
continued listing requirements and standards, including those regarding director independence and independent committee requirements,
minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurances
that we will be able to comply with the applicable listing standards. Although we are currently in compliance with such listing
standards, we have, in the past, fallen out of compliance and may in the future fall out of compliance with such standards. If
we are unable to maintain compliance with these NASDAQ requirements, our Common Stock will be delisted from NASDAQ.
In the event that our Common Stock is delisted
from NASDAQ and is not eligible for quotation on another market or exchange, trading of our Common Stock could be conducted on
the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the OTC Pink Marketplace
or the OTC Bulletin Board operated by the OTC Market Group Inc. In such event, it could become more difficult to dispose of, or
obtain accurate price quotations for, our Common Stock, and there would likely also be a reduction in our coverage by securities
analysts and the news media, which could cause the price of our Common Stock to decline further. Also, it may be difficult for
us to raise additional capital if we are not listed on a major exchange.
In the event that our Common Stock
is delisted from NASDAQ, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because
they may be considered penny stocks and thus be subject to the penny stock rules.
The SEC has adopted a number of rules to
regulate “penny stock” that restricts transactions involving stock which is deemed to be penny stock. Such rules include
Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have the effect
of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than
$5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market
if current price and volume information with respect to transactions in such securities is provided by the exchange or system).
Our shares of Common Stock have in the past constituted, and may again in the future constitute, “penny stock” within
the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage
such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity
of such shares of Common Stock and impede their sale in the secondary market.
A U.S. broker-dealer selling penny stock
to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in
excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability
determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless
the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S.
broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance
with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt.
A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative
and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent
price information with respect to the “penny stock” held in a customer’s account and information with respect
to the limited market in “penny stocks”.
Stockholders should be aware that, according
to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns
include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii)
“boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales
persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping
of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor
losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect
to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive
within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
If and when a larger trading market
for our Common Stock develops, the market price of our Common Stock is still likely to be highly volatile and subject to wide fluctuations,
and you may be unable to resell your shares of Common Stock at or above the price at which you acquired them.
The market price of our Common Stock may
be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including,
but not limited to:
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variations in our revenues and operating expenses;
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actual or anticipated changes in the estimates of our operating results or changes in stock market analyst recommendations regarding our Common Stock, other comparable companies or our industry generally;
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market conditions in our industry, the industries of our customers and the economy as a whole;
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actual or expected changes in our growth rates or our competitors’ growth rates;
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developments in the financial markets and worldwide or regional economies;
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announcements of innovations or new products or services by us or our competitors;
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announcements by the government relating to regulations that govern our industry;
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sales of our Common Stock or other securities by us or in the open market; and
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changes in the market valuations of other comparable companies.
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In addition, if the market for technology
stocks or the stock market in general experiences loss of investor confidence, the trading price of our Common Stock could decline
for reasons unrelated to our business, financial condition or operating results. The trading price of our Common Stock might also
decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each
of these factors, among others, could harm the value of your investment in our Common Stock. In the past, following periods of
volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted
against us, could result in substantial costs and diversion of management’s attention and resources, which could materially
and adversely affect our business, operating results and financial condition.
Our stockholders may experience significant
dilution.
Although certain exercise restrictions
are placed upon the holders of the warrants, the issuance of material amounts of Common Stock by us would cause our existing stockholders
to experience significant dilution in their investment in us. In addition, if we obtain additional financing involving the issuance
of equity securities or securities convertible into equity securities, our existing stockholders’ investment would be further
diluted. Such dilution could cause the market price of our Common Stock to decline, which could impair our ability to raise additional
financing.
The exercise or conversion of some or all
of our outstanding warrants or convertible securities could result in significant dilution in the percentage ownership interest
of investors in this offering and in the percentage ownership interest of our existing Common Stockholders and in a significant
dilution of voting rights and earnings per share. As of the date of this prospectus supplement, we have warrants outstanding to
purchase 4,782,448 shares of Common Stock. The warrants have an average exercise price of $5.32 and a weighted average years to
maturity of approximately 3.28 years.
In addition to the dilutive effects described
above, the exercise of those securities would lead to an increase in the number of shares of Common Stock eligible for resale in
the public market. Sales of substantial numbers of such shares of Common Stock in the public market could adversely affect the
market price of our shares of Common Stock. Substantial dilution and/or a substantial increase in the number of shares of Common
Stock available for future resale may negatively impact the trading price of our shares of Common Stock.
We do not anticipate paying dividends
in the foreseeable future; you should not buy our Common Stock if you expect dividends.
The payment of dividends on our Common
Stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board
of directors may consider relevant. If we do not pay dividends, our Common Stock may be less valuable because a return
on your investment will only occur if our stock price appreciates.
We currently intend to retain our future
earnings to support operations and to finance expansion and, therefore, we do not anticipate paying any cash dividends on our Common
Stock in the foreseeable future.
If you make an additional investment
in our Common Stock, you may experience additional dilution in the future.
We may acquire other technologies or finance
strategic alliances by issuing our equity or equity-linked securities, which may result in additional dilution to our stockholders.
We could issue “blank check”
preferred stock without stockholder approval with the effect of diluting then current stockholder interests and impairing their
voting rights; and provisions in our charter documents could discourage a takeover that stockholders may consider favorable.
Our certificate of incorporation authorizes
the issuance of up to 10,000,000 shares of “blank check” preferred stock with designations, rights and preferences
as may be determined from time to time by our board of directors. Our board of directors is empowered, without stockholder
approval, to issue a series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute
the interest of, or impair the voting power of, our Common Stockholders. The issuance of a series of preferred stock could
be used as a method of discouraging, delaying or preventing a change in control of the Company. For example, it would be possible
for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of
any attempt to change control of the Company.
Financial Industry Regulatory Authority
(“FINRA”) sales practice requirements may limit a stockholder’s ability to buy and sell our Common Stock.
FINRA has adopted rules that require that
in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers
must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives
and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced
securities will not be suitable for certain customers. FINRA requirements will likely make it more difficult for broker-dealers
to recommend that their customers buy our Common Stock, which may have the effect of reducing the level of trading activity in
our Common Stock. As a result, fewer broker-dealers may be willing to make a market in our Common Stock, reducing a stockholder’s
ability to resell shares of our Common Stock.
Sales of a significant number of
shares of our Common Stock in the public markets or significant short sales of our Common Stock, or the perception that such sales
could occur, could depress the market price of our Common Stock and impair our ability to raise capital.
Sales of a substantial number of shares
of our Common Stock or other equity-related securities in the public markets could depress the market price of our Common Stock.
If there are significant short sales of our Common Stock, the price decline that could result from this activity may cause the
share price to decline more so, which, in turn, may cause long holders of the Common Stock to sell their shares, thereby contributing
to sales of Common Stock in the market. Such sales also may impair our ability to raise capital through the sale of additional
equity securities in the future at a time and price that our management deems acceptable, if at all.
We may seek to raise additional funds,
finance acquisitions or develop strategic relationships by issuing securities that would dilute the ownership of the Common Stock.
Depending on the terms available to us, if these activities result in significant dilution, it may negatively impact the trading
price of our shares of Common Stock.
We have financed our operations, and we
expect to continue to finance our operations, acquisitions, if any, and the development of strategic relationships by issuing equity
and/or convertible securities, which could significantly reduce the percentage ownership of our existing stockholders. Further,
any additional financing that we secure may require the granting of rights, preferences or privileges senior to, or pari passu
with, those of our Common Stock. Any issuances by us of equity securities may be at or below the prevailing market price of our
Common Stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of our
Common Stock to decline. We may also raise additional funds through the incurrence of debt or the issuance or sale of other securities
or instruments senior to our shares of Common Stock. The holders of any securities or instruments we may issue may have rights
superior to the rights of our holders of Common Stock. If we experience dilution from the issuance of additional securities and
we grant superior rights to new securities over holders of Common Stock, it may negatively impact the trading price of our shares
of Common Stock.
Our charter documents and Delaware
law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our Common Stock.
Our certificate of incorporation, as amended,
and our bylaws, as amended, contain provisions that could delay or prevent a change in control of our Company. These provisions
could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:
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authorizing the board of directors to issue, without stockholder approval, preferred stock with rights senior to those of our Common Stock;
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limiting the persons who may call special meetings of stockholders; and
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requiring advance notification of stockholder nominations and proposals.
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In addition, the provisions of Section
203 of the Delaware General Corporation Law govern us. These provisions may prohibit large stockholders, in particular those owning
fifteen percent (15%) or more of our outstanding voting stock, from merging or combining with us for a certain period of time without
the consent of our board of directors.
These and other provisions in our certificate
of incorporation and our bylaws, as amended, and under Delaware law could discourage potential takeover attempts, reduce the price
that investors might be willing to pay in the future for shares of our Common Stock and result in the market price of our Common
Stock being lower than it would be without these provisions. See the section entitled “Description of Securities” for
additional information on anti-takeover provisions.
If securities or industry analysts
do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations
regarding our Common Stock adversely, our Common Stock price and trading volume could decline.
The trading
market for our shares of Common Stock will be influenced by the research and reports that industry or securities analysts may publish
about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding
our Common Stock adversely, or provide more favorable relative recommendations about our competitors, our share price would likely
decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could
lose visibility in the financial markets, which in turn could cause our Common Stock price or trading volume to decline.
Risks Related to our Business
We are uncertain of our ability to
generate sufficient revenue and profitability in the future.
We continue to develop and refine our business
model, but we can provide no assurance that we will be able to generate a sufficient amount of revenue, from our business in order
to achieve profitability. It is not possible for us to predict at this time the potential success of our business. The
revenue and income potential of our proposed business and operations are currently unknown. If we cannot continue as a viable entity,
you may lose some or all of your investment in our Company.
The Company incurred a net loss from continuing
operations of $1,328,616 for the year ended December 31, 2018. As of December 31, 2018, the Company had cash and stockholders’
equity of $425,189 and $14,736,758, respectively. At December 31, 2018, of the Company had working capital deficiency (excluding
discontinued operations) of $1,603,466. We cannot provide any assurance that we will be able to raise additional cash from equity
financings, secure debt financing, and/or generate revenue from the sales of our products. If we are unable to secure additional
capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs in
order to conserve our cash in amounts sufficient to sustain operations and meet our obligations.
We and the businesses we have recently
acquired or propose to acquire have limited operating histories and we cannot offer any assurance as to our future financial results,
and you should not rely on the historical financial date included in this prospectus as an indicator of our future financial performance.
You may lose your entire investment.
We and the businesses we have recently
acquired or propose to acquire have limited operating histories upon which to base any assumption as to the likelihood that we
will be successful in implementing our business plan, and we may not be able to generate significant revenues or achieve profitability.
You should consider our business and prospects in light of the risks and difficulties we face with our limited operating history
and should not rely on our past results or the past results of any of such businesses as an indication of our future performance.
There is no assurance that the growth rate we or they have experienced to date will continue. Even if we generate future revenues
sufficient to expand operations, increased infrastructure costs and cost of goods sold and marketing expenses could impair or prevent
us from generating profitable returns. We recognize that if we are unable to generate significant revenues from our business
development, we will not be able to earn profits or potentially continue operations. If we are unsuccessful in addressing these
risks, our business will most likely fail.
If we fail to keep pace with changing industry technology
and consumer preferences, we will be at a competitive disadvantage.
The industry segments in which we are operating
are evolving rapidly. They are characterized by changing technology, budding industry standards, frequent new and enhanced product
introductions, rapidly changing end-user/consumer preferences and product obsolescence. In order to continue to compete effectively
in these markets, we need to respond quickly to technological changes and to understand their impact on our customers’ preferences.
It may take significant time and resources to respond to these technological changes. If we fail to keep pace with these changes,
our business may suffer. Moreover, developments by others may render our technologies and intended products noncompetitive or obsolete,
or we may be unable to keep pace with technological developments or other market factors. If any of our competitors implement new
technologies before we are able to implement them, those competitors may be able to provide more effective products than ours.
Any delay or failure in the introduction of new or enhanced products could have a material adverse effect on our business, results
of operations and financial condition. Furthermore, our inability to keep pace with changing industry technology and consumer preferences
may cause our inventory to become obsolete at a rate faster than anticipated, which may result in our taking goodwill impairment
charges in past or future acquisitions that negatively impact our results of operations.
We have a limited operating history
upon which you can gauge our ability to obtain profitability.
We have a limited operating history and
our business and prospects must be considered in light of the risks and uncertainties to which emerging growth companies are exposed.
We cannot provide assurances that our business strategy will be successful or that we will successfully address those risks and
the risks described herein. Most importantly, if we are unable to secure future capital, we may be unable to continue our operations.
We may incur losses on a quarterly or annual basis for a number of reasons, some of which may be outside our control.
If we cannot obtain additional capital
required to finance our research and development efforts, our business may suffer and you may lose the value of your investment.
We may require
additional funds to further execute our business plan and expand our business. If we are unable to obtain additional capital when
needed, we may have to restructure our business or delay or abandon our development and expansion plans. If this occurs, you may
lose part or all of your investment. We will have ongoing capital needs as we expand our business. If we raise additional
funds through the sale of equity or convertible securities, your ownership percentage of our Common Stock will be reduced. In addition,
these transactions may dilute the value of our Common Stock. We may have to issue securities that have rights, preferences
and privileges senior to our Common Stock. The terms of any additional indebtedness may include restrictive financial and
operating covenants that would limit our ability to compete and expand. There can be no assurance that we will be able to obtain
the additional financing we may need to fund our business, or that such financing will be available on terms acceptable to us.
We face intense competition in our
market, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain
or improve our competitive position.
A number of other companies engage in the
business of developing applications for facial recognition for access control. The market for biometric security products is intensely
competitive, and we expect competition to increase in the future from established competitors and new market entrants. Our current
competitors include both emerging or developmental stage companies, such as ourselves, as well as larger companies. Many of our
existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as:
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greater name recognition and longer operating histories;
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larger sales and marketing budgets and resources;
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broader distribution and established relationships with distribution partners and end-customers;
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greater customer support resources;
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greater resources to make acquisitions;
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larger and more mature intellectual property portfolios; and
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substantially greater financial, technical, and other resources.
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In addition, some of our larger competitors
have substantially broader product offerings and leverage their relationships based on other products or incorporate functionality
into existing products to gain business in a manner that discourages users from purchasing our products, including through selling
at zero or negative margins, product bundling, or closed technology platforms. Conditions in our market could change rapidly and
significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation. New
start-up companies that innovate and large competitors that are making significant investments in research and development may
invent similar or superior products and technologies that compete with our products and technology. Our current and potential competitors
may also establish cooperative relationships among themselves or with third parties that may further enhance their resources.
Our markets are subject to technological
change and our success depends on our ability to develop and introduce new products.
Each of the governmental and commercial
markets for our products is characterized by:
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changing technologies;
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changing customer needs;
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frequent new product introductions and enhancements;
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increased integration with other functions; and
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product obsolescence.
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Our success will be dependent in part on
the design and development of new products. To develop new products and designs for our target markets, we must develop, gain access
to and use leading technologies in a cost-effective and timely manner and continue to expand our technical and design expertise.
The product development process is time-consuming and costly, and there can be no assurance that product development will be successfully
completed, that necessary regulatory clearances or approvals will be granted on a timely basis, or at all, or that the potential
products will achieve market acceptance. Our failure to develop, obtain necessary regulatory clearances or approvals for, or successfully
market, potential new products could have a material adverse effect on our business, financial condition and results of operations.
Claims by others that we infringe
their intellectual property rights could increase our expenses and delay the development of our business. As a result, our business
and financial condition could be harmed.
Our industries
are characterized by the existence of a large number of patents as well as frequent claims and related litigation regarding patent
and other intellectual property rights. We cannot be certain that our products do not and will not infringe issued patents, patents
that may be issued in the future, or other intellectual property rights of others.
We do not have
the resources to conduct exhaustive patent searches to determine whether the technology used in our products infringe patents held
by third parties. In addition, product development is inherently uncertain in a rapidly evolving technological environment in which
there may be numerous patent applications pending, many of which are confidential when filed.
We may face claims
by third parties that our products or technology infringe on their patents or other intellectual property rights. Any claim of
infringement could cause us to incur substantial costs defending against the claim, even if the claim is invalid, and could distract
our management. If any of our products are found to violate third-party proprietary rights, we may be required to pay substantial
damages. In addition, we may be required to re-engineer our products or obtain licenses from third parties to continue to offer
our products. Any efforts to re-engineer our products or obtain licenses on commercially reasonable terms may not be successful,
which would prevent us from selling our products, and, in any case, could substantially increase our costs and have a material
adverse effect on our business, financial condition and results of operations.
We may not be able to protect our
intellectual property rights adequately.
Our ability to compete for government contracts
is affected, in part, by our ability to protect our intellectual property rights. We rely on a combination of patents, trademarks,
copyrights, trade secrets, confidentiality procedures and non-disclosure and licensing arrangements to protect our intellectual
property rights. Despite these efforts, we cannot be certain that the steps we take to protect our proprietary information will
be adequate to prevent misappropriation of our technology or protect that proprietary information. The validity and breadth of
claims in technology patents involve complex legal and factual questions and, therefore, may be highly uncertain. Nor can we assure
you that, if challenged, our patents will be found to be valid or enforceable, or that the patents of others will not have an adverse
effect on our ability to do business. In addition, the enforcement of laws protecting intellectual property may be inadequate to
protect our technology and proprietary information.
We may not have the resources to assert
or protect our rights to our patents and other intellectual property. Any litigation or proceedings relating to our intellectual
property, whether or not meritorious, will be costly and may divert the efforts and attention of our management and technical personnel.
We also rely on other unpatented proprietary
technology, trade secrets and know-how and no assurance can be given that others will not independently develop substantially equivalent
proprietary technology, techniques or processes, that such technology or know-how will not be disclosed or that we can meaningfully
protect our rights to such unpatented proprietary technology, trade secrets, or know-how. Although we intend to enter into non-disclosure
agreements with our employees and consultants, there can be no assurance that such non-disclosure agreements will provide adequate
protection for our trade secrets or other proprietary know-how.
Our success will depend, in part,
on our ability to obtain new patents.
To date, we have applied for 39 patents
in the U.S., 11 of which have been awarded, and our success will depend, in part, on our ability to obtain patent and trade secret
protection for proprietary technology that we currently possess or that we may develop in the future. No assurance can be given
that any pending or future patent applications will issue as patents, that the scope of any patent protection obtained will be
sufficient to exclude competitors or provide competitive advantages to us, that any of our patents will be held valid if subsequently
challenged or that others will not claim rights in or ownership of the patents and other proprietary rights held by us.
Furthermore, there can be no assurance
that our competitors have not or will not independently develop technology, processes or products that are substantially similar
or superior to ours, or that they will not duplicate any of our products or design around any patents issued or that may be issued
in the future to us. In addition, whether or not patents are issued to us, others may hold or receive patents which contain claims
having a scope that covers products or processes developed by us.
We may not have the resources to adequately
defend any patent infringement litigation or proceedings. Any such litigation or proceedings, whether or not determined in our
favor or settled by us, is costly and may divert the efforts and attention of our management and technical personnel. In addition,
we may be required to obtain licenses to patents or proprietary rights from third parties. There can be no assurance that such
licenses will be available on acceptable terms if at all. If we do not obtain required licenses, we could encounter delays in product
development or find that the development, manufacture or sale of products requiring such licenses could be foreclosed. Accordingly,
challenges to our intellectual property, whether or not ultimately successful, could have a material adverse effect on our business
and results of operations.
Our future success depends on the
continued service of management, engineering and sales personnel and our ability to identify, hire and retain additional personnel.
Our success depends, to a significant extent,
upon the efforts and abilities of members of senior management. We have entered into an employment agreement with our Chief Executive
Officer and President, as well as our Chief Operating Officer, but have not entered into an employment agreement with our Chief
Financial Officer, Chief Technology Officer or Chief Revenue Officer. The loss of the services of one or more of our senior management
or other key employees could adversely affect our business. We currently maintain a key person life insurance policy on our Chief
Executive Officer only.
There is intense competition for qualified
employees in our industry, particularly for highly skilled design, applications, engineering and sales people. We may not be able
to continue to attract and retain developers, managers, or other qualified personnel necessary for the development of our business
or to replace qualified individuals who may leave us at any time in the future. Our anticipated growth is expected to place increased
demands on our resources, and will likely require the addition of new management and engineering staff as well as the development
of additional expertise by existing management employees. If we lose the services of or fail to recruit engineers or other technical
and management personnel, our business could be harmed.
The requirements of being a public company may strain
our resources and divert management’s attention.
As a public company, we are subject to
the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act), the Dodd-Frank
Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations. Compliance with these rules
and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or
costly, and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual and
current reports with the SEC with respect to our business and operating results.
As a result of disclosure
of information in this prospectus supplement and in filings required of a public company, our business and financial
condition is more visible, which we believe may result in threatened or actual litigation, including by competitors and other
third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do
not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them,
could divert resources of our management and harm our business and operating results.
Periods of rapid growth and expansion
could place a significant strain on our resources, including our employee base, which could negatively impact our operating results.
We may experience periods of rapid growth
and expansion, which may place significant strain and demands on our management, our operational and financial resources, customer
operations, research and development, marketing and sales, administrative, and other resources. To manage our possible future growth
effectively, we will be required to continue to improve our management, operational and financial systems. Future growth would
also require us to successfully hire, train, motivate and manage our employees. In addition, our continued growth and the evolution
of our business plan will require significant additional management, technical and administrative resources. If we are unable to
manage our growth successfully we may not be able to effectively manage the growth and evolution of our current business and our
operating results could suffer.
We depend on contract manufacturers,
and our production and products could be harmed if it is unable to meet our volume and quality requirements and alternative sources
are not available.
We rely on contract manufacturers to provide
manufacturing services for our products. If these services become unavailable, we would be required to identify and enter into
an agreement with a new contract manufacturer or take the manufacturing in-house. The loss of our contract manufacturers could
significantly disrupt production as well as increase the cost of production, thereby increasing the prices of our products. These
changes could have a material adverse effect on our business and results of operations.
We are presently a small company
with too limited resources and personnel to establish a comprehensive system of internal controls. If we fail to maintain an effective
system of internal controls, we would not be able to accurately report our financial results on a timely basis or prevent fraud.
As a result, current and potential stockholders could lose confidence in our financial
reporting, which would
harm our business and the trading price of our Common Stock.
Effective internal controls are necessary
for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or
prevent fraud, our brand and operating results would be harmed. We may in the future discover areas of our internal controls that
need improvement. For example, because of size and limited resources, our external auditors may determine that we lack the personnel
and infrastructure necessary to properly carry out an independent audit function. Although we believe that we have adequate
internal controls for a company with our size and resources, we are not certain that the measures that we have in place will ensure
that we implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement
required new or improved controls, or difficulties encountered in their implementation, would harm our operating results or cause
us to fail to meet our reporting obligations. Inferior internal controls would also cause investors to lose confidence in our reported
financial information, which would have a negative effect on our company and the trading price of our Common Stock.
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in
accordance with U.S. generally accepted accounting principles. A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual
or interim financial statements will not be prevented or detected on a timely basis.
As of December 31, 2018, we have identified
certain matters that constituted material weaknesses in our internal controls over financial reporting. Specifically, we have difficulty
in accounting for complex accounting transactions due to an insufficient number of accounting personnel with experience in that
area and limited segregation of duties within our accounting and financial reporting functions.
If we do not effectively manage changes
in our business, these changes could place a significant strain on our management and operations.
Our ability to grow successfully requires
an effective planning and management process. The expansion and growth of our business could place a significant strain on
our management systems, infrastructure and other resources. To manage our growth successfully, we must continue to improve
and expand our systems and infrastructure in a timely and efficient manner. Our controls, systems, procedures and resources
may not be adequate to support a changing and growing company. If our management fails to respond effectively to changes and
growth in our business, including acquisitions, this could have a material adverse effect on our business, financial condition,
results of operations and future prospects.
We may not be able to access the
equity or credit markets.
We face the risk that we may not be able
to access various capital sources including investors, lenders, or suppliers. Failure to access the equity or credit markets from
any of these sources could have a material adverse effect on our business, financial condition, results of operations, and future
prospects.
Persistent global economic trends
could adversely affect our business, liquidity and financial results.
Although improving, persistent global economic
conditions, particularly the scarcity of capital available to smaller businesses, could adversely affect us, primarily through
limiting our access to capital and disrupting our clients’ businesses. In addition, continuation or worsening of general
market conditions in economies important to our businesses may adversely affect our clients’ level of spending and ability
to obtain financing, leading to us being unable to generate the levels of sales that we require. Current and continued disruption
of financial markets could have a material adverse effect on our business, financial condition, results of operations and future
prospects.
We may seek or need to raise additional
funds. Our ability to obtain financing for general corporate and commercial purposes or acquisitions depends on operating and financial
performance, and is also subject to prevailing economic conditions and to financial, business and other factors beyond our control.
The global credit markets and the financial services industry have been experiencing a period of unprecedented turmoil characterized
by the bankruptcy, failure or sale of various financial institutions. An unprecedented level of intervention from the U.S. and
other governments has been seen. As a result of such disruption, our ability to raise capital may be severely restricted and the
cost of raising capital through such markets or privately may increase significantly at a time when we would like, or need, to
do so. Either of these events could have an impact on our flexibility to fund our business operations, make capital expenditures,
pursue additional expansion or acquisition opportunities, or make another discretionary use of cash and could adversely impact
our financial results.
Although recent trends point to continuing
improvements, there is still lingering volatility and uncertainty. A change or disruption in the global financial markets for any
reason may cause consumers, businesses and governments to defer purchases in response to tighter credit, decreased cash availability
and declining consumer confidence. Accordingly, demand for our products could decrease and differ materially from current expectations.
Further, some of our customers may require substantial financing in order to fund their operations and make purchases from us.
The inability of these customers to obtain sufficient credit to finance purchases of our products and meet their payment obligations
to us or possible insolvencies of our customers could result in decreased customer demand, an impaired ability for us to collect
on outstanding accounts receivable, significant delays in accounts receivable payments, and significant write-offs of accounts
receivable, each of which could adversely impact our financial results.
Rising interest rates could adversely
impact our business.
Changes in interest rates could have an adverse impact on our
business by increasing our cost of capital. For example:
|
●
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rising interest rates would increase our cost of capital; and
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|
|
|
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●
|
rising interest rates may negatively impact our ability to secure financing on favorable terms and may impact our ability to provide cost-effective financing to our end-customers or end-users, where applicable.
|
Rising interest rates could generally harm
our business and financial condition.
Risks Related to Our Biometric Recognition
Applications and Related Products
Our biometric products and technologies
may not be accepted by the intended commercial consumers of our products, which could harm our future financial performance.
There can be no assurance that our biometric
systems will achieve wide acceptance by commercial consumers of such security-based products, and/or market acceptance generally.
The degree of market acceptance for products and services based on our technology will also depend upon a number of factors, including
the receipt and timing of regulatory approvals, if any, and the establishment and demonstration of the ability of our proposed
device to provide the level of security in an efficient manner and at a reasonable cost. Our failure to develop a commercial product
to compete successfully with existing security technologies could delay, limit or prevent market acceptance. Moreover, the market
for new biometric-based security systems is largely undeveloped, and we believe that the overall demand for mobile biometric-based
security systems technology will depend significantly upon public perception of the need for such a level of security. There can
be no assurance that the public will believe that our level of security is necessary or that the security industry will actively
pursue our technology as a means to solve their security issues. Long-term market acceptance of our products and services will
depend, in part, on the capabilities, operating features and price of our products and technologies as compared to those of other
available products and services. As a result, there can be no assurance that currently available products, or products under development
for commercialization, will be able to achieve market penetration, revenue growth or profitability.
Our biometric applications may become
obsolete if we do not effectively respond to rapid technological change on a timely basis.
The biometric identification and personal
identification industries are characterized by rapid technological change, frequent new product innovations, changes in customer
requirements and expectations and evolving industry standards. If we are unable to keep pace with these changes, our business may
be harmed. Products using new technologies, or emerging industry standards, could make our technologies less attractive. In addition,
we may face unforeseen problems when developing our products, which could harm our business. Furthermore, our competitors may have
access to technologies not available to us, which may enable them to produce products of greater interest to consumers or at a
more competitive cost.
Our biometric applications are new and
our business model is evolving. Because of the new and evolving nature of biometric technology, it is difficult to predict
the size of this specialized market, the rate at which the market for our biometric applications will grow or be accepted, if at
all, or whether other biometric technologies will render our applications less competitive or obsolete. If the market for
our biometric applications fails to develop or grows slower than anticipated, we would be significantly and materially adversely
affected.
If our products and services do not
achieve market acceptance, we may never have significant revenues or any profits.
If we are unable to operate our business
as contemplated by our business model or if the assumptions underlying our business model prove to be unfounded, we could fail
to achieve our revenue and earnings goals within the time we have projected, or at all, which would have a detrimental effect on
our business. As a result, the value of your investment could be significantly reduced or completely lost.
We may in the future experience competition
from other biometric application developers.
Competition in the development of biometric
recognition is expected to become more intense. Competitors range from university-based research and development graphics
labs to development-stage companies and major domestic and international companies. Many of these entities have financial,
technical, marketing, sales, distribution and other resources significantly greater than those that we have. There can be
no assurance that we can continue to develop our biometric technologies or that present or future competitors will not develop
technologies that render our biometric applications obsolete or less marketable or that we will be able to introduce new products
and product enhancements that are competitive with other products marketed by industry participants.
We may fail to create new applications
for our products and enter new markets, which would have an adverse effect on our operations, financial condition and prospects.
Our future success depends in part on our
ability to develop and market our technology for applications other than those currently intended. If we fail in these goals, our
business strategy and ability to generate revenues and cash flow would be significantly impaired. We intend to expend significant
resources to develop new technology, but the successful development of new technology cannot be predicted and we cannot guarantee
we will succeed in these goals.
Our products may have defects, which
could damage our reputation, decrease market acceptance of our products, cause us to lose customers and revenue and result in costly
litigation or liability
.
Our products may contain defects for many
reasons, including defective design or manufacture, defective material or software interoperability issues. Products as complex
as those we offer, frequently develop or contain undetected defects or errors. Despite testing defects or errors may arise in our
existing or new products, which could result in loss of revenue, market share, failure to achieve market acceptance, diversion
of development resources, injury to our reputation, and increased service and maintenance cost. Defects or errors in our products
and solutions might discourage customers from purchasing future products. Often, these defects are not detected until after the
products have been shipped. If any of our products contain defects or perceived defects or have reliability, quality or compatibility
problems or perceived problems, our reputation might be damaged significantly, we could lose or experience a delay in market acceptance
of the affected product or products and might be unable to retain existing customers or attract new customers. In addition, these
defects could interrupt or delay sales. In the event of an actual or perceived defect or other problem, we may need to invest significant
capital, technical, managerial and other resources to investigate and correct the potential defect or problem and potentially divert
these resources from other development efforts. If we are unable to provide a solution to the potential defect or problem that
is acceptable to our customers, we may be required to incur substantial product recall, repair and replacement and even litigation
costs. These costs could have a material adverse effect on our business and operating results.
We will provide warranties on certain product
sales and allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances
requires us to make estimates of product return rates and expected costs to repair or to replace the products under warranty. We
will establish warranty reserves based on our best estimates of warranty costs for each product line combined with liability estimates
based on the prior twelve months’ sales activities. If actual return rates and/or repair and replacement costs differ
significantly from our estimates, adjustments to recognize additional cost of sales may be required in future periods. In addition,
because our customers rely on secure authentication and identification of cardholders to prevent unauthorized access to programs,
PCs, networks, or facilities, a malfunction of or design defect in its products (or even a perceived defect) could result in legal
or warranty claims against us for damages resulting from security breaches. If such claims are adversely decided against us, the
potential liability could be substantial and have a material adverse effect on our business and operating results. Furthermore,
the possible publicity associated with any such claim, whether or not decided against us, could adversely affect our reputation.
In addition, a well-publicized security breach involving smart card-based or other security systems could adversely affect the
market’s perception of products like ours in general, or our products in particular, regardless of whether the breach is
attributable to our products. Any of the foregoing events could cause demand for our products to decline, which would cause its
business and operating results to suffer.
USE OF PROCEEDS
We estimate that the net proceeds from the
sale of the Shares and Warrant offered by this prospectus supplement, after expenses payable by us, will be approximately $1.9
million.
We intend to use approximately $1.9 million
of the net proceeds from this offering for working capital and other general corporate purposes. Pending use of the net proceeds,
we intend to invest the net proceeds in interest-bearing, investment-grade securities.
DILUTION
The net tangible book value of our Common
Stock as of December 31, 2018, was approximately $(19,736,929) or $0.78 per share of Common Stock based upon 25,228,072 shares
of Common Stock outstanding on such date. As adjusted net tangible book value per share represents the amount of our total tangible
assets reduced by the amount of our total liabilities, divided by the total number of shares of Common Stock outstanding after
giving effect to the sale of the shares in this offering (excluding the shares underlying the Warrants).
Shares we are offering based upon a public
offering price of $0.81 per share, and after estimated offering expenses payable by us.
If you invest in our Shares in this offering,
your interest will be diluted to the extent of the difference between the offering price per share and the as adjusted net tangible
book value per share of our Common Stock immediately after completion of this offering.
The following table illustrates this dilution
on a per share basis to new investors:
Public offering price per share
|
|
$
|
0.81
|
|
Net tangible book value per share as of December 31, 2018, before giving effect to this offering
|
|
$
|
(0.78
|
)
|
Increase in net tangible book value per share attributed to existing investors
|
|
$
|
(0.14
|
)
|
As adjusted net tangible book value per share after giving effect to this offering
|
|
$
|
(0.64
|
)
|
Dilution to net tangible book value per share to new investors in this offering
|
|
$
|
(1.45
|
)
|
The table below summarizes as of December
31, 2018, on an as adjusted basis as described above, the number of shares of our Common Stock, the total consideration and the
average price per share (i) paid to us by our existing stockholders and (ii) to be paid by new investors purchasing our Shares
in this offering at a public offering price of $0.81 per share, before estimated offering expenses payable by us.
|
|
Shares
Purchased
|
|
|
Total Consideration
|
|
|
Average Price
|
|
|
|
Number
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Per Share
|
|
Existing stockholders
|
|
|
25,228,072
|
|
|
|
91.1
|
%
|
|
$
|
64,751,394
|
|
|
|
97.0
|
%
|
|
$
|
2.57
|
|
New investors
|
|
|
2,436,136
|
|
|
|
8.9
|
%
|
|
$
|
2,000,000
|
|
|
|
3.0
|
%
|
|
$
|
0.81
|
|
Total
|
|
|
27,697,208
|
|
|
|
100.0
|
%
|
|
$
|
66,751,394
|
|
|
|
100.0
|
%
|
|
$
|
2.41
|
|
The total number of shares of our Common
Stock reflected in the discussion and tables above is based on 25,228,072 shares of our Common Stock outstanding as of December
31, 2018.
As of the date of this prospectus supplement
there are 2,000 shares of our Series C Preferred Stock outstanding. The shares of Series C Preferred Stock are not convertible
into shares of Common Stock.
The total number of shares reflected excludes (i)
shares underlying unexercised warrants or conversion rights on convertible debt outstanding as of December 31, 2018, and (ii) shares
underlying the Warrants.
DESCRIPTION OF SECURITIES
Introduction
In the discussion that follows, we have
summarized selected provisions of our certificate of incorporation, as amended, by-laws and the Delaware General Corporation Law
(the “DGCL”) relating to our capital stock. This summary is not complete. This discussion is subject to the relevant
provisions of Delaware law and is qualified in its entirety by reference to our certificate of incorporation, as amended, and our
by-laws. You should read the provisions of our certificate of incorporation, as amended, and our by-laws as currently in effect
for provisions that may be important to you.
Authorized Capital Stock
The Company is authorized to issue 110,000,000
shares of its capital stock consisting of (a) 100,000,000 shares of Common Stock, par value $0.0001 per share and (b) 10,000,000
shares of “blank check” preferred stock. As of the date of this prospectus supplement, 26,441,188 shares of our Common
Stock were issued and outstanding.
Dividend Policy
We have never declared or paid any cash
dividends on our Common Stock, and we do not currently anticipate declaring or paying cash dividends on our Common Stock in the
foreseeable future. We currently intend to retain all of our future earnings to support our operations and to finance the growth
and development of our business. Any future determination relating to our dividend policy will be made at the discretion of our
board of directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions,
future prospects, contractual restrictions and covenants and other factors that our board of directors may deem relevant.
Description of Securities
In this offering, we are offering shares
of our Common Stock
having an aggregate gross sales price
of up to $2,000,000.
The material
terms and provisions of our Common Stock and other securities are described under the caption “Description of Capital Stock”
starting on page 8 of the accompanying prospectus.
Warrants
The following summary of certain terms
and provisions of the Warrants that are being offered hereby is not complete and is subject to, and qualified in its entirety by
the provisions of, the Warrant, the form of which has been filed as an exhibit to the Current Report on Form 8-K incorporated by
reference herein, filed with the Securities and Exchange Commission on April 3, 2019. Prospective investors should carefully review
the terms and provisions of the form of Warrant for a complete description of the terms and conditions of the Warrants.
Duration and Exercise Price
. The
Warrants offered hereby will entitle the holders thereof to purchase up to an aggregate of 2,469,136 shares of our Common Stock
at an exercise price of $1.05 per share, exercisable immediately upon issuance and expiring on the fifth (5
th
) anniversary
of the initial date of issuance. The Warrant will be issued separately from the Shares, and may be transferred separately immediately
thereafter.
Certain Adjustments
. The
exercise price of the Warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations
or similar events affecting our Common Stock.
Cashless Exercise
. If,
at the time a holder exercises its Warrants, there is no effective registration statement registering, or the prospectus contained
therein is not available for an issuance of, the shares underlying the Warrants to the holder, then in lieu of making the cash
payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect
instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according
to a formula set forth in the Warrants.
Fundamental Transactions
. If,
at any time while the Warrants are outstanding, the Company, directly or indirectly, in one or more related transactions, enters
into a Fundamental Transaction (as defined in the Warrants), then each holder shall have the right thereafter to receive, upon
exercise of a Warrant, the same amount and kind of securities, cash or property as such holder would have been entitled to receive
upon the occurrence of such Fundamental Transaction if the holder had been, immediately prior to such Fundamental Transaction,
the holder of the number of shares of Common Stock then issuable upon exercise of the Warrants. Any successor to us, surviving
entity or the corporation purchasing or otherwise acquiring such assets shall assume the obligation to deliver to the holder such
alternate consideration, and the other obligations, under the Warrants.
Transferability
. The
Warrants may be transferred at the option of the holder of the Warrant upon surrender of the Warrants with the appropriate instruments
of transfer.
Exchange Listing
. We
do not plan on making an application to list the Warrants on any national securities exchange or other nationally recognized trading
system.
Exercisability
. The Warrants
will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied
by payment in full for the number of shares of our Common Stock purchased upon such exercise (except in the case of a cashless
exercise as discussed above). A holder (together with its affiliates) may not exercise any portion of the warrant to the extent
that the holder would beneficially own more than 4.99% of our outstanding Common Stock after exercise. The holder may increase
or decrease this beneficial ownership limitation to any other percentage of our Common Stock outstanding immediately after the
exercise not in excess of 9.99%, upon, in the case of an increase, not less than 61 days’ prior written notice to us.
Waivers and Amendments
. Subject
to certain exceptions, the terms of a Warrant may be amended or waived only with the written consent of the holder.
Purchase Agreement
. Pursuant to
the Purchase Agreement between the Company and the investors in this offering, if the Company or any of its subsidiaries issues
shares of Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement) in a subsequent financing within eighteen
(18) months from the closing date specified in the Purchase Agreement, each such investor shall have the right to participate in
up to an amount of such subsequent financing equal to fifty (50%) percent of such subsequent financing on the same terms, conditions
and price provided for such subsequent financing.
PLAN OF DISTRIBUTION
The terms of this offering were subject to
market conditions and negotiations between us and prospective investors. We have entered into a Purchase Agreement directly with
an accredited investor who has agreed to purchase the Shares and the Warrants. We will only sell to investors who have entered
into the Purchase Agreement.
Delivery of the Shares and Warrants offered
hereby is expected to take place on or about April 4, 2019, subject to satisfaction of certain conditions.
LEGAL MATTERS
The validity of the issuance of the securities
offered hereby will be passed upon for us by Robinson Brog Leinwand Greene Genovese & Gluck P.C., New York, New York.
EXPERTS
The consolidated financial statements of
Nxt-ID, Inc. and its subsidiaries incorporated by reference from the Company’s Annual Report on Form 10-K as of and for
the years ended December 31, 2017 and 2018 have been incorporated by reference herein in reliance upon the report of Marcum LLP,
an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Fit Pay, Inc.
as of and for the fiscal year ended December 31, 2016 incorporated by reference herein from the Company’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on November 6, 2017 have been audited by Benjamin & Young, LLP,
independent registered public accountants, to the extent and for the period set forth in their report, and are incorporated by
reference herein in reliance on such report given upon the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus supplement constitutes
a part of a registration statement on Form S-3 filed under the Securities Act. As permitted by the SEC’s rules, this prospectus
supplement and the accompanying base prospectus, which form a part of the registration statement, do not contain all the information
that is included in the registration statement. You will find additional information about us in the registration statement. Any
statements made in this prospectus supplement concerning legal documents are not necessarily complete and you should read the documents
that are filed as exhibits to the registration statement or otherwise filed with the SEC for a more complete understanding of the
document or matter.
We file annual, quarterly
and current reports, proxy statements and other information with the SEC. You may read, without charge, and copy the documents
we file at the SEC’s public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You can request copies
of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Our SEC filings are also available to the public at no cost from the SEC’s website
at
www.sec.gov
. Our corporate website is
www.nxt-id.com
. The information on our corporate website is not incorporated
by reference in this prospectus or any prospectus supplement and you should not consider it a part of this prospectus or any accompanying
prospectus supplement.
INFORMATION INCORPORATED BY REFERENCE
The SEC permits us to “incorporate
by reference” into this prospectus the information contained in documents we file with the SEC, which means that we can disclose
important information to you by referring you to those documents. Information that is incorporated by reference is considered to
be part of this prospectus and you should read it with the same care that you read this prospectus. Information that we file later
with the SEC will automatically update and supersede the information that is either contained, or incorporated by reference, in
this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed. We have filed
with the SEC and incorporate by reference in this prospectus, except as superseded, supplemented or modified by this prospectus,
the documents listed below:
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Our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on April 1, 2019;
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Our Quarterly Reports on Form 10-Q for the three months ended March 31, 2018, filed with the SEC on May 15, 2018, for the six and three months ended June 30, 2018, filed with the SEC on August 14, 2018, and for the nine and three months ended September 30, 2018, filed with the SEC on November 14, 2018;
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Our Current Reports on Form 8-K, filed with the SEC on March 9, 2018, May 18, 2018, May 30, 2018, July 27, 2018,
August 6, 2018, August 17, 2018, September 20, 2018, September 21, 2018, October 2, 2018, November 19, 2018, December
7, 2018, January 9, 2019, January 15, 2019, April 3, 2019, and April 4, 2019;
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Our Definitive Proxy Statement on Schedule 14A for our annual meeting of stockholders held on July 31, 2018, filed with the SEC on July 5, 2018; and
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Our Registration Statement on Form 8-A, filed with the SEC on September 9, 2014, including any amendments or reports filed for the purpose of updating the description of our Common Stock therein.
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We also incorporate by reference into this
prospectus additional documents we may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date hereof but before the completion or termination of this offering (excluding any information not deemed “filed”
with the SEC). Any statement contained in a previously filed document is deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or in a subsequently filed document incorporated by reference
herein modifies or supersedes the statement, and any statement contained in this prospectus is deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained in a subsequently filed document incorporated by reference
herein modifies or supersedes the statement.
We will provide, without charge, to each
person to whom a copy of this prospectus is delivered, including any beneficial owner, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference herein, including exhibits. Requests should be directed
to:
Nxt-ID, Inc.
1627 U.S. Highway 1
Unit 206
Sebastian, FL 32958
(203) 266-2103
Copies of these filings are also available
on our website at
www.nxt-id.com.
For other ways to obtain a copy of these filings, please refer to “Where
You Can Find More Information” above. The information on our corporate website is not incorporated by reference in this prospectus
or any prospectus supplement and you should not consider it a part of this prospectus or any accompanying prospectus supplement.
PROSPECTUS
$25,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
Nxt-ID, Inc.
We may offer and sell, from time to time
in one or more offerings in traditional certificated form or in uncertificated form, any combination of common stock, preferred
stock, debt securities, warrants, rights, or units having an aggregate offering price not exceeding $25,000,000. The preferred
stock, debt securities, warrants, right, and units may be exercisable or exchangeable for common stock or preferred stock or other
securities of ours.
This prospectus provides a general description
of the securities we may offer. We will provide specific terms of the offerings of our securities in one or more supplements to
this prospectus. The prospectus supplement may also add, update or change information in this prospectus. You should
read this prospectus and any prospectus supplement, as well as the documents incorporated by reference or deemed to be incorporated
by reference into this prospectus, carefully before you invest in any of our securities.
This prospectus may not be used to offer
or sell our securities unless accompanied by a prospectus supplement relating to the offered securities.
These securities may be sold directly by
us, through dealers or agents designated from time to time, to or through underwriters, dealers or through a combination of these
methods on a continuous or delayed basis. For additional information on the methods of sale, see the section entitled “Plan
of Distribution” in this prospectus. We will also describe the plan of distribution for any particular offering of our
securities in a prospectus supplement. If any agents, underwriters or dealers are involved in the sale of any securities in respect
of which this prospectus is being delivered, we will disclose their names and the nature of our arrangements with them in a prospectus
supplement. The price to the public of such securities and the net proceeds we expect to receive from any such sale will also be
included in a prospectus supplement.
Our common stock and warrants are currently
traded on the NASDAQ Capital Market under the symbols “NXTD” and “NXTDW”, respectively. On December 14,
2018, the last reported sale price of our common stock and warrants as reported on the NASDAQ Capital Market was $0.79 per share
and $0.065, respectively.
The aggregate market value of our outstanding
common stock held by non-affiliates is $17,113,283 based on 25,066,306 shares of outstanding common stock, of which 21,662,384
are held by non-affiliates, and a per share price of $0.79 based on the closing sale price of our common stock on December 14,
2018. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell our common stock in a public primary offering
with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below
$75,000,000. During the previous 12 calendar months prior to and including the date of this prospectus supplement, we have offered
$7,000,000 of our securities pursuant to General Instruction I.B.6 of Form S-3.
We are an “emerging growth company”
as the term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected
to comply with certain reduced public company reporting requirements for this and future filings.
Investing in our securities involves
risks. You should carefully review the risks described under the heading “Risk Factors” beginning on page 5 and in
the documents which are incorporated by reference herein and contained in the applicable prospectus supplement before you invest
in our securities.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is December
17, 2018.
TABLE OF CONTENTS
You should rely only on the information
contained in this prospectus and the accompanying prospectus supplement or incorporated by reference in these documents. No dealer,
salesperson or other person is authorized to give any information or to represent anything not contained or incorporated by reference
in this prospectus or the accompanying prospectus supplement. If anyone provides you with different, inconsistent or unauthorized
information or representations, you must not rely on them. This prospectus and the accompanying prospectus supplement are an offer
to sell only the securities offered by these documents, but only under circumstances and in jurisdictions where it is lawful to
do so. The information contained in this prospectus or any prospectus supplement is current only as of the date on the front of
those documents.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration
statement that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration
process. Under this shelf registration process, we may sell any combination of the securities described in this prospectus in one
or more offerings from time to time having an aggregate offering price of up to $25,000,000. This prospectus provides you with
a general description of the securities we may offer. Each time we offer securities, we will provide you with a prospectus supplement
that describes the specific amounts, prices and terms of the securities we offer. The prospectus supplement also may add, update
or change information contained in this prospectus. You should read carefully both this prospectus, including the section entitled
“Risk Factors,” and any prospectus supplement, together with the additional information described below under the headings
“Where You Can Find More Information” and “Incorporation of Documents by Reference.”
In addition, this prospectus does not contain
all the information provided in the registration statement we filed with the SEC. For further information, we refer you to the
registration statement, including its exhibits. The registration statement can be read on the SEC website or at the SEC offices
mentioned below under the heading “Where You Can Find More Information.” Statements contained in this prospectus and
any prospectus supplement about the provisions or contents of any agreement or other document are not necessarily complete. If
the SEC’s rules and regulations require that an agreement or document be filed as an exhibit to the registration statement,
please see that agreement or document for a complete description of such matters.
You should rely only on the information
contained or incorporated by reference in this prospectus and any prospectus supplement. We have not authorized any other person
to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus
supplement, as well as information we have previously filed with the SEC and incorporated by reference, is accurate as of the date
on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since
those dates. This prospectus may not be used to consummate a sale of our securities unless it is accompanied by a prospectus supplement.
In this prospectus, we refer to Nxt-ID,
Inc. as “we,” “us,” “our,” and the “Company” unless we specifically state otherwise
or the context indicates otherwise.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus, the applicable prospectus
supplement and the information incorporated by reference in this prospectus contain various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
and Exchange Act of 1934, as amended (the “Exchange Act”), which represent our expectations or beliefs concerning future
events. Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events
or conditions, and/or which include words such as “believes,” “plans,” “intends,” “anticipates,”
“estimates,” “expects,” “may,” “will” or similar expressions. In addition, any
statements concerning future financial performance, ongoing strategies or prospects, and possible future actions, which may be
provided by our management, are also forward-looking statements. Forward-looking statements are based on current expectations and
projections about future events and are subject to risks, uncertainties, and assumptions about our company, economic and market
factors, and the industry in which we do business, among other things. These statements are not guarantees of future performance,
and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future
events, or otherwise, except as required by law. Actual events and results may differ materially from those expressed or forecasted
in forward-looking statements due to a number of factors. Factors that could cause our actual performance, future results and actions
to differ materially from any forward-looking statements include, but are not limited to, those discussed under the heading “Risk
Factors” in any of our filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The
forward-looking statements in this prospectus, the applicable prospectus supplement and the information incorporated by reference
in this prospectus represent our views as of the date such statements are made. These forward-looking statements should not be
relied upon as representing our views as of any date subsequent to the date such statements are made.
PROSPECTUS SUMMARY
This summary highlights selected information
contained elsewhere in this prospectus or in documents incorporated herein by reference. This summary does not contain all the
information that you should consider before investing in our securities. You should carefully read the entire prospectus, including
“Risk Factors,” our consolidated financial statements and the information incorporated by reference herein, before
making an investment decision
Our Company
Nxt-ID, Inc. was incorporated in the State
of Delaware on February 8, 2012. The Company is a security technology company and operates its business in one segment –
hardware and software security systems and applications. The Company is engaged in the development of proprietary products and
solutions that serve multiple end markets, including the security, healthcare, financial technology and the Internet of Things
(“IoT”) markets. The Company evaluates the performance of its business on, among other things, profit and loss from
operations. With extensive experience in access control, biometric and behavior-metric identity verification, security and privacy,
encryption and data protection, payments, miniaturization, and sensor technologies, the Company develops and markets solutions
for payment, IoT and healthcare applications.
On June 25, 2012, the Company acquired
100% of the membership interests in 3D-ID LLC (“3D-ID”), a limited liability company formed in Florida in February
2011 and owned by the Company’s founders. By acquiring 3D-ID, the Company gained the rights to a portfolio of patented technology
in the field of three-dimensional facial recognition and imaging including 3D facial recognition products for access control, law
enforcement and travel and immigration. 3D-ID was an early stage company engaged in the design, research and development, integration,
analysis, modeling, system networking, sales and support of intelligent surveillance, three-dimensional facial recognition and
three-dimensional imaging devices and systems primarily for identification and access control in the security industries. Since
the Company’s acquisition of 3D-ID was a transaction between entities under common control in accordance with Accounting
Standards Codification (“ASC”) 805, “Business Combinations”, Nxt-ID recognized the net assets of 3D-ID
at their carrying amounts in the accounts of Nxt-ID on the date that 3D-ID was organized, February 14, 2011.
On July 25, 2016, the Company completed
the acquisition of LogicMark, LLC (“LogicMark”) pursuant to an Interest Purchase Agreement by and among the Company,
LogicMark and the holders of all of the membership interests of LogicMark (the “LogicMark Sellers”), dated May 17,
2016 (the “Interest Purchase Agreement”). Pursuant to the Interest Purchase Agreement, we acquired all of the membership
interests of LogicMark from the LogicMark Sellers for (i) $17.5 million in cash consideration, (ii) $2.5 million in a secured promissory
note (the “LogicMark Note”) issued to LogicMark Investment Partners, LLC, as representative of the LogicMark Sellers
(the “LogicMark Representative”), (iii) 78,740 shares of our common stock, which were issued upon signing of the Interest
Purchase Agreement (the “LogicMark Shares”), and (iv) warrants (the “LogicMark Warrants”) to purchase an
aggregate of 157,480 shares of common stock (the “LogicMark Warrant Shares”) for no additional consideration. Such
warrants were exercised on July 27, 2016. In addition, the Company was required to pay the LogicMark Sellers earn-out payments
of (i) up to $1,500,000 for calendar year 2016 and (ii) up to $5,000,000 for calendar year 2017 if LogicMark met certain gross
profit targets set forth in the Interest Purchase Agreement.
On
May 23, 2017, the Company completed a merger (the “Merger”) pursuant to an executed Agreement and Plan of Merger (the
“Merger Agreement”) by and among the Company, Fit Merger Sub, Inc., a wholly-owned subsidiary of the Company (the “Merger
Sub”), Fit Pay, Inc. (“Fit Pay”), Michael Orlando (“Orlando”), Giesecke & Devrient Mobile Security
America, Inc. (“G&D”), the other stockholders of Fit Pay (the “Other Holders”) and Michael Orlando
in his capacity as stockholder representative representing the Other Holders (the “Stockholder Representative,” and
together with Orlando and G&D, the “Fit Pay Sellers”). In connection with the Merger, Fit Pay merged with and into
the Merger Sub, with the Merger Sub continuing as the surviving entity and a wholly owned subsidiary of the Company.
Pursuant to the terms of the Merger Agreement,
the aggregate purchase price paid for Fit Pay was: (i) 19.96% of the outstanding shares of common stock; (ii) 2,000 shares of Series
C Non-Convertible Preferred Stock of the Company; (iii) the payment of certain debts by the Company; and (iv) the payment of certain
unpaid expenses by the Company. In addition, the Company will be required to pay the Fit Pay Sellers an earnout payment equal to
12.5% of the gross revenue derived from Fit Pay’s technology for sixteen (16) fiscal quarters commencing on October 1, 2017
and ending on December 31, 2021.
In connection with the Fit Pay transaction,
Orlando became our Chief Operating Officer and President of our new Fit Pay subsidiary effective as of May 23, 2017.
The
Company’s wholly-owned subsidiary, LogicMark, manufactures and distributes non-monitored and monitored personal emergency
response systems (“PERS”) sold through the United States Department of Veterans Affairs, healthcare durable medical
equipment dealers and distributors and monitored security dealers and distributors. The Company’s wholly-owned subsidiary,
Fit Pay, has a proprietary technology platform that delivers payment, credential management, authentication and other secure services
to the IoT ecosystem. The platform uses tokenization, a payment security technology that replaces cardholders’ account information
with a unique digital identifier, to transact highly secure contactless payment and authentication services.
On September 21, 2018, the Company announced
that its board of directors approved a plan to separate the Company’s financial technology business from its healthcare business
into an independent publicly traded company. The Company will distribute shares of the newly created company to the Company’s
stockholders through the execution of a spin-off. As a result, the Company reclassified its financial technology business to discontinued
operations for all periods reported in its Annual Report on Form 10-K for the year ended December 31, 2018. The Company’s
financial technology business is comprised of its Fit Pay subsidiary and the intellectual property developed by the Company, including
the Flye Smartcard and the Wocket.
Healthcare
With respect to the healthcare market,
our business initiatives are driven by LogicMark, which serves a market that enables two-way communication, medical device connectivity
and patient data tracking of key vitals through sensors, biometrics, and security to make home health care a reality. There are
three major trends driving this market: (1) an increased desire for connectivity; specifically, a greater desire for connected
devices by people over 60 years of age who now represent the fastest growing demographic for social media; (2) the growth of “TeleHealth”,
which is the means by which telecommunications technologies are meeting the increased need for health systems to better distribute
doctor care across a wider range of health facilities, making it easier to treat and diagnose patients; and (3) rising healthcare
costs – as health spending continues to outpace the economy, representing between 6% and 7% of the overall economy, the need
to reduce hospital readmissions, increase staffing efficiency and improve patient engagement remain the highest priorities. Together,
these trends have produced a large and growing market for us to serve. LogicMark has built a successful business on emergency communications
in healthcare. We have a strong business relationship with the VA today, serving veterans who suffer from chronic conditions that
often require emergency assistance. This business is steady and growing, producing the highest annual revenue in its operational
history in 2017. Our strategic plan calls for expanding LogicMark’s business into other healthcare verticals as well as retail
and enterprise channels in order to better serve the expanding demand for connected and remote healthcare solutions.
Home healthcare, which includes health
monitoring and management using IoT and cloud-based processing, is an emerging area for LogicMark. The long-term trend toward more
home-based healthcare is a massive shift that is being driven by demographics (an aging population) and basic economics. People
also value autonomy and privacy which are important factors in determining which solutions will suit the market. Consumers are
beginning to enjoy the benefits of smart home technologies and online digital assistants. One of the promising applications of
our VoiceMatch™ technology is enabling secure commands for restricted medical access. This solution, when coupled with Nxt-ID
BioCloud™, combines biometrics with encryption and distributed access control.
PERS devices are used to call for help
and medical care during an emergency. These devices are also used by a wide patient pool, as well as the general population, to
ensure safety and security when living or traveling alone. The global medical alert systems market caters to different end-users
across the healthcare industry, including individual users, hospitals and clinics, assisted living facilities and senior living
facilities. The growing demand for home healthcare devices is mainly driven by an aging population and rising healthcare costs
worldwide. We believe that this will spur the usage of medical alert systems across the globe, as they offer safety and medical
security while being affordable and accessible.
Payments and Financial Technology
With
respect to the payments and financial technology market, our business initiatives are driven by Fit Pay, which was acquired by
Nxt-ID in May 2017. Fit Pay’s core technology is a proprietary platform that enables contactless payment capabilities, allowing
manufacturers of “smart devices” to add payment capabilities to their products with very little start-up time and minimal
investment in software development, while granting them access to the leading card network and global credit card issuing banks.
It is one of the first successful commercializations of a token requestor service provider integrated with the major payment card
networks – Discover, Mastercard and Visa. The existing propriety capabilities of the contactless payment companies are not
available to other original equipment manufacturers (“OEMs”). The Fit Pay Token Requestor Manager (TRM) Platform creates
an opportunity for a whole new range of devices to be payment-enabled.
Fit
Pay has expanded its relationship with
Garmin International, Inc. (“Garmin”)
for
which it provides technology, platform and tokenization services to power
Garmin Pay™, a contactless payment feature
included on smartwatches manufactured by Garmin. The payment feature, which went live in the fall of 2017, is now included in ten
(10) of Garmin’s smartwatches.
In
addition to expanding the number of devices on which Garmin Pay™ is available from 1 to 10, Fit Pay has made significant
progress in expanding the geographic and issuer footprint for Garmin Pay™. As of December 31, 2018, Garmin Pay™
is supported by an issuer network of 229 issuing banks in 27 countries with additions being made regularly. This represents a significant
increase from fiscal year-end 2017, at which time the network included 60 issuing banks in 8 countries. As a part of this growth,
Fit Pay announced agreements with Chase, Westpac and Discover. This expansion of the Garmin Pay™ network increases the
overall
revenue opportunity for this flagship customer.
Our payment and financial technology business
has also expanded to include new products and services. This includes growing the capabilities of the TRM Platform to integrate
it with additional payment networks and issuing banks. Fit Pay has also developed proprietary payment devices that it will offer
through business-to-business and direct-to-consumer channels. These new products will leverage the TRM Platform and allow us to
access new customers and emerging markets, such as cryptocurrency.
Fit Pay’s initial product offering
is a platform extension and contactless payment device called Flip™, which enables Bitcoin holders to make contactless payment
transactions at millions of retail locations with value exchanged from their cryptocurrency. The development of the product and
platform to support Flip™ has been completed and Fit Pay is currently seeking the final network and bank approvals to begin
the initial shipments of the product. While commercialization of the product has taken longer than anticipated, the Company believes
the product continues to represent an opportunity to bring to market a unique offering in an emerging market segment.
In
addition to these expansions of Fit Pay’s offerings, the Company was also announced
as
a technology partner for Visa’s
Token Service for credential-on-file (“COF”) token requestors. Through
this program, Fit Pay will be able to tokenize credential-on-file digital payments on behalf of merchant and payment ecosystem
clients, greatly expanding the addressable market for the Company’s platform services. Leveraging the EMVCo Payment Tokenization
Standard, the tokenization COF record offers another layer of security for consumers and merchants. It replaces sensitive cardholder
information, such as personal account numbers and expiration dates, with a unique digital identifier (a “token”) that
can be used for payment without exposing a cardholder’s more sensitive account information.
In addition to enhancing security, expired
or compromised payment credentials can be seamlessly updated in the background by the financial institution, eliminating a significant
point of friction for consumers and merchants. These additional services will be buoyed by the overall of growth in digital payments,
which is estimated by eMarketer to grow to $5.4 trillion in total transaction value by 2022.
Together,
these opportunities position our emerging payment and financial technology business for future growth as Fit Pay begins to monetize
its core TRM technology platform and expand its products and services to new markets and customers.
Our payments business operates within a
rapidly expanding market. According to the research firm, Juniper Research (“Juniper”), in-store contactless payments
will reach $2 trillion by 2020, representing 1 in 3 total point of sale transactions. Contactless payments will exceed the $1 trillion
mark for the first time in 2018, a year earlier than previously anticipated by Juniper. This growth is driven by an acceleration
in consumer usage of contactless payment services as well as merchant acceptance.
In addition, according to the latest research
report from Counterpoint’s
Global Smartwatch Tracker
, global smartwatch shipments grew 37% year-over-year in
the second quarter of 2018. Garmin shipments grew 35% year-over-year and it holds 3% market share. Importantly, the report
noted that 50% of the market operates on a proprietary platform (
i.e.,
not Apple or Android) for which Fit Pay’s white
label, operating system agnostic solution is well-suited.
As an early and established entrant into
the payments market, we believe that we are well-positioned to take advantage of both the growth of payment-enabled devices and
the consumer demand for new forms of payments.
Securities We May Offer
The descriptions of the securities contained
in this prospectus, together with the applicable prospectus supplements, summarize all the material terms and provisions of the
various types of securities that we may offer. We will describe in the applicable prospectus supplement relating to any securities
the particular terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement,
the terms of the securities may differ from the terms we have summarized below. We will also include information in the prospectus
supplement, where applicable, about material United States federal income tax considerations relating to the securities, and the
securities exchange, if any, on which the securities will be listed.
We may sell from time to time, in one or
more offerings:
The aggregate offering price of the securities
offered pursuant to this prospectus may not exceed $25,000,000. This prospectus may not be used to consummate a sale of securities
unless it is accompanied by a prospectus supplement.
Corporate Information
The Company is a Delaware corporation formed
on February 8, 2012. We were initially known as Trylon Governmental Systems, Inc. We changed our name to Nxt-ID, Inc. on June 25,
2012.
We are an “emerging growth company”
as defined in the JOBS Act. We will remain an emerging growth company for up to the last day of the fiscal year following the fifth
anniversary of our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual
gross revenue exceeds $1.07 billion, (ii) the date that we become a ’‘large accelerated filer’’ as defined
in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates
exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which
we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Pursuant to Section 107 of
the JOBS Act, we have elected to utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for
complying with new or revised accounting standards. Our emerging growth company status will expire on December 31, 2018.
Where You Can Find Us
Our principal executive offices are located
at 1627 U.S. 1, Unit 206, Sebastian, FL 32958, and our telephone number is (203) 266-2103. Our website address is
www.nxt-id.com
.
The information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration
statement of which it forms a part. The information on our website is not part of this prospectus.
RISK FACTORS
Investing in our securities involves significant
risk. The prospectus supplement applicable to each offering of our securities will contain a discussion of the risks applicable
to an investment in the Company. Prior to making a decision about investing in our securities, you should carefully consider the
specific factors discussed under the heading “Risk Factors” in the applicable prospectus supplement, together with
all of the other information contained or incorporated by reference in the prospectus supplement or appearing or incorporated by
reference in this prospectus. You should also consider the risks, uncertainties and assumptions discussed under the heading “Risk
Factors” included in our most recent Annual Report on Form 10-K, as revised or supplemented by our subsequent Quarterly Reports
on Form 10-Q or our Current Reports on Form 8-K that we have filed with the SEC, as set forth under “Incorporation of Documents
by Reference”, all of which are incorporated herein by reference, and which may be amended, supplemented or superseded from
time to time by other reports we file with the SEC in the future. The risks and uncertainties we have described are not the only
ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect
our operations. The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities.
USE OF PROCEEDS
Except as otherwise provided in the applicable
prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by this prospectus for general
corporate purposes, which may include, among other things, working capital, capital expenditures, product development, marketing
activities, acquisitions of new technologies and investments, repayment of debt and repurchases and redemptions of securities.
The intended application of proceeds from
the sale of any particular offering of securities using this prospectus will be described in the accompanying prospectus supplement
relating to such offering. The precise amount and timing of the application of these proceeds will depend on our funding requirements
and the availability and costs of other funds. Accordingly, we will retain broad discretion over the use of such proceeds. Pending
use of the net proceeds, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing instruments.
THE SECURITIES WE MAY OFFER
The descriptions of the securities contained
in this prospectus, together with the applicable prospectus supplements, summarize all the material terms and provisions of the
various types of securities that we may offer. We will describe in the applicable prospectus supplement relating to any securities
the particular terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement,
the terms of the securities may differ from the terms we have summarized below. We will also include in the prospectus supplement
information, where applicable, about material United States federal income tax considerations relating to the securities, and the
securities exchange, if any, on which the securities will be listed.
We may sell from time to time, in one or
more offerings:
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Shares of our common stock;
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Shares of our preferred stock;
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Warrants to purchase shares of our common stock, preferred stock, or debt securities;
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Rights to purchase shares of our common stock, preferred stock, or other securities; and/or
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Units consisting of any of the securities listed above.
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The terms of any securities we offer will
be determined at the time of sale. We may issue securities that are exchangeable or exercisable for common stock or any of the
other securities that may be sold under this prospectus. When particular securities are offered, a supplement to this prospectus
will be filed with the SEC, which will describe the terms of the offering and sale of such securities.
DESCRIPTION OF CAPITAL STOCK
General
The following description of our capital
stock, together with the additional information we include in any applicable prospectus supplement, summarizes the material terms
and provisions of the capital stock that we may offer under this prospectus, but is not complete. For the complete terms of our
capital stock, please refer to our certificate of incorporation, as amended from time to time, any certificate of designation for
our preferred stock, and our bylaws, as amended from time to time. The Delaware General Corporation Law (the “DGCL”)
may also affect the terms of our capital stock.
Authorized Capital Stock
The Company is authorized to issue 110,000,000
shares of its capital stock consisting of (a) 100,000,000 shares of common stock and (b) 10,000,000 shares of “blank check”
preferred stock, of which 3,125,000 shares of preferred stock were designated as the Series A Convertible Preferred Stock (“Series
A Preferred Stock”), 4,500,000 shares of preferred stock were designated as the Series B Convertible Preferred Stock (“Series
B Preferred Stock”), and 2,000 shares of preferred stock were designated as the Series C Non-Convertible Preferred Stock
(“Series C Preferred Stock”). As of December 14, 2018, 25,066,306 shares of our common stock were issued
and outstanding, 2,000 shares of our Series C Preferred Stock were issued and outstanding and no shares of our Series A Preferred
Stock or Series B Preferred Stock were issued and outstanding.
Common Stock
Each share of common stock entitles the
holder to one vote, either in person or by proxy, at meetings of stockholders. Our stockholders are not permitted to vote their
shares cumulatively. Accordingly, the holders of our common stock who hold, in the aggregate, more than 50% of the total voting
rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect
any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote
thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.
Holders of common stock are entitled to
receive ratably such dividends, if any, as may be declared by our board of directors out of funds legally available. We have not
paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development
of our business. Any future disposition of dividends will be at the discretion of our board of directors and will depend upon,
among other things, our future earnings, operating and financial condition, capital requirements, and other factors.
Holders of our common stock have no preemptive
rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution
or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution
to stockholders after the payment of all of our debts and other liabilities.
Preferred Stock
General
We are authorized to issue up to 10,000,000
shares of “blank check” preferred stock, par value $0.0001 per share, none of which is presently issued or outstanding.
Our board of directors is authorized to issue such shares of preferred stock with designations, rights and preferences as it may
determine from time to time. Accordingly, our board of directors is empowered, without stockholder approval, to issue shares of
preferred stock with dividend, liquidation, conversion, or other rights that could adversely affect the rights of the holders of
our common stock. Once designated by our board of directors, each series of preferred stock will have specific financial and other
terms that will be described in a prospectus supplement. We will also file with the SEC a certificate of designation designating
the rights and preferences of the preferred stock prior to any issuance of preferred stock, and you should read such certificate
of designation for provisions that may be important to you.
Series C Preferred Stock
The following is a summary of the material
terms of the Series C Preferred Stock. This summary is not complete. The following summary of the terms and provisions of the Series
C Preferred Stock is qualified in its entirety by reference to the Certificate of Designations setting forth the terms of the Series
C Preferred Stock (as amended, the “Certificate of Designations”) and our Certificate of Incorporation.
Ranking
The Series C Preferred Stock ranks senior
to our common stock and junior to our Series A Preferred Stock and our Series B Preferred Stock with respect to dividend rights
and/or rights upon distributions, liquidation, dissolution or winding up of the Company.
Dividends on Series C Preferred Stock
Holders of Series C Preferred Stock shall
be entitled to receive from and after the first date of issuance of the Series C Preferred Stock cumulative dividends at a rate
of 5% per annum on a compounded basis, which dividend amount shall be guaranteed. In the event that the Company’s market
capitalization is $50,000,000 for greater than thirty (30) consecutive days, then the dividend rate shall increase to fifteen percent
(15%) per annum. Accrued and unpaid dividends shall be payable in cash.
Redemption of Series C Preferred Stock
The Series C Preferred Stock may be redeemed
by the Company in cash at any time, in whole or in part, upon payment of the stated value of the Series C Preferred Stock, and
all related accrued but unpaid dividends.
Fundamental Change
If a “fundamental change” occurs
at any time while the Series C Preferred Stock is outstanding, the holders of shares of Series C Preferred Stock then outstanding
shall be immediately paid, out of the assets of the Company or the proceeds of such fundamental change, as applicable, and legally
available for distribution to its stockholders, an amount in cash equal to the stated value of the Series C Preferred Stock, and
all related accrued but unpaid dividends.
If the legally available assets of the
Company and the proceeds of such “fundamental change” are insufficient to pay the all of the holders of the Series
C Preferred Stock, then the holders of the Series C Preferred Stock shall share ratably in any such distribution in proportion
to the amount that they would have been entitled to. A fundamental change includes but is not limited to any change in the ownership
of at least 50% of the voting stock, liquidation or dissolution, or the common stock ceases to be listed on the market upon which
it currently trades.
Voting Rights
The holders of the Series C Preferred Stock
shall be entitled to vote on any matter submitted to the stockholders of the Company for a vote. One (1) share of Series C Preferred
Stock shall carry the same voting rights as one (1) share of common stock.
Dividends
Since inception we have not paid any dividends
on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although
we intend to retain our earnings, if any, to finance the exploration and growth of our business, our board of directors will have
the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital
requirements, and other factors, which our board of directors may deem relevant.
Warrants
As of December 14, 2018, the Company had
5,090,352 warrants outstanding with a weighted average exercise price and remaining life in years of $5.42 and 3.361 respectively.
At December 14, 2018, the warrants had no aggregate intrinsic value. The exercise price of the warrants is subject to adjustment
upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate
change and dilutive issuances.
Options and Other Stock Awards
On January 4, 2013, the Company’s
stockholders authorized the Company’s 2013 Long-Term Stock Incentive Plan (the “Plan”). The maximum aggregate
number of shares of common stock that may be issued under the Plan, including stock options, stock awards and stock appreciation
rights, is limited to 10% of the shares of common stock outstanding on the first trading day of any fiscal year, less shares or
awards previously issued under the Plan, or 1,771,929 for fiscal year 2018. Currently, we have not issued any stock options under
the Plan. As of December 14, 2018, we have issued 1,079,255 shares of common stock under the Plan.
On August 24, 2017, a majority of the Company’s
stockholders approved at the 2017 Annual Stockholders’ Meeting the 2017 Stock Incentive Plan (“2017 SIP”). The
aggregate maximum number of shares of common stock (including shares of common stock underlying options) that may be issued under
the 2017 SIP pursuant to awards of restricted shares of common stock or options are be limited to 10% of the outstanding shares
of common stock, which calculation shall be made on the first (1
st
) business day of each new fiscal year; provided that
for fiscal year 2017, only 1,500,000 shares of common stock could be delivered to participants under the 2017 SIP. Thereafter,
the 10% evergreen provision shall govern the 2017 SIP. The number of shares of common stock that are the subject of awards under
the 2017 SIP which are forfeited or terminated, are settled in cash in lieu of shares of common stock or are settled in a manner
such that all or some of such shares covered by an award are not issued to a participant or are exchanged for awards that do not
involve shares of common stock will again immediately become available to be issued pursuant to awards granted under the 2017 SIP.
If shares of common stock are withheld from payment of an award to satisfy tax obligations with respect to the award, those shares
of common stock will be treated as shares that have been issued under the 2017 SIP and will not again be available for issuance
under the 2017 SIP.
Registration Rights
None.
Anti-Takeover Effects of Provisions of the DGCL and our Certificate
of Incorporation and Bylaws
Provisions of the DGCL and our Certificate
of Incorporation and by-laws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise,
or to remove incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of
coercive takeover practices and takeover bids that our board of directors may consider inadequate and to encourage persons seeking
to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of
our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could
result in improved terms for our stockholders.
Section 203 of the DGCL.
We are
subject to Section 203 of the DGCL, which prohibits a Delaware corporation from engaging in any “business combination”
with any interested stockholder for a period of three (3) years after the date that such stockholder became an interested stockholder,
with the following exceptions:
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before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
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upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
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In general, Section 203 defines business
combination to include the following:
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any merger or consolidation involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
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In general, Section 203 defines an “interested
stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or
within three (3) years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding
voting stock of the corporation.
Amendments to Our Certificate of Incorporation.
Under
the DGCL, the affirmative vote of a majority of the outstanding shares entitled to vote thereon and a majority of the outstanding
stock of each class entitled to vote thereon is required to amend a corporation’s certificate of incorporation. Under the
DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled to vote as a class upon a proposed
amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would:
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increase or decrease the aggregate number of authorized shares of such class;
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increase or decrease the par value of the shares of such class; or
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alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely.
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If any proposed amendment would alter or
change the powers, preferences or special rights of one or more series of any class of our capital stock so as to affect them adversely,
but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a
separate class for the purposes of this provision.
Vacancies in the Board of Directors.
Our
by-laws provide that, subject to limitations, any vacancy occurring in our board of directors for any reason may be filled by a
majority of the remaining members of our board of directors then in office, even if such majority is less than a quorum. Each director
so elected shall hold office until the expiration of the term of the other directors. Each such directors shall hold office until
his or her successor is elected and qualified, or until the earlier of his or her death, resignation or removal.
Special Meetings of Stockholders.
Under
our by-laws, special meetings of stockholders may be called at any time by our President whenever so directed in writing by a majority
of the entire board of directors. Special meetings can also be called whenever one-third of the number of shares of our capital
stock entitled to vote at such meeting shall, in writing, request one. Under the DGCL, written notice of any special meeting must
be given not less than ten (10) nor more than sixty (60) days before the date of the special meeting to each stockholder entitled
to vote at such meeting.
No Cumulative Voting.
The DGCL
provides that stockholders are denied the right to cumulate votes in the election of directors unless our Certificate of Incorporation
provides otherwise. Our Certificate of Incorporation does not provide for cumulative voting.
Limitation on Directors’ Liability; Indemnification
Delaware law authorizes Delaware corporations
to limit or eliminate the personal liability of their directors to them and their stockholders for monetary damages for breach
of a director’s fiduciary duty of care. The duty of care requires that, when acting on behalf of the corporation, directors
must exercise an informed business judgment based on all material information reasonably available to them. Absent the limitations
Delaware law authorizes, directors of Delaware corporations are accountable to those corporations and their stockholders for monetary
damages for conduct constituting gross negligence in the exercise of their duty of care. Delaware law enables Delaware corporations
to limit available relief to equitable remedies such as injunction or rescission. Our Certificate of Incorporation limits the liability
of our directors to us and our stockholders to the fullest extent Delaware law permits. Specifically, no director will be personally
liable for monetary damages for any breach of the director’s fiduciary duty as a director, except for liability:
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For any breach of the director’s duty of loyalty to us or our stockholders;
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For acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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For unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and
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For any transaction from which the director derived an improper personal benefit.
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This provision could have the effect of
reducing the likelihood of derivative litigation against our directors and may discourage or deter our stockholders or management
from bringing a lawsuit against our directors for breach of their duty of care, even though such an action, if successful, might
otherwise have benefited us and our stockholders. Our by-laws provide indemnification to our officers and directors and other specified
persons with respect to their conduct in various capacities. See “Indemnification of Officers and Directors” in this
registration statement.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or person controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
Listing
Our common stock and warrants are listed
on the NASDAQ Capital Market under the symbols NXTD” and “NXTDW,” respectively.
Transfer Agent and Registrar
The transfer agent and registrar for our
common stock is VStock Transfer, LLC. The transfer agent’s address is 18 Lafayette Place, Woodmere, NY 11598 and its telephone
number is (212) 828-8436.
DESCRIPTION OF DEBT SECURITIES
We may offer debt securities which may
be senior, subordinated or junior subordinated and may be convertible. We may offer general debt obligations, which may be secured
or unsecured, senior or subordinated and convertible into shares of our common stock. In this prospectus, we refer to the senior
debt securities and the subordinated debt securities together as the “debt securities.” We may issue debt securities
under a note purchase agreement or under an indenture to be entered between us and a trustee. We will file the form of debt security
and form of note purchase agreement for debt securities or form of indenture for debt securities with the SEC
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The indentures do not limit the amount of securities that may be issued under it and provides that debt securities may be issued
in one or more series. The senior debt securities will have the same rank as all of our other indebtedness that is not subordinated.
The subordinated debt securities will be subordinated to our senior debt on terms set forth in the applicable prospectus supplement.
In addition, the subordinated debt securities will be effectively subordinated to creditors and preferred stockholders of our subsidiaries.
Our board of directors will determine the terms of each series of debt securities being offered. This prospectus contains only
general terms and provisions of the debt securities. The applicable prospectus supplement will describe the particular terms of
the debt securities offered thereby. You should read any prospectus supplement and any free writing prospectus that we may authorize
to be provided to you related to the series of debt securities being offered, as well as the complete note agreements and/or indentures
that contain the terms of the debt securities.
If we decide to issue debt securities pursuant
to an indenture to be entered into between us and a trustee, we will issue the debt securities offered by this prospectus and any
accompanying prospectus supplement under an indenture to be entered into between us and the trustee identified in the applicable
prospectus supplement. The terms of the debt securities will include those stated in the indenture and those made part of the indenture
by reference to the Trust Indenture Act of 1939, as in effect on the date of the indenture. The indenture will be subject to and
governed by the terms of the Trust Indenture Act of 1939. If we offer debt securities under this prospectus, we will file the form
of indenture with the SEC.
The following description briefly sets
forth certain general terms and provisions of the debt securities that we may offer. The particular terms of the debt securities
offered by any prospectus supplement and the extent, if any, to which these general provisions may apply to the debt securities,
will be described in the related prospectus supplement. Accordingly, for a description of the terms of a particular issue of debt
securities, reference must be made to both the related prospectus supplement and to the following description. Where any provision
in an accompanying prospectus supplement is inconsistent with any provision in this summary, the prospectus supplement will control.
Debt Securities
The aggregate principal amount of debt
securities that may be issued either pursuant to a note purchase agreement or under an indenture is unlimited. The debt securities
may be issued in one or more series as may be authorized from time to time pursuant to a supplemental indenture entered into between
us and the trustee or an order delivered by us to the trustee. For each series of debt securities we offer, a prospectus supplement
accompanying this prospectus will describe the following terms and conditions of the series of debt securities that we are offering,
to the extent applicable:
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Title and aggregate principal amount;
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Whether the debt securities will be senior, subordinated or junior subordinated;
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Applicable subordination provisions, if any;
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Provisions regarding whether the debt securities will be convertible or exchangeable into other securities or property of the Company or any other person;
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Percentage or percentages of principal amount at which the debt securities will be issued;
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Maturity date(s);
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Interest rate(s) or the method for determining the interest rate(s);
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Whether interest on the debt securities will be payable in cash or additional debt securities of the same series;
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Dates on which interest will accrue or the method for determining dates on which interest will accrue and dates on which interest will be payable;
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Whether the amount of payment of principal of, premium, if any, or interest on the debt securities may be determined with reference to an index, formula or other method;
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Redemption, repurchase or early repayment provisions, including our obligation or right to redeem, purchase or repay debt securities under a sinking fund, amortization or analogous provision;
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If other than the debt securities’ principal amount, the portion of the principal amount of the debt securities that will be payable upon declaration of acceleration of the maturity;
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Authorized denominations;
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Form;
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Amount of discount or premium, if any, with which the debt securities will be issued, including whether the debt securities will be issued as “original issue discount” securities;
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The place or places where the principal of, premium, if any, and interest on the debt securities will be payable;
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Where the debt securities may be presented for registration of transfer, exchange or conversion;
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The place or places where notices and demands to or upon the Company in respect of the debt securities may be made;
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Whether the debt securities will be issued in whole or in part in the form of one or more global securities;
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If the debt securities will be issued in whole or in part in the form of a book-entry security, the depository or its nominee with respect to the debt securities and the circumstances under which the book-entry security may be registered for transfer or exchange or authenticated and delivered in the name of a person other than the depository or its nominee;
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Whether a temporary security is to be issued with respect to such series and whether any interest payable prior to the issuance of definitive securities of the series will be credited to the account of the persons entitled thereto;
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The terms upon which beneficial interests in a temporary global security may be exchanged in whole or in part for beneficial interests in a definitive global security or for individual definitive securities;
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The guarantors, if any, of the debt securities, and the extent of the guarantees and any additions or changes to permit or facilitate guarantees of such debt securities;
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Any covenants applicable to the particular debt securities being issued;
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Any defaults and events of default applicable to the debt securities, including the remedies available in connection therewith;
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Currency, currencies or currency units in which the purchase price for, the principal of and any premium and any interest on, such debt securities will be payable;
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Time period within which, the manner in which and the terms and conditions upon which the Company or the purchaser of the debt securities can select the payment currency;
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Securities exchange(s) on which the debt securities will be listed, if any;
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Whether any underwriter(s) will act as market maker(s) for the debt securities;
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Extent to which a secondary market for the debt securities is expected to develop;
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Provisions relating to defeasance;
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Provisions relating to satisfaction and discharge of the indenture;
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Any restrictions or conditions on the transferability of the debt securities;
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Provisions relating to the modification of the indenture both with and without the consent of holders of debt securities issued under the indenture;
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Any addition or change in the provisions related to compensation and reimbursement of the trustee;
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Provisions, if any, granting special rights to holders upon the occurrence of specified events;
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Whether the debt securities will be secured or unsecured, and, if secured, the terms upon which the debt securities will be secured and any other additions or changes relating to such security; and
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Any other terms of the debt securities that are not inconsistent with the provisions of the Trust Indenture Act (but may modify, amend, supplement or delete any of the terms of the indenture with respect to such series of debt securities).
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General
One or more series of debt securities may
be sold as “original issue discount” securities. These debt securities would be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. One
or more series of debt securities may be variable rate debt securities that may be exchanged for fixed rate debt securities.
United States federal income tax consequences
and special considerations, if any, applicable to any such series will be described in the applicable prospectus supplement.
Debt securities may be issued where the
amount of principal and/or interest payable is determined by reference to one or more currency exchange rates, commodity prices,
equity indices or other factors. Holders of such debt securities may receive a principal amount or a payment of interest that is
greater than or less than the amount of principal or interest otherwise payable on such dates, depending upon the value of the
applicable currencies, commodities, equity indices or other factors. Information as to the methods for determining the amount of
principal or interest, if any, payable on any date, the currencies, commodities, equity indices or other factors to which the amount
payable on such date is linked and certain additional United States federal income tax considerations will be set forth in the
applicable prospectus supplement.
The term “debt securities”
includes debt securities denominated in U.S. dollars or, if specified in the applicable prospectus supplement, in any other freely
transferable currency or units based on or relating to foreign currencies.
Subject to the limitations provided in
any indenture and in a prospectus supplement, debt securities that are issued in registered form may be transferred or exchanged
at the principal corporate trust office of the trustee, without the payment of any service charge, other than any tax or other
governmental charge payable in connection therewith.
Governing Law
All debt securities, including debt securities
issued pursuant to an indenture, shall be construed in accordance with and governed by the laws of the state of New York. To the
extent we issue securities pursuant to an indenture, such indenture will be governed by the laws of the state of New York.
DESCRIPTION OF WARRANTS
The following description, together with
the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. While the
terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any series
of warrants in more detail in the applicable prospectus supplement. If we indicate in the prospectus supplement, the terms of any
warrants offered under that prospectus supplement may differ from the terms described below. If there are differences between that
prospectus supplement and this prospectus, the prospectus supplement will control. Thus, the statements we make in this section
may not apply to a particular series of warrants. Specific warrant agreements will contain additional important terms and
provisions and will be incorporated by reference as an exhibit to the registration statement which includes this prospectus.
General
We may issue warrants for the purchase
of common stock, preferred stock, and/or debt securities in one or more series. We may issue warrants independently or together
with common stock, preferred stock, and/or debt securities, and the warrants may be attached to or separate from these securities.
We will issue warrants under one or more
warrant agreements between us and a warrant agent that we will name in the prospectus supplement. We will file the form of warrant
agreement and form of warrant certificate with the SEC, and you should read the form of warrant agreement and form of warrant certificate
for provisions that may be important to you.
We will describe in the applicable prospectus supplement the
terms of the series of warrants, including:
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The offering price and aggregate number of warrants offered;
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The currency for which the warrants may be purchased;
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If applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;
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If applicable, the date on and after which the warrants and the related securities will be separately transferable;
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In the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise;
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The warrant agreement under which the warrants will be issued;
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The effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants;
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Anti-dilution provisions of the warrants, if any;
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The terms of any rights to redeem or call the warrants;
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Any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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The dates on which the right to exercise the warrants will commence and expire or, if the warrants are not continuously exercisable during that period, the specific date or dates on which the warrants will be exercisable;
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The manner in which the warrant agreement and warrants may be modified;
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The identities of the warrant agent and any calculation or other agent for the warrants;
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Federal income tax consequences of holding or exercising the warrants;
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The terms of the securities issuable upon exercise of the warrants;
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Any securities exchange or quotation system on which the warrants or any securities deliverable upon exercise of the warrants may be listed; and
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Any other specific terms, preferences, rights or limitations of or restrictions on the warrants.
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Exercise of Warrants
Each warrant will entitle the holder to
purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable
prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise
the warrants at any time up to 5:00 p.m. eastern time on the expiration date that we set forth in the applicable prospectus supplement.
After the close of business on the expiration date, unexercised warrants will become void.
Holders of the warrants may exercise the
warrants by delivering the warrant certificate representing the warrants to be exercised together with specified information, and
paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement.
We will set forth on the reverse side of the warrant certificate, and in the applicable prospectus supplement, the information
that the holder of the warrant will be required to deliver to the warrant agent.
Until the warrant is properly exercised,
no holder of any warrant will be entitled to any rights of a holder of the securities purchasable upon exercise of the warrant.
Upon receipt of the required payment and
the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office
indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable upon such exercise. If
fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue a new warrant certificate
for the remaining amount of warrants.
Modifications
We may amend the warrant agreements and
the warrant certificates without the consent of the holders of the warrants to cure any ambiguity, to cure, correct or supplement
any defective or inconsistent provision, or in any other manner that will not adversely affect the interests of the holders of
the warrants. We may also modify or amend certain other terms of the warrant agreements and the warrant certificates with the written
consent of the holders of not less than a majority of the then outstanding warrants.
Enforceability of Rights by Holders
of Warrants
Any warrant agent will act solely as our
agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder
of any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will
have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant certificate, including
any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant
may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action its
right to exercise, and receive the securities purchasable upon exercise of, its warrants in accordance with their terms.
DESCRIPTION OF RIGHTS
We may issue rights to purchase shares
of our common stock, preferred stock, debt securities, or other securities. These rights may be issued independently or together
with any other security offered hereby and may or may not be transferable by the holder receiving the rights in such offering.
The applicable prospectus supplement may add, update or change the terms and conditions of the rights as described in this prospectus.
The applicable prospectus supplement will
describe the specific terms of any offering of rights for which this prospectus is being delivered, including the following:
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The price, if any, per right;
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The exercise price payable for common stock, preferred stock, or other securities upon the exercise of the rights;
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The number of rights issued or to be issued to each holder;
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The number and terms of common stock, preferred stock, or other securities which may be purchased per right;
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The extent to which the rights are transferable;
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Any other terms of the rights, including the terms, procedures and limitations relating to the exchange and exercise of the rights;
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The date on which the holder’s ability to exercise the rights shall commence, and the date on which the rights shall expire;
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The extent to which the rights may include an over-subscription privilege with respect to unsubscribed securities; and
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If applicable, the material terms of any standby underwriting or purchase arrangement entered into by us in connection with the offering of such rights.
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Holders may exercise rights as described
in the applicable prospectus supplement. Upon receipt of payment and the rights certificate properly completed and duly executed
at the corporate trust office of the rights agent or any other office indicated in the prospectus supplement, we will, as soon
as practicable, forward the applicable securities purchased upon exercise of the rights. If less than all of the rights issued
in any rights offering are exercised, we may offer any unsubscribed securities directly to persons other than stockholders, to
or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements
with one or more underwriters or other purchasers, pursuant to which the underwriters or other purchasers may be required to purchase
any securities remaining unsubscribed for after such offering, as described in the applicable prospectus supplement.
The description in the applicable prospectus
supplement of any rights that we may offer will not necessarily be complete and will be qualified in its entirety by reference
to the applicable rights certificate, which will be filed with the SEC.
DESCRIPTION OF UNITS
We may issue units comprised of one or
more of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the
unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations
of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included
in the unit may not be held or transferred separately, at any time or at any time before a specified date.
We may evidence units by unit certificates
that we issue under a separate unit agreement. We may issue the units under a unit agreement between us and one or more unit agents.
If we elect to enter into a unit agreement with a unit agent, the unit agent will act solely as our agent in connection with the
units and will not assume any obligation or relationship of agency or trust for or with any registered holders of units or beneficial
owners of units. We will indicate the name and address and other information regarding the unit agent in the applicable prospectus
supplement relating to a particular series of units if we elect to use a unit agent.
We will describe in the applicable prospectus
supplement the terms of the series of units being offered, including:
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The designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
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Any unit agreement under which the units will be issued and any provisions of the unit agreement that differ from those described herein;
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Any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
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Whether the units will be issued in fully registered or global form.
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The other provisions regarding our common
stock, preferred stock, debt securities, warrants and rights as described in this prospectus will apply to each unit to the extent
such unit consists of shares of our common stock, preferred stock, debt securities, warrants and/or rights.
GLOBAL SECURITIES
We may issue some or all of our securities
of any series as global securities. We will register each global security in the name of a depositary identified in the applicable
prospectus supplement. The global securities will be deposited with a depositary or nominee or custodian for the depositary and
will bear a legend regarding restrictions on exchanges and registration of transfer as discussed below and any other matters to
be provided pursuant to the indenture.
As long as the depositary or its nominee
is the registered holder of a global security, that person will be considered the sole owner and holder of the global security
and the securities represented by it for all purposes under the securities and the indenture. Except in limited circumstances,
owners of a beneficial interest in a global security:
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Will not be entitled to have the global security or any securities represented by it registered in their names;
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Will not receive or be entitled to receive physical delivery of certificated securities in exchange for the global security; and
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Will not be considered to be the owners or holders of the global security or any securities represented by it for any purposes under the securities or the indenture.
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We will make all payments of principal
and any premium and interest on a global security to the depositary or its nominee as the holder of the global security. The laws
of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. These
laws may impair the ability to transfer beneficial interests in a global security.
Ownership of beneficial interests in a
global security will be limited to institutions having accounts with the depositary or its nominee, called “participants”
for purposes of this discussion, and to persons that hold beneficial interests through participants. When a global security is
issued, the depositary will credit on its book-entry, registration and transfer system the principal amounts of securities represented
by the global security to the accounts of its participants. Ownership of beneficial interests in a global security will be shown
only on, and the transfer of those ownership interests will be effected only through, records maintained by:
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The depositary, with respect to participants’ interests; or
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Any participant, with respect to interests of persons held by the participants on their behalf.
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Payments by participants to owners of beneficial
interests held through the participants will be the responsibility of the participants. The depositary may from time to time adopt
various policies and procedures governing payments, transfers, exchanges and other matters relating to beneficial interests in
a global security. None of the following will have any responsibility or liability for any aspect of the depositary’s or
any participant’s records relating to, or for payments made on account of, beneficial interests in a global security, or
for maintaining, supervising or reviewing any records relating to those beneficial interests:
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Us or our affiliates;
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The trustee under any indenture; or
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Any agent of any of the above.
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PLAN OF DISTRIBUTION
We may sell the securities being offered
pursuant to this prospectus from time to time in one or more transactions, including, without limitation:
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Through underwriters or dealers;
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Through agents;
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Directly to purchasers;
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In a rights offering;
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In “at the market” offerings within the meaning of Rule 415(a)(4) of the Securities Act to or through a market maker or into an existing trading market on an exchange or otherwise;
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Through a combination of any of these methods; or
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Through any other method permitted by applicable law and described in a prospectus supplement.
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The applicable prospectus supplement will
describe the terms of the offering of the securities, including:
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The name or names of any underwriters, if any, and if required, any dealers or agents;
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The purchase price of the securities and the proceeds we will receive from the sale;
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Any underwriting discounts and other items constituting underwriters’ compensation;
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Any commissions paid to agents;
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Any discounts or concessions allowed or reallowed or paid to dealers;
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Any delayed delivery arrangements;
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Any additional risk factors applicable to the securities that we propose to sell; and
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Any securities exchange or market on which the securities may be listed.
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We may sell the securities from time to
time in one or more transactions at:
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A fixed price or prices, which may be changed;
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Market prices prevailing at the time of sale;
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Prices related to such prevailing market prices; or
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Sale through Underwriters or Dealers
If underwriters are used in the sale, the
underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters.
Unless we inform you otherwise in the applicable prospectus supplement, the obligations of the underwriters to purchase the securities
will be subject to certain conditions, and the underwriters will be obligated to purchase all of the offered securities if they
purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
We will describe the name or names of any
underwriters, dealers or agents and the purchase price of the securities in a prospectus supplement relating to the securities.
In connection with the sale of the securities,
underwriters may receive compensation from us or from purchasers of the securities, for whom they may act as agents, in the form
of discounts, concessions or commissions. Underwriters may sell the securities to or through dealers, and these dealers may receive
compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers
for whom they may act as agents, which is not expected to exceed that customary in the types of transactions involved. Underwriters,
dealers and agents that participate in the distribution of the securities may be deemed to be underwriters, and any discounts or
commissions they receive from us and any profit on the resale of the securities they realize may be deemed to be underwriting discounts
and commissions under the Securities Act. The prospectus supplement will identify any underwriter or agent and will describe any
compensation they receive from us.
Underwriters could make sales in privately
negotiated transactions and/or any other method permitted by law, including sales deemed to be an “at-the-market” offering,
sales made directly on the NASDAQ Capital Market, or such other exchange or automated quotation system on which our securities
trade, or sales made to or through a market maker other than on an exchange. The name of any such underwriter or agent involved
in the offer and sale of our securities, the amounts underwritten, and the nature of its obligations to take our securities will
be described in the applicable prospectus supplement.
Unless otherwise specified in the prospectus
supplement, each series of the securities will be a new issue with no established trading market, other than our common stock,
which is currently listed on the NASDAQ Capital Market. We may elect to list any of the securities on an exchange, but are not
obligated to do so. It is possible that one or more underwriters may make a market in a series of the securities, but underwriters
will not be obligated to do so and may discontinue any market making at any time without notice. Therefore, we can give no assurance
about the liquidity of or the trading market for any of the securities.
In compliance with the guidelines of the
Financial Industry Regulatory Authority, Inc., or FINRA, the maximum aggregate discounts, commissions, agency fees or other items
constituting underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8% of the
aggregate offering price of the securities offered pursuant to this prospectus and any applicable prospectus supplement.
To facilitate the offering of securities,
certain persons participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price
of the securities. This may include over-allotments or short sales of the securities, which involve the sale by persons participating
in the offering of more securities than we sold to them. In these circumstances, these persons would cover such over-allotments
or short positions by making purchases in the open market or by exercising their over-allotment option, if any. In addition, these
persons may stabilize or maintain the price of the securities by bidding for or purchasing securities in the open market or by
imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed if securities
sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to stabilize
or maintain the market price of the securities at a level above that which might otherwise prevail in the open market. These transactions
may be discontinued at any time.
From time to time, we or our affiliates
may engage in transactions with these underwriters, dealers and agents in the ordinary course of business. Underwriters have from
time to time in the past provided, and may from time to time in the future provide, investment banking services to us for which
they have in the past received, and may in the future receive, customary fees.
Direct Sales and Sales through Agents
We may sell the securities directly. In
this case, no underwriters or agents would be involved. We may also sell the securities through agents designated by us from time
to time. In the applicable prospectus supplement, we will name any agent involved in the offer, sale or resale of the offered securities,
and we will describe any commissions payable to the agent. Unless we inform you otherwise in the applicable prospectus supplement,
any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to
institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to
any sale of those securities. We will describe the terms of any sales of these securities in the applicable prospectus supplement.
Remarketing Arrangements
Securities may also be offered and sold,
if so indicated in the applicable prospectus supplement, in connection with a remarketing upon their purchase, in accordance with
a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for us. Any remarketing firm will be identified and the terms of its agreements, if any, with us and
its compensation will be described in the applicable prospectus supplement.
Delayed Delivery Contracts
If we so indicate in the applicable prospectus
supplement, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities
from us at the public offering price under delayed delivery contracts. Institutions with which we may make these delayed delivery
contracts include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable
institutions and others. These contracts would provide for payment and delivery on a specified date in the future. The contracts
would be subject only to those conditions described in the applicable prospectus supplement. The obligations of any purchaser under
any such delayed delivery contract will be subject to the condition that the purchase of the securities shall not at the time of
delivery be prohibited under the laws of the jurisdiction to which the purchaser is subject. The underwriters and other agents
will not have any responsibility with regard to the validity or performance of these delayed delivery contracts. The applicable
prospectus supplement will describe the commission payable for solicitation of those contracts.
General Information
We may have agreements with the underwriters,
dealers, agents and remarketing firms to indemnify them against certain civil liabilities, including liabilities under the Securities
Act, or to contribute with respect to payments that the underwriters, dealers, agents or remarketing firms may be required to make.
Underwriters, dealers, agents and remarketing firms may be customers of, engage in transactions with or perform services for us
in the ordinary course of their businesses.
LEGAL MATTERS
The validity of the issuance of the securities
offered hereby will be passed upon for us by Robinson Brog Leinwand Greene Genovese & Gluck P.C., New York, New York.
EXPERTS
The consolidated financial statements of
Nxt-ID, Inc. and its subsidiaries incorporated by reference from the Company’s Annual Report on Form 10-K as of and for the
years ended December 31, 2017 and 2016 have been incorporated by reference herein in reliance upon the report of Marcum LLP, an
independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Fit Pay, Inc.
as of and for the fiscal year ended December 31, 2016 incorporated by reference herein from the Company’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on November 6, 2017 have been audited by Benjamin & Young, LLP,
independent registered public accountants, to the extent and for the period set forth in their report, and are incorporated by
reference herein in reliance on such report given upon the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a
registration statement on Form S-3 filed under the Securities Act. As permitted by the SEC’s rules, this prospectus
and any prospectus supplement, which form a part of the registration statement, do not contain all the information that is included
in the registration statement. You will find additional information about us in the registration statement. Any statements
made in this prospectus or any prospectus supplement concerning legal documents are not necessarily complete and you should read
the documents that are filed as exhibits to the registration statement or otherwise filed with the SEC for a more complete understanding
of the document or matter.
We will file annual, quarterly and special
reports and other information with the SEC. Our filings with the SEC are available to the public on the SEC’s website at
http://www.sec.gov
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The information we file with the SEC or contained on or accessible through our corporate web site or any other web site that we
may maintain is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read
and copy, at SEC prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of
which this prospectus is a part, at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington D.C. 20549.
You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC permits us to “incorporate
by reference” into this prospectus the information contained in documents we file with the SEC, which means that we can disclose
important information to you by referring you to those documents. Information that is incorporated by reference is considered to
be part of this prospectus and you should read it with the same care that you read this prospectus. Information that we file later
with the SEC will automatically update and supersede the information that is either contained, or incorporated by reference, in
this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed. We have filed
with the SEC and incorporate by reference in this prospectus, except as superseded, supplemented or modified by this prospectus,
the documents listed below:
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Our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on April 2, 2018;
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Our Quarterly Reports on Form 10-Q for the three months ended March 31, 2018, filed with the SEC on May 15, 2018, for the six and three months ended June 30, 2018, filed with the SEC on August 14, 2018, and for the nine and three months ended September 30, 2018, filed with the SEC on November 14, 2018;
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Our Current Reports on Form 8-K, filed with the SEC on March 9, 2018, May 18, 2018, May 30, 2018, July 27, 2018, August 6, 2018, August 17, 2018, September 20, 2018, September 21, 2018, October 2, 2018, November 19, 2018, and December 7, 2018;
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Our Definitive Proxy Statement on Schedule 14A for our annual meeting of stockholders held on July 31, 2018, filed with the SEC on July 5, 2018; and
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Our Registration Statement on Form 8-A, filed with the SEC on September 9, 2014, including any amendments or reports filed for the purpose of updating the description of our common stock therein.
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We also incorporate by reference into this
prospectus additional documents we may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date hereof but before the completion or termination of this offering (excluding any information not deemed “filed”
with the SEC). Any statement contained in a previously filed document is deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or in a subsequently filed document incorporated by reference
herein modifies or supersedes the statement, and any statement contained in this prospectus is deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained in a subsequently filed document incorporated by reference
herein modifies or supersedes the statement.
We will provide, without charge, to each
person to whom a copy of this prospectus is delivered, including any beneficial owner, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference herein, including exhibits. Requests should be directed
to:
Nxt-ID, Inc.
1627 U.S. Highway 1
Unit 206
Sebastian, FL 32958
(203) 266-2103
Copies of these filings are also available
on our website at
www.nxt-id.com.
For other ways to obtain a copy of these filings, please refer to “Where
You Can Find More Information” above.
2,469,136 Shares of Common Stock
Warrants to Purchase 2,469,136 Shares
of Common Stock
PROSPECTUS SUPPLEMENT
April 4, 2019
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