Item 3.02 Unregistered Sales of Equity Securities.
On February 12, 2014, LabStyle Innovations Corp. (the "Company") entered into a
definitive Securities Purchase Agreement (the "Securities Purchase Agreement")
with certain institutional and accredited investors (the "Buyers") to raise
approximately $4.19 million in gross proceeds in a private placement offering
(the "Offering") of consisting of an aggregate of (i) 2,226,956 shares (the
"Shares") of the Company's common stock (the "Common Stock") and warrants (the
"Warrants") to purchase an aggregate of 1,670,216 shares of Common Stock (the
"Warrant Shares"). The Offering closed on February 18, 2014.
Pursuant to the terms of the Securities Purchase Agreement, the Company is
potentially required to issue additional shares of Common Stock (the "Adjustment
Shares") at a specified time to the Buyers in the event that the price per share
of Common Stock in the Offering ($1.88) is greater than the price per share of
the Common Stock, calculated as 90% of the average of the ten (10) lowest volume
weighted prices of the Common Stock (the "Adjustment Price") during the twenty
(20) trading day period (the "Adjustment Period") starting immediately following
the earlier of the date on which the Shares, Warrants Shares and Adjustment
Shares have been registered for resale with the Securities and Exchange
Commission ("SEC") or are able to be sold without restriction under Rule 144
under the Securities Act, of 1933, as amended; provided, that, subject to the
terms and conditions of the Securities Purchase Agreement, the Company may be
required to issue further additional Adjustment Shares at one or more additional
specified times if the Adjustment Shares are not freely tradable for certain
specified minimum periods.
A registration statement registering only the Shares and the Warrants Shares for
public resale was declared effective on June 3, 2014, thus triggering the
commencement of the Adjustment Period. In accordance with the Securities
Purchase Agreement, because the Adjustment Price ($0.89, as calculated above)
was less than the price per share in the Offering ($1.88), on July 3, 2014, the
Company issued an aggregate of 2,484,416 unregistered Adjustment Shares to the
Buyers. In addition, pursuant to the terms of the Warrants and as a result of
the issuance of the Adjustment Shares, the exercise price of the Warrants was
reduced to $0.89 per share and the number of Warrant Shares was increased by an
aggregate of 2,746,688 shares of Common Stock (the "Additional Warrant Shares").
Since the Adjustment Shares were not freely tradable when issued, the Company
may be required to issue further additional Adjustment Shares if the Adjustment
Price is less than $0.89 per share following a second Adjustment Period which
will commence on the earlier to occur of August 18, 2014 or the date when a
registration statement covering the resale of the Adjustment Shares and
Additional Warrant Shares is declared effective by the SEC.
The issuance of the Adjustment Shares was exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act")
pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D
promulgated thereunder because, among other things, the transaction did not
involve a public offering and the Buyers are accredited investors.
The Securities Purchase Agreement, Registration Rights Agreement and form of
Warrant used in connection with the Offering are filed as Exhibits 10.1, 4.1 and
4.2, respectively, to the Company's Current Report on Form 8-K dated February
12, 2014, and readers are advised to review such documents and such Current
Report for further information.
Cautionary Note Regarding Forward-Looking Statements
This Current Report of the Company contains or may contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Statements that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "plan," "project," "potential," "seek," "may," "will," "expect,"
"believe," "anticipate," "intend," "could," "estimate" or "continue" are
intended to identify forward-looking statements. Readers are cautioned that
certain important factors may affect the Company's actual results and could
cause such results to differ materially from any forward-looking statements that
may be made in this Current Report. Factors that could cause or contribute to
differences between the Company's actual results and forward-looking statements
include, but are not limited to, those risks discussed in the Company's filings
with the U.S. Securities and Exchange Commission. Readers are cautioned that
actual results may differ significantly from those set forth in the
forward-looking statements. The Company undertakes no obligation to publicly
update any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable law.