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Infinity Augmented Reality, Inc. – ‘PRER14A’ on 7/2/15

On:  Thursday, 7/2/15, at 4:46pm ET   ·   Accession #:  1213900-15-4933   ·   File #:  0-53446

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/02/15  Infinity Augmented Reality, Inc.  PRER14A                1:899K                                   Edgar Agents LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PRER14A     Amendment No. 2 to Preliminary Proxy Statement      HTML    527K 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A INFORMATION

(Amendment No. 2)

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a party other than the Registrant ☐

Check the appropriate box:

Infinity Augmented Reality, Inc.

(Name of Registrant As Specified in Charter)

________________________________________________________________________________________

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box)

PRELIMINARY COPY

INIFINITY AUGMENTED REALITY, INC.

228 Park Ave. S #61130

New York, NY 10003-1502

NOTICE OF A SPECIAL MEETING OF THE STOCKHOLDERS

To our stockholders:

You are cordially invited to attend a Special Meeting of the Stockholders of Infinity Augmented Reality, Inc., a Nevada corporation (the "Company", "we", "us" or "our"), to be held on August 5, 2015 at 9:00 am, local time, at the offices of the Company’s legal advisors – Pearl Cohen Zedek Latzer Baratz LLP at 1500 Broadway, 12^th Floor, New York, NY 10036 (the “Special Meeting”), in order to:

As described in the accompanying Proxy Statement, in the event the Reverse/Forward Stock Split is approved by the stockholders at the Special Meeting, any stockholder owning fewer than 101 shares of our common stock will be cashed out. The intended effect of the Reverse/Forward Stock Split is to reduce the number of record holders of our common stock to fewer than 300 holders, so we will be eligible to deregister our common stock with the Securities and Exchange Commission (the “SEC”). In such case, we would no longer be required to file periodic reports with the SEC.

THE REVERSE/FORWARD STOCK SPLIT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, AND NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE COMMISSION HAS PASSED UPON THE FAIRNESS OR MERITS OF THE REVERSE/FORWARD STOCK SPLIT OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY PRESENTATION TO THE CONTRARY IS UNLAWFUL.

The foregoing items of business are more fully described in the Proxy Statement that accompanies this Notice. The Board of Directors has fixed the close of business on June 30, 2015 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Special Meeting or any adjournment thereof. Only stockholders of record at the close of business on the record date are entitled to notice of, and to vote at, the Special Meeting.

Regardless of whether you plan to attend the Special Meeting, please vote your shares as soon as possible so that your shares will be voted in accordance with your instructions. For specific voting instructions, please refer to the instructions on the proxy card attached hereto as Exhibit A. If you attend the Special Meeting, you will have the right to revoke the proxy and vote your shares in person.

By Order of the Board of Directors:

TABLE OF CONTENTS

PRELIMINARY COPY

INFINITY AUGMENTED REALITY, INC.

228 Park Ave. S #61130

New York, NY 10003-1502 

PROXY STATEMENT

FOR A SPECIAL MEETING OF STOCKHOLDERS

To be held on August 5, 2015

This Proxy Statement is being furnished in connection with the solicitation by the board of directors (the “Board of Directors” or the “Board”) of Infinity Augmented Reality, Inc., a Nevada corporation (the “Company”), of proxies to be voted at Special Meeting (the “Special Meeting”) of the Company’s stockholders to be held at the offices of Pearl Cohen Zedek Latzer Baratz LLP at 1500 Broadway, 12^th Floor, New York, NY 10036 on August 5, 2015 and at any adjournment(s) and postponement(s) thereof. This Proxy Statement is being furnished pursuant to and in accordance with the requirements of Section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 13e-3 under the Exchange Act and Section 14(a) under the Exchange Act and corresponding Regulation 14A promulgated thereunder.

At the Special Meeting, the stockholders will be asked to:

If Proposal No. 1 is approved, the Reverse/Forward Stock Split will become effective upon the filing of the amendments to our Articles of Incorporation (the “Certificate of Amendment”), and such filing date will be the “Effective Date”. As described in this Proxy Statement, in the event the Reverse/Forward Stock Split is approved by the stockholders at the Special Meeting, any stockholder owning fewer than 101 shares of our common stock will be cashed out. The intended effect of the Reverse/Forward Stock Split is to reduce the number of record holders of our common stock to fewer than 300 holders, so we will be eligible to deregister our common stock with the Securities and Exchange Commission (the “SEC”). In such case, we would no longer be required to file periodic reports with the SEC.

1

SUMMARY TERM SHEET

The following questions and answers briefly address some commonly asked questions about Proposal No. 1 (the Reverse/Forward Stock Split). These questions and answers may not include all the information that is important to you with respect to Proposal No. 1 (the Reverse/Forward Stock Split).

See the information set forth below under the caption “Golden Parachutes and Other Compensation of Any Officers as a Result of the Reverse/Forward Stock Split”.

SOLICITATION OF PROXIES, QUORUM AND VOTING

All voting rights are vested exclusively in the holders of Common Stock. Only holders of Common Stock of record at the close of business on June 30, 2015 (the “Record Date”) are entitled to receive notice of and to vote at the Special Meeting. As of the Record Date, there were a total of 110,390,005 shares of Common Stock outstanding. Each holder of Common Stock entitled to vote at the Special Meeting is entitled to one vote for each share held.

Stockholders holding a majority of the Common Stock issued and outstanding as of the Record Date, present in person or by proxy at the Special Meeting, will constitute a quorum for the transaction of business at the Special Meeting or any adjournment(s) thereof. Assuming a quorum is present at the Special Meeting.

If the accompanying proxy is properly executed and returned, the shares represented by the proxy will be voted as directed at the Special Meeting. You cannot vote your shares unless you are present at the Special Meeting or you have properly executed your proxy. There are two convenient methods for registered stockholders to direct their vote by proxy without attending the Special Meeting:

If you hold shares in a brokerage account, brokers are not entitled to vote on these proposals in the absence of specific client instructions. Stockholders who hold shares in a brokerage account are encouraged to provide voting instructions to their broker. To vote shares held in street name at the Special Meeting, you should contact your broker before the Special Meeting to obtain a proxy form in your name.

The shares represented by the proxies solicited by the Board of Directors of the Company will be voted in accordance with the directions given therein, but if no direction is given, such shares will be voted (i) FOR the Reverse/Forward Stock Split; (ii) FOR the Increase in Authorized Common Stock; (iii) FOR the Increase in Authorized Preferred Stock; and (iv) FOR approval and adoption of the 2015 Incentive Plan.

To have a valid meeting of the stockholders, a quorum of the Company’s stockholders is necessary. A quorum consists of a majority of the shares of the Common Stock issued and outstanding and entitled to vote on the Record Date present in person or by proxy at the Special Meeting. Stockholders who execute proxies retain the right to revoke them at any time by notice in writing to the Secretary of the Company, Ms. Ortal Zanzuri by revocation in person at the meeting or by presenting a later-dated proxy. Unless so revoked, the shares represented by proxies will be voted at the Special Meeting.

Space for the Special Meeting is limited. Therefore, admission will be on a first-come, first-served basis. Registration will open at 8:30 a.m. Eastern Time and the Special Meeting will begin at 9:00 a.m. Eastern Time. Each stockholder should be prepared to present valid government photo identification, such as a driver's license or passport. In addition, beneficial stockholders holding their shares through a broker, bank, trustee, or other nominee will need to bring proof of beneficial ownership as Record Date, such as their most recent account statement reflecting their stock ownership on or prior to the Record Date, a copy of the voting instruction card provided by their broker, bank, trustee, or other nominee, or similar evidence of ownership.

Use of cameras, recording devices, computers, and other electronic devices, such as smart phones and tablets, will not be permitted at the Special Meeting. Photography and video are prohibited at the Special Meeting.

REQUIRED VOTES

Under the rules that govern brokers who have record ownership of shares that are held in “street name” for their clients, who are the beneficial owners of the shares, brokers have discretion to vote these shares on routine matters but not on non-routine matters. All of the proposals in this Proxy Statement are not considered “routine”. Therefore, your broker will not have discretionary authority to vote your shares with respect to proposals. A “broker non-vote” occurs when the broker does not receive voting instructions from the beneficial owner with respect to a non-routine matter and therefore the broker expressly indicates on a proxy card that it is not voting on a matter. Broker non-votes and abstentions are, however, counted as shares present at the Special Meeting for purposes of determining a quorum.

With regard to Proposals No. 1 - 3, the affirmative vote of a majority of the shares of Common Stock entitled to vote is required for approval and therefore broker non-votes and abstentions could prevent the approval of a proposal because they do not count as affirmative votes.

With regard to Proposal No. 4, the affirmative vote of a majority of the shares having voting powers and present at the Special Meeting in person or by proxy is required for approval. Broker non-votes shares will not be deemed shares “with voting power” with respect to that proposal and therefore will have no effect on the outcome of the vote with respect to Proposal No. 4. Votes cast as abstentions will have the same effect as a vote against the proposal.

The Company will bear the expenses of this proxy solicitation, including the cost of preparing and mailing this Proxy Statement and accompanying proxy. This includes the charges and expenses of banks, brokerage firms, and other custodians, nominees or fiduciaries for forwarding solicitation material regarding the Special Meeting to beneficial owners of the Company’s voting shares. Our directors, officers, and employees may solicit proxies by mail, telephone, personal interviews, or by other means. They will not be compensated for these activities but may be reimbursed for their out-of-pocket expenses.

Dissenters’ Rights

Holders of shares of the Company’s Common Stock who do not vote in favor of Proposal No. 1 (Reverse/Forward Stock Split) will be entitled to dissenters’ rights under Sections 92A.300 – 92A.500 of the Nevada Revised Statutes but only if they (i) submit to us, prior to the Special Meeting, a written notice of intent to demand payment for their shares if the action described in Proposal No. 1 is consummated, (ii) do not vote in favor of Proposal No.1, and (iii) comply with the other Nevada law procedures summarized in this proxy statement. Any failure to strictly follow any of these procedures may result in a termination or waiver of your dissenter’s rights under Nevada law. A copy of those sections of the Nevada Revised Statutes is attached to this notice and in the accompanying proxy statement as Annex B.

PROPOSAL No. 1 — AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO EFFECT A REVERSE/FORWARD STOCK SPLIT

You are being asked to vote on an amendment to our Articles of Incorporation to effect a Reverse Stock Split of our Common Stock. The intended effect of the Reverse Stock Split is to reduce the number of record holders of our Common Stock to fewer than 300, so we will be eligible to terminate the registration of our Common Stock under the Securities Exchange Act of 1934 (the “Exchange Act”). If the Reverse Stock Split is approved by stockholders, we will take action to deregister our Common Stock with the SEC, and our Common Stock will no longer be eligible for trading on the OTC Market OTC.QB. In such case, we will no longer be required to file periodic reports with the SEC. However, our Common Stock may be quoted on the OTC Pink Marketplace, or the “Pink Sheets”.

The Company's Board of Directors has adopted resolutions approving an amendment to the Company's Articles of Incorporation to effect a Reverse/Forward Stock Split of the Company's Common Stock, at an exchange ratio of 1-for-101 shares of outstanding Common Stock (the “Reverse Split”), immediately followed by a forward stock split of the Company's outstanding Common Stock, at the same exchange ratio (the “Forward Split” and together with the Reverse Split, the “Reverse/Forward Stock Split”). Such amendment will not change the par value per share or the number of authorized shares of Common Stock. Holders of record of less than one share as a result of the Reverse Split will be cashed out at the rate of $0.15 per pre-split share. Holders of record of at least one share as a result of the Reverse/Forward Stock Split will not be entitled to receive any cash payment. The proposed Certificates of Amendment to the Company's Articles of Incorporation affecting the Reverse/Forward Stock Split are attached as Annex A-1 and Annex A-2 to this Proxy Statement.

The exact timing of the filing of the Certificate of Amendment that will effect the Reverse Stock Split will be determined by our Board based on its evaluation as to when such action will be the most advantageous to the Company and our stockholders. In addition, our Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the Certificates of Amendment, our Board, in its sole discretion, determines that it is no longer in our best interest and the best interests of our stockholders to proceed with the Reverse/Forward Stock Split. Factors that may lead the Board to abandon the Reverse/Forward Stock Split may include, among other things, increased transaction costs to consummate the transaction, changes in the current economic environment, and an adverse response from the markets in which the Company operates or adverse responses from our stockholders. If such a determination to abandon the Reverse/Forward Stock Split is made by the Board, our stockholders would be notified through the filing of a Current Report with the SEC on Form 8-K.

We will also need to first notify FINRA of the intended Reverse Split by filing the Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated record date of such action.

The intended effect of the Reverse/Forward Stock Split is to reduce the number of record holders of our Common Stock ([359] as of June 30, 2015) to fewer than 300, thereby enabling us to terminate the public registration of our Common Stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and suspend our duty to file periodic reports and other information with the SEC thereunder. This will eliminate the expense required to comply with the reporting and related requirements under the Exchange Act.

This action is required since after careful consideration, our Board has unanimously concluded that the costs associated with being a public reporting company are not justified by the resulting benefits. In addition, management has been told by potential investors that they would be interested in investing in the Company premised on the Company successfully suspending its reporting obligation under the Exchange Act. After the Reverse/Forward Stock Split and the subsequent deregistration of our common stock and suspension of our duty to file periodic reports and other information with the SEC, we will no longer be subject to the reporting and related requirements under the Exchange Act and we will cease to file reports and information with the SEC, as more fully described in the accompanying Proxy Statement. The Company’s stock, however, may be eligible for continued quotation on the OTC Pink tier of the OTC Markets, or the “Pink Sheets”.

Provided that the Reverse/Forward Stock Split is approved, we will file to deregister our Common Stock with the SEC. We will in such case no longer be required to file periodic reports with the SEC. The Company expects that the deregistration of its Common Stock under the Exchange Act will eliminate the significant expense required to comply with its Exchange Act reporting obligations and the SEC's proxy rules. The Company estimates the annual savings to be approximately $170,000 in tangible expenses, and the considerable senior management time and effort that is currently expended on compliance and disclosure matters attributable to the Company's Exchange Act filings may be focused on managing and growing our business. The Reverse/Forward Stock Split will provide small stockholders of record (holding fewer than 101 shares) with a liquidity event whereby their shares will be converted to cash at a 209% premium based on the average closing price for the 30 trading days prior to the initial public announcement of the Reverse/Forward Stock Split after the close of trading on February 4, 2015 and a 195% premium based on the average closing price for the 90 trading days prior to such announcement. From May 19, 2015 through June 30, 2015, inclusive (30 trading days), the average daily trading volume has been 138,133 shares with an average closing price of $0.06. The cash payment of $0.15 per pre-split share to stockholders whose shares will be cashed out represents a premium of 250% over the average closing price from May 19, 2015 through June 30, 2015, inclusive.

From May 19, 2015 through June 30, 2015, inclusive (30 trading days), the average daily trading volume has been shares with an average closing price of $0.06. The cash payment of $0.15 per pre-split share to stockholders whose shares will be cashed out represents a premium of 250% over the average closing price from May 19, 2015 through June 30, 2015, inclusive

Stockholders whose fractional shares have been purchased after the reverse split will have dissenters' rights of appraisal as detailed below.

SPECIAL FACTORS

Structure of the Reverse/Forward Stock Split

The Reverse/Forward Stock Split is considered a “going private” transaction as defined in Rule 13e-3 promulgated under the Exchange Act because it is intended to, and, if completed, will enable us to, terminate the registration of (or deregister) our Common Stock under Section 12(g) of the Exchange Act and suspend our duty to file periodic reports and other information with the SEC under Section 13(a) thereunder. In connection with the Transaction, we have filed with the SEC a Rule 13E-3 Transaction Statement on Schedule 13E-3.

The Reverse/Forward Stock Split is comprised of a reverse stock split (the “Reverse Split”), pursuant to which the shares of the Company's $0.00001 par value common stock shall be converted at an exchange ratio of 101 for 1 shares of outstanding Common Stock, as will be determined by the Company’s Board, followed immediately by a forward stock split of the Company's outstanding Common Stock, at the same exchange ratio (the “Forward Split”). Holders of record of less than one share as a result of the Reverse Split will be cashed out at the rate of $0.15 per pre-split share (each, a “Discontinued Stockholder”). Holders of at least one share as a result of the Reverse Split will not be entitled to receive any cash payment. If a person or entity holds shares of Common Stock in “street name,” then its broker, bank or other nominee (the “Record Owner”) is considered the owner of record with respect to those shares of Common Stock and not such person or entity. If the Record Owner holds less than one share as a result of the Reverse Split, it will be cashed out at the rate of $0.15 per pre-split share. Record Owners of at least one share as a result of the Reverse Split will not be entitled to receive any cash payment, even if a Record Owner hold shares of Common Stock in “street name” for any individual beneficial owners that held beneficial ownership in less than 101 pre-split shares of Common Stock.

The Reverse/Forward Stock Split can be illustrated with the following examples:

Subject to the approval of the amendment to the Company’s Articles of Incorporation as proposed, and as soon as practicable thereafter, we will send all stockholders of record with less than one share as a result of the Reverse Split a letter of transmittal to be used to transmit their Common Stock certificates to VStock Transfer (the “Exchange Agent”). Such stockholders of record will receive a cash payment in the amount of $0.15 per pre-split share. Upon proper completion and execution of the letter of transmittal, and the return of the letter of transmittal and accompanying stock certificate(s) to the Exchange Agent, each stockholder of record entitled to receive payment will receive a check for an amount of $0.15 for each pre-split share owned by the stockholder. In the event we are unable to locate certain stockholders or if a stockholder fails properly to complete, execute and return the letter of transmittal and accompanying stock certificate to the Exchange Agent, any funds payable to such stockholders pursuant to the Reverse/Forward Stock Split will be held in escrow until a proper claim is made, subject to applicable abandoned property laws. Stockholders who hold shares in a book-entry account are not required to take any action to receive a cash payment. The Exchange Agent will furnish stockholders with the necessary instructions for surrendering their pre-split stock certificates. If you have lost your stock certificates, or if they have been mutilated, destroyed or stolen, please contact the Exchange Agent at 212-828-8436.

Stockholders who hold shares that are not cashed out as a result of the Reverse/Forward Stock Split will not be required to exchange their certificates representing pre-split shares for new certificates. The Reverse/Forward Stock Split will take place on the Effective Date without any action on the part of the holders of the Common Stock and without regard to current certificates representing shares of Common Stock being physically surrendered for certificates representing the number of shares of Common Stock that each stockholder is entitled to receive as a result of the Reverse/Forward Stock Split.

The Reverse/Forward Stock Split will not materially change the rights, preferences or limitations of those stockholders who will retain an interest in the Company subsequent to the consummation of the Reverse/Forward Stock Split.

Background and Cost

As disclosed in the Company’s previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q, the Company has disclosed that there are substantial doubts as to its ability to continue as a going concern as the Company will require additional funds to finance its augmented reality operations.

As of June 2014, the Company’s management met with several potential investors and strategic partners in an attempt to implement the Company’s business plan. These initial attempts did not succeed as the many of the potential investors and strategic partners replied they are not interested in investing in a public traded company. Large strategic investors expressed reservation about investing or cooperating with the Company since this would require various public disclosure under law.

On November 19, 2014, the Board met and discussed, among other things, the financing of the Company and potential financing options. The Board considered the opportunities available after a reverse stock split which would enable the company to terminate the public registration under the Exchange Act and suspend the Company’s duty to file periodic reports and other information with the SEC thereunder.

On November 20, 2014, the management met with Credit Strategies LLC, Platinum Partners Value Arbitrage Fund L.P., ALS Capital Ventures LLC (collectively, “Platinum”), to discuss a further investment in the Company, the possible conversion of debentures as well as the litigation and other potential liabilities relating to the Company’s previous life insurance business. Our former CEO, Moshe Oratz attended this meeting at the offices of Platinum. In this meeting, the management also updated that all attempts to attract investors and strategic partners were not successful and that if the Company will not receive an infusion of funds, it might be forced to cease operation.

Platinum and Mr. Oratz were advised by management that they believed that the Company’s existing debt structure (prior to the entry into the Master Agreement), the liabilities associated with its former business and the Company’s public reporting status impede the Company’s ability to obtain badly needed financing. In response, these shareholders indicated that they would consider a further investment in the Company, though no financing commitment was then given, and inquired as to other actions management would consider appropriate for purposes of furthering a possible investment in the Company.  The shareholders advised management to continue in its efforts to raise capital. These security holders and their affiliates ultimately agreed to become parties to the Master Agreement, in their capacity as either Indemnitors or Debentureholders (as such terms are defined therein) after negotiating the terms thereof.

As previously announced, the following stockholders have entered into the Master Agreement: Credit Strategies LLC, Platinum Partners Value Arbitrage Fund L.P., ALS Capital Ventures LLC, SBO Trust U/A/D 4/13/10, MJSYRL Inc., CS Master Holdings LLC, Moshe Oratz, and Singulariteam Fund LP (f/k/a Genesis Angels Fund LP). The Board of Directors has unanimously approved the Master Agreement and all transactions contemplated thereby, including the reverse-forward stock split, the increase to the Company’s authorized share capital and the 2015 incentive plan on January 29, 2015.

The Reverse/Forward Stock Split is not expected to affect our current business plan or operations, except for the anticipated cost and management time savings associated with termination of our obligations to file periodic reports under the Exchange Act with the SEC. Nevertheless, if net losses continue at the Company following the Reverse/Forward Stock Split and any other cost saving measures instituted by the Company, the Company will need to raise additional funds. Once we deregister our Common Stock under the Exchange Act, we will not be required to provide our stockholders with periodic, annual, quarterly or other reports regarding the Company. However, we do not intend to make available to stockholders any financial or other information about us that is not required by law. We do not intend, but may in our discretion elect, to distribute press releases for material and other events. We will continue to hold meetings as required under the Nevada Revised Statutes (the “NRS”), including annual meetings, or to take actions by written consent of stockholders in lieu of meetings.

We estimate that we will pay approximately $5,300 to cash out holders of record of less than one share as a result of the Reverse Split. In addition, we anticipate incurring approximately $25,000 in advisory, legal, financial, accounting and other fees and costs in connection with the Reverse/Forward Stock Split. The Company has sufficient cash on hand to cover the cost of cashing out holders of record of less than one share as a result of the Reverse Split and the related fees and costs of implementing the Reverse/Forward Stock Split and this Proxy Statement. The Company will not be using borrowed funds to finance the cost of the Reverse/Forward Stock Split, there are no conditions relating to the use of the cash to cover the cost of the Reverse/Forward Stock Split, and there are no alternative financing arrangements or alternative financing plans in place to cover the ultimate cost of the Reverse/Forward Stock Split. The estimated costs consist of the following, although actual costs may vary.

Each of our directors and executive officers intends to vote the shares that each director or executive officer beneficially owns in favor of the Reverse/Forward Stock Split. The shares of Common Stock held by our directors and executive officers represent approximately 0.48% of the Common Stock votes eligible to be cast at the Special Meeting.

Holders of 57,288,844 shares of Common Stock who are party to the Master Agreement, or approximately 51.9% of the Common Stock eligible to be cast at the Special Meeting (including those held by our directors and executive officers) have advised the Company that they intend to vote in favor of the Reverse/Forward Stock Split.

Motti Kushnir, Chief Executive Officer and Ortal Zanzuri, Chief Financial Officer and Secretary prepared and filed this Proxy Statement.

Reasons for the Reverse/Forward Stock Split

The primary purpose of the Reverse/Forward Stock Split is to ensure that the number of record holders of our Common Stock ([359] as of June 30, 2015) will be below 300 so that we can terminate the registration of our Common Stock under Section 12(g) of the Exchange Act. The Reverse/Forward Stock Split is expected to result in the elimination of the expenses related to our disclosure and reporting requirements under the Exchange Act. For some time, the Board of the Directors of the Company, has expressed concern about the expense of continuing to comply with the periodic reporting requirements of the Exchange Act given the small size of the Company (which as of June 30, 2015 consisted of approximately twelve employees, with periodic reporting requirements fulfilled by executive officers of the Company without sufficient segregation of duties to support internal control), the financials and operating losses of the Company, and the extremely low trading volume of shares of our Common Stock. Significantly, the Company had an annual net loss during the year ended August 31, 2014 of $7,874,588 and a quarterly net loss of $1,467,918 during the quarter ended November 30, 2014 and has subsequently had a quarterly net loss of $883,195 during the quarter ended February 28, 2015. In addition, management has been told by many potential investors that they would be interested in investing in the Company premised on the Company successfully suspending its reporting obligation under the Exchange Act. The Board therefore decided to consider whether it should remain a reporting company. The Board believes that any material benefit derived from continued registration under the Exchange Act is outweighed by the cost, including the cost and tangible and intangible burdens associated with compliance with the Sarbanes-Oxley Act of 2002.

The Board believes that the significant costs are not justified because we have not been able to realize many of the benefits that publicly traded companies sometimes realize. The Board does not believe that we are in a position to use our status as a public company to raise capital through sales of securities in a public offering, or otherwise to access the public markets to raise equity capital. In addition, our Common Stock’s extremely limited trading volume, stock price and public float have all but eliminated our ability to use our Common Stock as acquisition currency or to attract and retain employees.

Our Common Stock’s limited trading volume and public float have also hindered our stockholders’ ability to sell their shares, which has prevented them from realizing the full benefits of holding publicly traded stock. Our low market capitalization has resulted in limited interest from market makers or financial analysts who might report on our activity to the investment community. Because the Common Stock has been thinly traded, any attempt to trade a large block of shares in the public markets, to the extent possible, would risk a significant impact on the market price of our Common Stock. The Board believes that it is unlikely that our market capitalization and trading liquidity will increase significantly in the foreseeable future.

The overall executive time expended on the preparation and review of our public filings is likely to continue to increase rather than decrease. Since we have relatively few executive personnel, these indirect costs can be significant relative to our overall expenses and, although there will be no direct monetary savings with respect to these indirect costs when the Reverse/Forward Stock Split is effected and we cease filing periodic reports with the SEC, the time currently devoted by management to our public company reporting obligations could be devoted to other purposes, such as operational concerns to further our business objectives and the interests of our stockholders. The Board believes that it is in our best interests and the best interests of our stockholders to eliminate the administrative, financial and additional accounting burdens associated with periodic reporting to the SEC by consummating the Reverse/Forward Stock Split at this time rather than continue to subject the Company to these burdens.

Although continuing shareholders would indirectly benefit from any tax savings generated by the Company's future use of any accrued operating loss carry-forwards, if and to the extent actually used by the Company to offset future taxable income, the Board did not consider such tax savings (to the extent available) to be material in connection with its review and evaluation of the Reverse/Forward Stock Split. The Company had a Federal tax net operating loss carry forward of $2,352,274 for the year ended August 31, 2014.

Strategic Alternatives Considered

While considering the merits of the Reverse Split, the Board evaluated a number of strategic alternatives. In evaluating the risks and benefits of each strategic alternative, the Board determined that the Reverse Split would be the simplest and most cost-effective approach to achieve the purposes described above. The Board considered the following alternatives:

Fairness of the Reverse/Forward Stock Split to Stockholders

The Board believes that the Reverse/Forward Stock Split is fair to the unaffiliated holders of our Common Stock, including both unaffiliated stockholders who will be cashed out in the Reverse/Forward Stock Split and those who continue to be stockholders of the Company after the Reverse/Forward Stock Split. The Board, on behalf of the Company, has itself made that determination and, for the reasons set forth below, has reached a decision that the Reverse Split is fair to the unaffiliated stockholders.

The Board did not obtain a report, opinion, or appraisal from an appraiser or financial advisor with respect to the consideration to holders of record of less than one share as a result of the Reverse Split, due to the financially depressed status of the Company, the Company's continuing operating losses, the stage in the development of the Company’s product, the recent historical trading price of its common stock, and no representative or advisor was retained on behalf of the unaffiliated stockholders to review or negotiate the transaction. Further, the result of the Reverse/Forward Stock Split is anticipated to affect approximately 35,500 shares, or less than 0.03% of the Common Stock of the Company.

No director who is not an employee of the Company has retained an unaffiliated representative to act solely on behalf of unaffiliated security holders for purposes of negotiating the terms of the Reverse/Forward Stock Split and/or preparing a report concerning the fairness of the transaction.

Each Director on the Board who is not an employee of the Company approved the Reverse/Forward Stock Split. The Board, which has unanimously approved the Reverse/Forward Stock Split, concluded that the expense of opinions, appraisals and representatives was not reasonable in relation to the size of the transaction contemplated and concluded that the Board could adequately establish the fairness of the Reverse/Forward Stock Split without such outside persons.

The Board did not create a special committee of the Board to approve the Reverse/Forward Stock Split. Creating a special committee by hiring new directors and retaining independent counsel for such a committee would significantly increase the cost of the Reverse/Forward Stock Split.

The Board unanimously determined that the Reverse/Forward Stock Split, including the proposed cash payment of $0.15 per pre-split share to stockholders whose shares will be cashed out, is substantively and procedurally fair, in form and from a financial point of view, to all of our unaffiliated stockholders, including those whose shares will be cashed out and those who will be continuing stockholders of the Company. No stockholder of the Company holding more that 5% of the Company’s issued share capital or any stockholder who is an officer or director of the Company will be cashed out in the framework of the Reverse/Forward Stock Split.

With respect to the stockholders whose shares would be cashed out, the Board relied upon, among other things, the determination of the range of fair values per pre-split share. The Board determined that $0.15 per pre-split share would a fair based on historical trading ranges.

The Board determined that certain additional factors supported the fairness of the Reverse/Forward Stock Split to those unaffiliated stockholders whose shares will be cashed out; including the fact that they will not pay the brokerage commissions they would have paid if they attempted to sell their shares in the open market. The proposed transaction price of $0.15 per pre-split share of Common Stock compares favorably to average closing price of the stock for the previous 30, 60, 90 and 180 trading days prior to the initial announcement of the Reverse/Forward Stock Split on February 4, 2015 and for the previous 30, 60, 90 and 180 trading days prior to the Record Date (as can be shown in the tables below). The average closing price for the approximately fifteen months since January 2, 2014, the first trading day of 2014 is $0.137.

Furthermore, the Board considered that, with extremely limited liquidity in the public market for our Common Stock, only a small portion of our stockholders would have been able to attain the historical closing prices before the stock price decreased measurably. The proposed transaction price of $0.15 per pre-split share does not include any discount for the lack of liquidity of our Common Stock or for the minority status of the shares of our Common Stock owned by unaffiliated stockholders.

The following table sets forth historical trading volume averages and average closing prices for the associated number of trading days prior to February 4, 2015 (considering that the public announcement of the Reverse/Forward Stock Split was after the close of trading on February 4, 2015):

From November 6, 2014 through February 4, 2015, inclusive (60 trading days), the average daily trading volume has been 81,390 shares with an average closing price of $0.08. The cash payment of $0.15 per pre-split share to stockholders whose shares will be cashed out represents a premium of 196% over the average closing price from November 6, 2014 through February 4, 2015, inclusive. From May 20, 2014 through February 4, 2015, inclusive (180 trading days), the average daily trading volume has been 69,202 shares with an average closing price of $0.10. The cash payment of $0.15 per pre-split share to stockholders whose shares will be cashed out represents a premium of 153% over the average closing price from May 20, 2014 through February 4, 2015, inclusive.

 On February 4, 2015, at the close of the trading day, which was prior to the announcement on that day of the Reverse/Forward Stock Split, our Common Stock's closing price per share was $0.09 on trading volume of 108,200 shares. Prior to this date, our average closing price for the 60 trading days prior to February 4, 2015, was approximately $0.08 per share on an unweighted basis. On February 13, 2015, the last practicable trading day prior to the date the Company’s pervious filing of its Preliminary Information Statement on Schedule 14 C (which was replaced by this Proxy Statement on Schedule 14 A) was first filed with the SEC, our Common Stock's closing price was $0.08.

In addition, the following table sets forth historical trading volume averages and average closing prices for the associated number of trading days prior to June 30, 2015, the Record Date:

From April 7, 2015 through June 30, 2015, inclusive (60 trading days), the average daily trading volume has been 317,060 shares with an average closing price of $0.06. The cash payment of $0.15 per pre-split share to stockholders whose shares will be cashed out represents a premium of 250% over the average closing price from April 7, 2015 through June 30, 2015, inclusive. From May 19, 2015 through June 30, 2015, inclusive (30 trading days), the average daily trading volume has been 138,133 shares with an average closing price of $0.06. The cash payment of $0.15 per pre-split share to stockholders whose shares will be cashed out represents a premium of 250% over the average closing price from May 19, 2015 through June 30, 2015, inclusive.

With respect to the fairness of the Reverse/Forward Stock Split to the stockholders whose stock would not be cashed out in the Reverse/Forward Stock Split, the Board also relied on the fact that the amount to be paid to stockholders whose stock would be cashed out was fair.

The Board determined that current and historical market prices of its Common Stock were the best measures of the fairness of the cash out price for holders of record of less than one share as a result of the Reverse Split to unaffiliated stockholders because recent and historical prices provide some insight into how the market has historically valued our Common Stock. The Board also reviewed stockholders' equity, which at August 31, 2014 was $0 under generally accepted accounting principles (“GAAP”). However, the Board did not ultimately explicitly establish or consider liquidation value as a factor in determining the fairness of the transaction since the Company has no present intent to liquidate and only a small fraction of existing stockholders will be eliminated as equity holders as a result of the Reverse/Forward Stock Split. Accordingly, the Board did not consider or establish, explicitly or otherwise, the going concern value of the Company in connection with determining the fairness of the Reverse Split because only a small number of stockholders will be cashed out in the Reverse/Forward Stock Split. The Company has not engaged in any stock repurchases.

Procedural Fairness of the Reverse Split

The Board, on behalf of the Company, has itself made that determination and, for the reasons set forth below, has reached a decision that the Reverse/Forward Stock Split is also procedurally fair to all unaffiliated stockholders, including both stockholders who will receive cash payments in connection with the Reverse/Forward Stock Split and will not be continuing stockholders of the Company and stockholders who will retain an equity interest in the Company. In reaching this conclusion, the Board noted that the potential ability of unaffiliated stockholders of record to decide whether or not to remain stockholders following the Reverse/Forward Stock Split by attempting to buy or sell shares of Common Stock in the open market, if permissible at prices acceptable to such stockholders, afforded protection to those stockholders who would not be continuing stockholders of the Company. Specifically, the Board noted that current holders of record of fewer than 101 shares may be able to remain stockholders of the Company by acquiring additional shares, if available at prices they are willing to pay, so that they own at least 101 shares immediately before the Reverse/Forward Stock Split. Conversely, stockholders of record that own 101 or more shares and desire to liquidate their shares in connection with the Reverse/Forward Stock Split may be able to sell or otherwise reduce their holdings to less than 101 shares prior to the Reverse/Forward Stock Split. It should be noted that, because there has historically been very limited trading in the Company's Common Stock, stockholders seeking to either increase or decrease their holdings prior to the Reverse/Forward Stock Split may not be able to do so at all or at a price they are willing to pay or accept.

In addition, the Board noted the result of the Reverse/Forward Stock Split is anticipated to affect approximately 35,500 shares, or less than 0.03%, of the Common Stock of the Company.

In light of the Board's determination that the interests of unaffiliated stockholders were protected by (i) the representation of stockholders who would remain stockholders after the Reverse/Forward Stock Split on the Board, and (ii) the ability of unaffiliated stockholders to decide whether or not to remain stockholders following the Reverse/Forward Stock Split by buying or selling shares of Common Stock in the open market, the Board did not create a Special Committee or retain independent counsel.

The Board did not grant unaffiliated stockholders access to our corporate files, except as provided under NRS. The Board determined that this Proxy Statement, together with our other filings with the SEC, provides adequate information for unaffiliated stockholders.

The Board determined that the process leading up to the approval of the Reverse/Forward Stock Split was procedurally fair to the stockholders because of the structural fairness of the Reverse/Forward Stock Split and the procedural protections available to stockholders.

Holders of 57,288,844 shares of Common Stock who are party to the Master Agreement, or approximately 51.9% of the Common Stock eligible to be cast at the Special Meeting (including those held by our directors and executive officers) have advised the Company that they intend to vote in favor of the Reverse/Forward Stock Split. The non-Company filing persons, comprised of CS Master Holdings LLC, ALS Capital Ventures LLC, Credit Strategies, LLC, Mr. Moshe Oratz, Singulariteam Fund LP, Motti Kushner, the Company’s Chief Executive Officer and Ortal Zanzuri, the Company’s Chief Financial Officer, have advised the Company that they have adopted the analysis and conclusions of our Board regarding the fairness of the Reverse/Forward Stock Split and have determined that the Reverse/Forward Stock Split is procedurally and substantively fair to our unaffiliated stockholders, including those stockholders owning shares to be cashed out and those who will retain an equity interest in the Company. Such holders reasonably believe that the Reverse/Forward Stock Split is fair to unaffiliated securities holders because of the structural fairness of the Reverse/Forward Stock Split and the procedural protections available to stockholders.

Federal Income Tax Consequences of the Reverse/Forward Stock Split

We have summarized below what we believe to be certain federal income tax consequences to the Company and its stockholders resulting from the Reverse/Forward Stock Split. This summary is based on United States federal income tax law, existing as of the date of this Proxy Statement. Such tax laws may change, even retroactively. This summary does not discuss all aspects of federal income taxation that may be important to you in light of your individual circumstances. In addition, this summary does not discuss any state, local, foreign, or other tax considerations. This summary assumes that you are a United States citizen and have held, and will hold, your shares as capital assets under the Internal Revenue Code (the “Code”). You should consult your tax advisor as to the particular federal, state, local, foreign, and other tax consequences, in light of your specific circumstances.

We believe that the Reverse/Forward Stock Split will be treated as a tax-free “recapitalization” for federal income tax purposes. We will not apply for any ruling from the Internal Revenue Service, nor will we receive an opinion of counsel with respect to the tax consequences of the Reverse Split.

We believe that any stockholders who continue to hold Common Stock immediately after the Reverse/Forward Stock Split, and who receive no cash as a result of the Reverse Split, should not recognize any gain or loss or dividend income as a result of the Reverse/Forward Stock Split and will have the same adjusted tax basis and holding period in their Common Stock as they had in such stock immediately prior to the Reverse/Forward Stock Split.

We believe that a stockholder who receives cash in the Reverse/Forward Stock Split (i.e., a stockholder of record who holds less than one share as a result of the Reverse Split) will be treated as having such shares redeemed in a taxable transaction governed by Section 302 of the Code and, depending on a stockholder's situation, the transaction will be taxed as either: (a) a sale or exchange of the redeemed shares, in which case the stockholder will recognize gain or loss equal to the difference between the cash payment and the stockholder's tax basis for the redeemed shares; or (b) a cash distribution which is treated: (i) first, as a taxable dividend to the extent of allocable earnings and profits, if any; (ii) second, as a tax-free return of capital to the extent of the stockholder's tax basis in the redeemed shares; and (iii) finally, as gain from the sale or exchange of the redeemed shares. Amounts treated as gain or loss from the sale or exchange of redeemed shares will be capital gain or loss. Amounts treated as a taxable dividend are ordinary income to the recipient; however, a corporate taxpayer (other than an S corporation) may be allowed a dividend received deduction subject to applicable limitations and other special rules.

The foregoing discussion summarizing certain federal income tax consequences does not refer to the particular facts and circumstances of any specific stockholder. Stockholders are urged to consult their own tax advisors for more specific and definitive advice as to the federal income tax consequences to them of the Reverse/Forward Stock Split, as well as advice as to the application and effect of state, local and foreign income and other tax laws.

Termination of Exchange Act Registration

Our Common Stock is currently registered under the Exchange Act. Our Common Stock is listed on the OTC Markets. We are permitted to terminate such registration if there are fewer than 300 record holders of outstanding shares of our Common Stock. As of June 30, 2015, we had [359] record holders of our Common Stock. Upon the effectiveness of the Reverse/Forward Stock Split, we expect to have [104] record holders of our Common Stock. We intend to terminate the registration of our Common Stock under the Exchange Act promptly after the Effective Date.

Termination of registration under the Exchange Act will substantially reduce the information which we will be required to furnish to our stockholders under the Exchange Act. After deregistration of our shares, our stockholders will have access to our corporate books and records to the extent provided by the Nevada Revised Statutes, and to any additional disclosures required by our directors' and officers' fiduciary duties to the Company and our stockholders.

We estimate that termination of registration of our Common Stock under the Exchange Act will save us an estimated $170,000 per year in legal, accounting, printing and other expenses, and will also enable our management to devote more time to our operations. By reducing the Company's number of stockholders of record to less than 300 and deregistering our Common Stock under the Exchange Act as intended, based on historical expenses, the Company expects to save (i) approximately $50,000 per year in professional fees and expenses for the preparation and filing of reports required by the Exchange Act and (ii) approximately $20,000 per year in other costs related to being a publicly reporting entity, such as Edgarization and XBRL costs, printing and mailing costs, expenses for compliance with the internal control and procedure requirements associated with Sarbanes-Oxley, the Dodd-Frank Act and regulatory compliance issues applicable to public entities, other than internal personnel expenses and (iii) approximately $100,000 per year in activities relating to investors relations (such as roadshows). The termination of the Company's public reporting obligations of the management will also alleviate a significant amount of time and effort previously required of the Company's employees in preparing and reviewing the periodic reports and filings required of public entities under the Exchange Act and the pressure and expense of hiring staff to satisfy the regulatory and accounting reporting requirements.

Potential Reinstatement of Reporting Obligations

The intended effect of the Reverse/Forward Stock Split is to reduce the number of record holders of our Common Stock to fewer than 300. This will make us eligible to terminate the registration of our Common Stock under Rule 12g-4 and Section 12(g) of the Exchange Act. We expect to reduce the number of our record holders to approximately 107 as a result of the Reverse/Forward Stock Split. However, if the Reverse/Forward Stock Split does not have the intended effect, or if the number of record holders of our Common Stock rises to either 500 or more persons who are not accredited investors or 2,000 persons after the consummation of the Reverse/Forward Stock Split for any reason (in each case, provided the Company has total assets exceeding $10 million), we may once again be subject to the periodic reporting obligations under the Exchange Act and the SEC's proxy rules, which would negate much, if not all, of the savings intended to be accomplished through the Reverse/Forward Stock Split.

Effects of the Reverse/Forward Stock Split on the Number of Authorized and Issued Shares

As of June 30, 2015, the Company had a total of 110,745,473 of its 500,000,000 authorized shares of Common Stock issued and 110,390,005 of Common Stock outstanding. The total number of authorized shares of Common Stock will not change as a result of the Reverse/Forward Stock Split. The table below illustrates the estimated effect on the number of authorized shares available for issuance as a result of the Reverse Split. Significantly, the result of the Reverse/Forward Stock Split is anticipated to affect approximately 35,500 shares, or approximately 0.03%, of the Common Stock of the Company.

The shares acquired in the Reverse/Forward Stock Split will be retired and returned to the status of authorized but unissued shares of Company Common Stock.

Dissenters’ and Appraisal Rights

Pursuant to Chapter 92A (Section 300 through 500 inclusive) of the NRS (“Chapter 92A”), any Discontinued Stockholder of the Company is entitled to dissent to the Reverse Split and obtain payment of the fair value of the shares. In the context of the Reverse Split, Chapter 92A provides that stockholders may elect to have the Company purchase pre-Reverse Split shares that would become fractional shares as a result of the Reverse Split for a cash price that is equal to the “fair value” of such shares, as determined in a judicial proceeding in accordance with the provisions of Chapter 92A. The fair value of the shares of any stockholder means the value of such shares immediately before the effectuation of the Reverse Split, excluding any appreciation or depreciation in anticipation of the Reverse Split, unless exclusion of any appreciation or depreciation would be inequitable.

To exercise your right to dissent:

If you (i) send written notice of your intent to dissent before the Special Meeting and (ii) do not vote in favor of the Reverse/Forward Stock Split, the Company is required to send to you a written dissenters’ notice within ten days after the Reverse/Forward Stock Split is consummated, if it is in fact consummated, telling you:

Chapter 92A is set forth in its entirety in Annex B to this Proxy Statement. If you wish to exercise your dissenters’ rights or preserve the right to do so, you should carefully review Annex B to this Proxy Statement. If you fail to comply with the procedures specified in Chapter 92A in a timely manner, you may lose your dissenters’ rights. Because of the complexity of those procedures, you should seek the advice of counsel if you are considering exercising your dissenters’ rights.

Stockholders who perfect their dissenters’ rights by complying with the procedures set forth in Chapter 92A will have the fair value of their shares determined by the Nevada state court and will be entitled to receive a cash payment equal to such fair value. Any such judicial determination of the fair value of shares could be based upon any valuation method or combination of methods the court deems appropriate. The value so determined could be more or less than the $0.15 per share to be paid in connection with the Reverse/Forward Stock Split. In addition, stockholders who invoke dissenters’ rights may be entitled to receive payment of a fair rate of interest from the effective time of the Reverse/Forward Stock Split on the amount determined to be the fair value of their shares.

Within 10 days after the effectuation of the Reverse/Forward Stock Split, the Company will send a written notice (a “Dissenters’ Rights Notice”) to all the record stockholders of the Company entitled to dissenters’ rights. The Dissenters’ Rights Notice will be accompanied by (i) a form for demanding payment from the Company that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and requires that the person asserting dissenter’s rights certify whether or not they acquired beneficial ownership of the shares before that date; (ii) a copy of the provisions of Chapter 92A; and (iii) a brief description of the procedures that a stockholder must follow to exercise dissenter’s rights.

In order to maintain eligibility to exercise dissenters’ rights under Chapter 92A, you must take the following actions within 30 days of the date that the Dissenters’ Rights Notice was delivered: (i) deliver a written demand for payment on the form provided in the Dissenters’ Rights Notice; (ii) certify whether you acquired beneficial ownership of the shares before the date set forth in the Dissenters’ Rights Notice; and (iii) deliver the certificates representing the dissenting shares to the Company.

Within 30 days after receipt of a demand for payment, the Company must pay each dissenter who complied with the provisions of Chapter 92A the amount the Company estimates to be the fair value of such shares, plus interest from the effective date of the Reverse/Forward Stock Split. The rate of interest shall be the average rate currently paid by the Company on its principal bank loans. The payment will be accompanied by the following: (i) financial statements for the Company for the year ended August 31, 2014 and the most recent interim financial statements; (ii) a statement of the Company’s estimate of the fair value of the shares; (iii) an explanation of how the interest was calculated; (iv) a statement of the dissenter’s rights to demand payment for the difference between the Company’s estimate of the fair value of the shares and the stockholder’s estimate of the fair value of the shares; and (v) a copy of Chapter 92A. If the Company does not deliver payment within 30 days of receipt of the demand for payment, the dissenting stockholder may enforce the dissenter’s rights by commencing an action in Nevada.

If a dissenting stockholder disagrees with the amount of the Company’s payment, then the dissenting stockholder may, within 30 days of such payment, (i) notify the Company in writing of the dissenting stockholder’s own estimate of the fair value of the dissenting shares and the amount of interest due, and demand payment of such estimate, less any payments made by the Company, or (ii) reject the offer by the Company if the dissenting stockholder believes that the amount offered by the Company is less than the fair value of the dissenting shares or that the interest due is incorrectly calculated. If a dissenting stockholder submits a written demand as set forth above and the Company accepts the offer to purchase the shares at the offer price, then the stockholder will be sent a check for the full purchase price of the shares within 30 days of acceptance.

If a demand for payment remains unsettled, the Company must commence a proceeding in the Nevada district court within 60 days after receiving the demand. Each dissenter who is made a party to the proceeding shall be entitled to a judgment in the amount, if any, by which the court finds the fair value of the dissenting shares, plus interest, exceeds the amount paid by the Company. If a proceeding is commenced to determine the fair value of the common stock, the costs of such proceeding, including the reasonable compensation and expenses of any appraisers appointed by the court, shall be assessed against the Company, unless the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment. The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable against the Company if the court finds that (i) the Company did not comply with Chapter 92A or (ii) against either the Company or a dissenting stockholder, if the court finds that such party acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by Chapter 92A.

A person having a beneficial interest in shares that are held of record in the name of another person, such as a broker, fiduciary, depository or other nominee, must act to cause the record holder to follow the requisite steps properly and in a timely manner to perfect dissenters’ rights of appraisal. If the shares are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as a trustee, guardian or custodian), depositary or other nominee, the written demand for dissenters’ rights of appraisal must be executed by or for the record owner. If shares are owned of record by more than one person, as in joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute a demand for appraisal for a stockholder of record, provided that the agent identifies the record owner and expressly discloses, when the demand is made, that the agent is acting as agent for the record owner. If a stockholder owns shares through a broker who in turn holds the shares through a central securities depository nominee, a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record holder of such shares.

A record holder, such as a broker, fiduciary, depository or other nominee, who holds shares as a nominee for others, will be able to exercise dissenters’ rights of appraisal with respect to the shares held for all or less than all of the beneficial owners of those shares as to which such person is the record owner. In such case, the written demand must set forth the number of shares covered by the demand. Where the number of shares is not expressly stated, the demand will be presumed to cover all shares outstanding in the name of such record owner.

The foregoing summary of the rights of dissenting stockholders under Chapter 92A does not purport to be a complete statement of the procedures to be followed by stockholders desiring to exercise any dissenters’ rights of appraisal rights available under Chapter 92A. The preservation and exercise of dissenters’ rights of appraisal require strict adherence to the applicable provisions of Chapter 92A, and the foregoing summary is qualified in its entirety by reference to Annex B to this Proxy Statement.

The Company has not made any provision to obtain counsel or appraisal services for unaffiliated stockholders.

Board Recommendation

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF AN AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO AUTHORIZE TO IMPLEMENT A REVERSE/FORWARD STOCK SPLIT OF OUR ISSUED AND OUTSTANDING COMMON STOCK.

PROPOSAL NO. 2 — AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCERASE THE NUMBER OF SHARES OF COMMON STOCK THAT THE COMPANY IS AUTHORIZED TO ISSUE TO 1,000,000,000 SHARES

The Articles of Incorporation presently authorizes the Company to issue up to 500,000,000 shares of Common Stock. The Company's Board has adopted a resolution, subject to stockholder approval, approving an increase to the number of shares of authorized Common Stock. As of Record Date, there were 110,390,005 shares of Common Stock issued and outstanding. We also have approximately 25,850,000 shares of Common Stock reserved for possible future issuance in connection with outstanding options, warrants, and convertible debentures. Some of the shares reserved for issuance may never actually be issued. For example, many of the outstanding options and warrants and convertible debentures have per share exercise prices well in excess of the current market price of the Common Stock, making their exercise unlikely. Nevertheless, we must keep reserved for future issuance a sufficient number of shares of Common Stock to meet the Company’s obligations to issue Common Stock in the event these options or warrants are exercised or convertible debentures are converted.

The Board believes it is in the best interest of the Company to amend the Company’s Articles of Incorporation whereby the number of shares of Common Stock that we would be authorized to issue from time to time would be increased to 1,000,000,000 shares.

Reasons for the Amendment

On February 2, 2015, the Company and certain of its debenture holders and stockholders and their affiliates holding a majority of the Company’s outstanding Common Stock entered into a definitive agreement to restructure a portion of the Company’s existing debt, provide for the assumption by certain of the stockholders of liabilities arising from the Company’s former business and serving as a first step in efforts to effect a recapitalization of the Company. Under the Master Agreement, dated as of February 2, 2015 (the “Master Agreement”), among the Company and these parties, it was agreed, among other things, that previously issued Company convertible debentures in the principal amount of approximately $8 million as well as warrants for a total of approximately 31 million shares would be exchanged for 52,767,193 shares of newly designated Preferred A Convertible Stock par value $0.00001 per share (the “Series A Preferred Stock”). By their terms the newly designated Series A Preferred Stock will be convertible into a minimum of 52,767,193 shares of Common Stock. Additionally, as also disclosed, one of the shareholders also agreed to convert its holdings of convertible debentures and warrants into approximately 10 million shares of our Common Stock. Finally, the Master Agreement contemplates that following the implementation of the Corporate Actions, including the Reverse/Forward Stock Split, certain of the stockholders may participate, in a new round of funding, which is currently contemplated to take the form of new series of convertible preferred stock.

The 155,000,000 shares of Common Stock reserved for issuance relate to shares issuable upon exercise of stock options held by employees (including officers) and non-employee directors.

The table below summarizes information relating to the number of shares of our Common Stock currently outstanding, reserved and available for issuance and the number of shares of Common Stock that would be reserved and available for issuance immediately following approval of the Increase in Authorized Common Stock.

The balance of the 369,151,075 additional authorized shares of Common Stock that is not needed to satisfy our reserve obligations referred to above may be issued for any proper corporate purpose approved by the Board. Among the reasons for having additional authorized and unissued shares of Common Stock is the ability to sell shares in capital raising transactions during advantageous market conditions, issue shares in connection with acquisitions of the assets, operating businesses or securities of other companies, and issue stock as stock dividends, stock splits and to use shares for other general corporate purposes. The additional shares of Common Stock, when issued, would have the same rights and privileges as the shares of Common Stock now issued. There are no pre-emptive rights relating to the Common Stock. Except in respect of the reservation requirements for the notes referred to above and additional funding that may be forthcoming under the Master Agreement, we do not presently have any agreements, understandings or arrangements regarding the issuance of additional shares of Common Stock or Preferred Stock from any of the additional authorized shares.

However, the Board believes the Company will need to secure financing in the near term for working capital, which financing could involve the issuance or reserve for future issuance of additional shares of Common Stock. Our Board believes that the complexity of modern business financing and acquisition transactions requires greater flexibility in our capital structure than now exists. The Board believes that an Increase in Authorized Common Stock would provide us with increased flexibility in the future to issue capital stock in connection with public or private offerings, stock dividends, financing and acquisition transactions, employee benefit plans and other proper corporate purposes. Moreover, having such additional authorized shares of Common Stock available will give us the ability to issue stock without the expense and delay of a special meeting of stockholders, which delay might deprive us of the flexibility the Board views as important in facilitating the effective use of our stock. Except as otherwise required by applicable law or any applicable stock exchange rules, authorized but unissued shares of Common Stock may be issued at such time, for such purpose and for such consideration as the Board of Directors may determine to be appropriate, without further authorization by stockholders.

Any issuance of additional shares of Common Stock would increase the number of outstanding shares of Common Stock and (unless such issuance was pro-rata among existing stockholders) the percentage ownership of existing stockholders would be diluted accordingly. The dilutive effect of such an issuance could discourage a change in control by making it more difficult or costly.

The issuance of any additional shares of our Common Stock (or any other security convertible into Common Stock) in the future may dilute our existing stockholders. Such dilution may be substantial, depending on the number of shares issued. Any newly authorized shares of Common Stock will have voting and other rights identical to those of the currently authorized shares of Common Stock. We believe that by increasing the Company’s share capital we will be able to issue shares from time to time as may be required for proper business purposes, including for raising additional capital for our ongoing operations, establishing strategic relationships with corporate partners or providing equity incentives to future employees and management. If Proposal No. 4 (the 2015 Incentive Plan) is approved, we will need to maintain sufficient available authorized Common Stock for purposes of effectuating issuances of our Common Stock thereunder.

Potential Anti-Takeover Effects of the Increase in Authorized Common Stock

Any additional issuance of Common Stock could, under certain circumstances, have the effect of delaying or preventing a change in control of our company by increasing the number of outstanding shares entitled to vote and by increasing the number of votes required to approve a change in control. Shares of Common Stock could be issued, or rights to purchase such shares could be issued, to render more difficult or discourage an attempt to obtain control of our company by means of a tender offer, proxy contest, merger or otherwise. The ability of our board of directors to issue such additional shares of Common Stock could discourage an attempt by a party to acquire control of our company by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price that such an attempt could cause. Moreover, the issuance of such additional shares of Common Stock to persons whose interests are aligned with that of our board of directors could make it more difficult to remove incumbent officers and directors from office, even if such change were to be favorable to stockholders generally.

Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of our board or contemplating a tender offer or other transaction for the combination of our company with another company), Proposal No. 2 was not proposed in response to any effort of which we are aware to accumulate shares of Common Stock or obtain control of us, nor is it part of a plan by management to recommend a series of similar actions having an anti-takeover effect to the board and our stockholders.

Board Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT THE COMPANY IS AUTHORIZED TO ISSUE TO 1,000,000,000 SHARES.

PROPOSAL NO. 3 — AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCERASE THE NUMBER OF SHARES OF PREFERRED STOCK THAT THE COMPANY IS AUTHORIZED TO ISSUE TO 500,000,000 SHARES

The Articles of Incorporation presently authorizes the Company to issue up to 100,000,000 shares of Preferred Stock. The Company's Board has adopted resolutions subject to stockholder approval, approving an increase to the number of authorized Preferred Stock of the Company. As of Record Date, there were no shares of Preferred Stock issued and outstanding.

Reasons for the Amendment

As noted above, under the terms of the Master Agreement we will need to designate approximately 53 million shares of preferred stock as newly designated Series A Preferred Stock.

In addition, as contemplated by the transactions disclosed in the Current Report on Form 8-K, filed by the Company on April 8, 2015, Singulariteam Fund II L.P., an entity for which Mr. Moshe Hogeg, the Chairman of our board of directors serves as Principal Partner & Chairman and Platinum have entered into an agreement to invest in the Company, together with a third party investor, in a private placement of $1,250,000 in principal amount of the Company’s convertible notes which are convertible into 71,621,565 shares of Series B Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”) which has not, as of the date hereof, been created and (ii) 214,864,694 shares of Series B Preferred Stock for an additional investment of $3,750,000 upon the creation of the Series B Preferred Stock, according to the terms contained in such report. Thus, in order to receive the remaining $3,750,000 we are required to increase the number of shares of Preferred Stock. Without the investment of such funds, we have substantial doubt about the Company’s ability to continue as a going concern.

In addition, we may need to raise additional capital after the investment contemplated from the issuance of the Series B Preferred Stock. The Board of Directors believes that authorizing the Board of Directors to issue Preferred Stock in one or more series from time to time by resolution would provide the Company with increased flexibility in the future to issue capital stock in connection with private offerings, stock dividends, financing and acquisition transactions, and other proper corporate purposes. Moreover, authorizing the Board to issue Preferred Stock in one or more series from time to time by resolution will give the Company the ability to issue stock without the expense and delay of a special meeting of stockholders, which delay might deprive the Company of the flexibility the Board views as important in facilitating the effective use of the Company's stock.

For the reasons noted above, the Board believes that the Company needs the increase flexibility to issue Preferred Stock in one or more financing.

Any series of Preferred Stock issued by resolution of the Board of Directors, when issued, will have such terms, including, without limitation, dividend or interest rates, conversion prices, voting rights, redemption prices, maturity dates as may be determined by the Board of Directors.

Except as provided above in connection with the Series A Preferred Stock and, subject to approval of this Proposal No. 3, the Series B Preferred Stock, the Company does not presently have any plans, intentions, agreements, understandings or arrangements regarding the issuance of Preferred Stock.

Except as otherwise required by applicable law or stock exchange rules, authorized but unissued shares of Preferred Stock may be issued at such time, for such purpose and for such consideration as the Board of Directors may determine to be appropriate, without further authorization by stockholders.

Potential Anti-Takeover Effects of the Increase in Authorized Preferred Stock

Any issuance of an additional series of Preferred Stock could, under certain circumstances, have the effect of delaying or preventing a change in control of our company by increasing the number of outstanding shares entitled to vote and by increasing the number of votes required to approve a change in control. Shares of Preferred Stock could be issued, or rights to purchase such shares could be issued, to render more difficult or discourage an attempt to obtain control of our company by means of a tender offer, proxy contest, merger or otherwise. The ability of our board of directors to designate one or more series or classes of Preferred Stock for issuance could discourage an attempt by a party to acquire control of our company by tender offer or other means. Such issuances could therefore deprive stockholders of benefits that could result from such an attempt, such as the realization of a premium over the market price that such an attempt could cause. Moreover, the designation and issuance of a new series of Preferred Stock to persons whose interests are aligned with that of our board of directors could make it more difficult to remove incumbent officers and directors from office, even if such change were to be favorable to stockholders generally.

While the creation of Preferred Stock may have anti-takeover ramifications, our Board believes that the financial flexibility offered by the Increase in Authorized Preferred Stock outweighs any disadvantages. To the extent that the increase in the number of authorized shares may have anti-takeover effects, the Increase in Authorized Preferred Stock, when effected, may encourage persons seeking to acquire us to negotiate directly with our board of directors, enabling our board to consider a proposed transaction in a manner that best serves our stockholders’ interests.

Our Board believes that it is advisable and in the best interests of our Company to have available authorized but undesignated shares of preferred stock in an amount adequate to provide for our future needs. The designation of one or more classes or series of Preferred Stock will be available for issuance from time to time as may be deemed advisable or required for various purposes, including the issuance of shares in connection with financing or acquisition transactions. We have no present plans or commitments for the issuance or use of the proposed shares of Preferred Stock in connection with any financing.

Although the increased number of authorized Preferred Stock could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of our board or contemplating a tender offer or other transaction for the combination of our company with another company), Proposal No. 3 was not proposed in response to any effort of which we are aware to accumulate shares of Preferred Stock or Common Stock or obtain control of us, nor is it part of a plan by management to recommend a series of similar actions having an anti-takeover effect to the board and our stockholders.

Board Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF PREFERRED STOCK THAT THE COMPANY IS AUTHORIZED TO ISSUE TO 500,000,000 SHARES,

PROPOSAL NO. 4 — ADOPTION OF THE 2015 INCENTIVE PLAN

At the Special Meeting, the Stockholders will be asked to approve the adoption of the Company’s 2015 Equity Incentive Plan (the "2015 Incentive Plan"). The initial amount to be reserved under the Plan is 155,000,000 shares of our Common Stock. This proposal will be effected only if Proposal No. 2 (Increase in Authorized Common Stock) is approved.

The purpose of our 2015 Incentive Plan is to maintain the ability of the company and its subsidiaries to attract and retain highly qualified and experienced directors, employees and consultants and to give such directors, employees and consultants a continued proprietary interest in the success of the company and its subsidiaries. In addition, the 2015 Incentive Plan is intended to encourage ownership of our common stock by the directors, employees and consultants of the company and its affiliates and to provide increased incentive for such persons to render services and to exert maximum effort for the success of the company’s business. The 2015 Incentive Plan provides eligible employees and consultants the opportunity to participate in the enhancement of stockholder value by the grants of options (including incentive stock options for employees only), restricted or unrestricted common stock and other awards under the 2015 Incentive Plan. The number of shares that are issuable under our current employee stock option plans (the “Current Option Plans”) is 40,661,978 shares of Common Stock. Under the terms of the Current Option Plans, the Company is not permitted to increase the number of shares of common stock reserved for issuance. In addition, the Company intends to issue restricted stock units to several key employees. The Current Option Plans does not provide for the issuance of restricted stock units. Therefore, the Board of the Company has determined that it would be in the best interest of the Company to adopt the 2015 Incentive Plan, which will allow the Company and its Israeli subsidiary the opportunity to attract and maintain qualified personnel by way of issuance of options, restricted stock units and similar awards permitted under the 2015 Incentive Plan.

The 2015 Incentive Plan below attached hereto as Annex C. Any capitalized terms not defined herein shall have the meaning assigned to them in the 2015 Incentive Plan. The purpose of the 2015 Incentive Plan is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and its subsidiary by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. All of the Company’s and its subsidiary’s employees, officers and directors, as well as consultants and advisors to the Company and/or its subsidiary are eligible to be granted Awards under the 2015 Incentive Plan. “Award” means either a Stock Option or a Stock Units (as defined below).

Although the Company cannot currently determine all of the awards that may be granted in the future to the executive officers and key employees of the Company, each of the executive officers and key employees of the Company has an interest in the approval of the 2015 Incentive Plan in so far as they are eligible recipients of awards under the plan. However, following the Reverse/Forward Stock Split, it is the intention of the Company to cause the issuance, from the 2015 Incentive Plan, of 155,000,000 options to purchase Common Stock of the Company, to the Company’s and its subsidiary’s officers and employees, including to, Motti Kushnir (Chief Executive Officer), Ortal Zanzuri (Chief Financial Officer and Secretary) and Matan Protter (Chief Technology Officer of Infinity Israel). The number of shares of options to be granted to each of such officers and employees shall be determined by the Board of Directors and compensation committee after the plan is in effect.

Summary of the 2015 Incentive Plan

Term. The 2015 Incentive Plan shall be effective from the date on which the Company’s Board adopts it (the “Effective Date”); provided, however, that the 2015 Incentive Plan shall be approved by the shareholders of the Company within 12 months before or after the Effective Date. The 2015 Incentive Plan shall remain in effect for 10 years or until earlier terminated by the Board.

Administration. The 2015 Incentive Plan is administered by a committee (the "Committee") appointed from time to time by our Board.  Each Award granted under the 2015 Incentive Plan shall be evidenced by an award agreement (the “Award Agreement”).

The Committee shall have full authority to determine eligibility for grant of Awards, to determine the type and size of Awards, supply any omission, correct any defect or inconsistency in the 2015 Incentive Plan as it shall deem appropriate, issue administrative guidelines and make changes in such guidelines as it from time to time deems proper, and to take any and all other actions it deems necessary or advisable for the proper operation or administration of the 2015 Incentive Plan.

Shares Subject to the 2015 Incentive Plan. The aggregate number of shares of our Common Stock reserved under the 2015 Incentive Plan is 155,000,000 shares par value $0.00001 per share.

In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the Committee shall, in its discretion, make a proportionate adjustment as it deems appropriate. The Committee is further authorized to make adjustments to the terms and conditions of, and the criteria included in Awards in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles.

Option Price and Duration. The Committee Board may grant Awards consisting of ISO and Nonqualified Stock Option (each, a “Stock Option”).  The Committee shall determine the purchase price per share of our Common Stock deliverable upon the exercise of a Stock Option; provided, however, that the exercise price shall not be less than 100% of the fair market value of the Common Stock on the day any such Stock Option is granted. In addition, the exercise price of an incentive stock option granted to any participant who owns more than 10% of the total voting power of all classes of our outstanding stock, must be at least 110% of the fair market value of the Common Stock on the grant date.

If the Committee fails to specify a vesting date in the Award Agreement, 25% of such Stock Options shall become exercisable on each of the first four anniversaries of the date of grant and shall remain exercisable following such anniversary date until the Stock Option expires

The 2015 Incentive Plan further set forth the effect on an Award upon the disability, death, retirement, authorized leave of absence or other change in the engagement of a Participant.

Stock Units. The Committee may grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Stock Units”). The Committee shall determine the terms and conditions of the Stock Units, including its vesting and the criteria for the vesting of such Stock Units and may determine whether a recipient shall be entitled to receive an amount equal to the amount of any dividend paid with respect to a share of Common Stock.

Change in Control. In the event of a Change of Control of the Company, all Awards granted under the 2015 Incentive Plan that are still outstanding and not yet vested or exercisable or which are subject to restrictions shall become immediately fully vested in each Participant or shall be free of any restrictions, as of the first date that the definition of change of control has been fulfilled, and shall be exercisable for the remaining duration of the Award.  Upon the consummation of any Change of Control, all outstanding Awards under the 2015 Incentive Plan shall, to the extent not previously exercised, either be assumed by any successor corporation or parent thereof, or be replaced with a comparable Award with respect to shares of common stock of such successor corporation or parent thereof. The Committee, in its sole discretion, may determine that, upon the occurrence of a Change in Control of the Company, all or a portion of certain outstanding Awards shall terminate within a specified number of days after notice to the holders, and each such holder shall receive an amount as the Committee may determine in its sole and absolute discretion.

Taxes. The Company, or its Subsidiary, may require a Participant whose Stock Unit granted hereunder has vested, or who exercises a Stock Option granted hereunder to reimburse the Company or the Subsidiary for any taxes required by any governmental regulatory authority to be withheld or otherwise deducted and paid by such corporation or entity in respect of the issuance or disposition of such shares or the payment of any amounts. The Company or the Subsidiary shall have the right to withhold the amount of such taxes from any other sums due or to become due from the Company or the Subsidiary to the Participant upon such terms and conditions as the Committee shall in its sole discretion prescribe.

Termination and Amendment. The Board or the Committee may suspend or terminate the 2015 Incentive Plan at any time with or without prior notice; provided, however, that no such action shall reduce the amount of any outstanding Award or adversely change the terms and conditions thereof without the Participant’s consent. The Board or the Committee may amend the 2015 Incentive Plan at any time with or without prior notice, provided that no amendment may adversely affect the rights of any Participant under any outstanding Award without the Participant’s consent; and, provided further, that shareholder approval was accepted if so required to comply with any applicable law; and, provided further, that the Board or the Committee may not, without shareholder approval, increase the maximum number of shares issuable under the 2015 Incentive Plan.

Transferability. Each Award granted under the 2015 Incentive Plan to a Participant shall not be transferable otherwise than by will or the laws of descent and distribution or pursuant to a “qualified domestic relations order” as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations adopted thereunder and Stock Options shall be exercisable, during the Participant’s lifetime, only by the Participant.

The adoption of the 2015 Incentive Plan shall not affect any other stock option, incentive or other compensation plans in effect for the Company or any Subsidiary, nor shall the 2015 Incentive plan preclude the Company from establishing any other forms of incentive or other compensation for employees, directors or consultants of the Company or any Subsidiary.

Certain Federal Income Tax Consequences to the Company and the Participant

The following discussion is a brief summary of the principal United States federal income tax consequences under current federal income tax laws relating to awards under the 2015 Incentive Plan. This summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign income and other tax consequences.

Options and RSU granted under the 2015 Incentive Plan are intended to satisfy the stock rights exception to Section 409A of the Code (“Section 409A”); other types of awards are intended either to satisfy another exception to Section 409A (such as the short-term deferral exception) or to be granted and administered in compliance with Section 409A. A participant will not realize any income upon the award of an Option (including any other stock-based award in the nature of a purchase right) or a RSU, nor will the Company be entitled to any tax deduction. When a participant, who has been granted an Option which is not designated as an Incentive Stock Option, exercises that option and receives Common Stock which is either “transferable” or not subject to a “substantial risk of forfeiture” under Section 83(c) of the Code, the participant will realize compensation income subject, in the case of an employee or former employee, to withholding taxes. The amount of that compensation income will equal the excess of the fair market value of the Common Stock (without regard to any restrictions) on the date of exercise of the Option over its exercise price, and the Company will generally be entitled to a tax deduction in the same amount and at the same time as the compensation income is realized by the participant. The participant’s tax basis for the Common Stock so acquired will equal the sum of the compensation income realized and the exercise price. Upon any subsequent sale or exchange of the Common Stock, the gain or loss will generally be taxed as a capital gain or loss and will be a long-term capital gain or loss if the Common Stock has been held for more than one year after the date of exercise.

If a participant exercises an Option which is designated as an Incentive Stock Option and the participant has been an employee of the Company or its subsidiaries throughout the period from the date of grant of the Incentive Stock Option until three months prior to its exercise, the participant will not realize any income upon the exercise of the Incentive Stock Option (although alternative minimum tax liability may result), and the Company will not be entitled to any tax deduction. If the participant sells or exchanges any of the shares acquired upon the exercise of the Incentive Stock Option more than one year after the issuance of the shares to the participant and more than two years after the date of grant of the Incentive Stock Option, any gain or loss (based upon the difference between the amount realized and the exercise price of the Incentive Stock Option) will be treated as long-term capital gain or loss to the participant. If such sale, exchange or other disposition takes place within two years of the grant of the Incentive Stock Option or within one year of the transfer of shares to the participant, the sale, exchange or other disposition will generally constitute a “disqualifying disposition” of such shares. In such event, to the extent that the gain realized on the disqualifying disposition does not exceed the difference between the fair market value of the shares at the time of exercise of the Incentive Stock Option over the exercise price, such amount will be treated as compensation income in the year of the disqualifying disposition, and the Company will be entitled to a deduction in the same amount and at the same time as the compensation income is realized by the participant. The balance of the gain, if any, will be treated as capital gain and will not result in any deduction by the Company.

With respect to other Awards granted under the Stock Incentive Plan that may be settled either in cash or in Common Stock or other property that is either transferable or not subject to a substantial risk of forfeiture under Section 83(c) of the Code, the participant will realize compensation income (subject, in the case of employees to withholding taxes) equal to the amount of cash or the fair market value of the Common Stock or other property received. The Company will be entitled to a deduction in the same amount and at the same time as the compensation income is realized by the participant.

With respect to awards involving Common Stock or other property that is both nontransferable and subject to a substantial risk of forfeiture, unless an election is made under Section 83(b) of the Code, as described below, the participant will realize compensation income equal to the fair market value of the Common Stock or other property received at the first time the Common Stock or other property is either transferable or not subject to a substantial risk of forfeiture. The Company will be entitled to a deduction in the same amount and at the same time as the compensation income is realized by the participant. Even though Common Stock or other property may be nontransferable and subject to a substantial risk of forfeiture, a participant may elect (within 30 days of receipt of the Common Stock or other property) to include in gross income the fair market value (determined without regard to such restrictions) of such Common Stock or other property at the time received. In that event, the participant will not realize any income at the time the Common Stock or other property either becomes transferable or is not subject to a substantial risk of forfeiture, but if the participant subsequently forfeits such Common Stock or other property, the participant’s loss would be limited only to the amount actually paid for the Common Stock or other property. While such Common Stock or other property remains nontransferable and subject to a substantial risk of forfeiture, any dividends or other income will be taxable as additional compensation income.

Finally, special rules may apply with respect to participants subject to Section 16(b) of the Exchange Act.

The Committee may condition the payment, exercise or vesting of any award on the payment of the withholding taxes and may provide that a portion of the Common Stock or other property to be distributed will be withheld (or previously acquired stock or other property surrendered by the participant) to satisfy such withholding and other tax obligations. Finally, amounts paid pursuant to an award which vests or becomes exercisable, or with respect to which restrictions lapse, upon a change in control may constitute a “parachute payment” under Section 280G of the Code. To the extent any such payment constitutes an “excess parachute payment”, the Company would not be entitled to deduct such payment and the participant would be subject to a 20 percent excise tax (in addition to regular income tax).

New Plan Benefits

Because awards under the Stock Incentive Plan are discretionary, the Company cannot currently determine the kind or number of Awards that may be granted under the Stock Incentive Plan or the recipients thereof. However, it is our intention to grant the following officers and directors of the Company and its Israeli subsidiary with options and RSU as outlined in the table below:

EQUITY COMPENSATION PLAN INFORMATION

Pursuant to the approval of our board of directors, we adopted our 2014 Equity Incentive Plan (“2014 Plan”) on March 24, 2014, whereby we reserved for issuance thereunder up to 30,000,000 shares of our common stock.  The purpose of the 2014 Plan is to provide our directors, officers and employees of, and consultants, with additional incentives by increasing their ownership in our Company. Our directors, officers, employees and consultants are eligible to participate in the 2014 Plan. Options in the form of Non-Statutory Stock Options (“NSO”) as well as Restricted Stock may be granted under the 2014 Plan. We have also adopted our 2013 Equity Incentive Plan (“2013 Plan”) on March 1, 2013, whereby we reserved for issuance thereunder up to 30,000,000 shares of our common stock.  We adopted our 2010 Equity Incentive Plan (“2010 Plan”) on June 1, 2010, whereby we reserved for issuance thereunder up to 10,000,000 shares of our common stock. A total of 70,000,000 shares of our common stock are available for issuance under the 2014 plan, the 2013 Plan and the 2010 Plan, collectively. As of August 31, 2014, grants of 25,800,000 options and shares of Restricted Stock have been made to officers, directors and consultants, net of cancelations.

The following table provides certain aggregate information, as of August 31, 2014, with respect to all of our equity compensation plans currently in effect:

2014 Equity Incentive Plan

Pursuant to the approval of our board of directors, we adopted our 2014 Plan on March 24, 2014, whereby up to 30,000,000 shares of our common stock were reserved for issuance. The purpose of the 2014 Plan is to provide our directors, officers, employees and consultants with additional incentives by increasing their ownership interest in our Company. Directors, officers, employees and consultants of our Company are eligible to participate in the 2014 Plan. Options in the form of NSOs, as well as Restricted Stock, may be granted under the 2014 Plan. As of August 31, 2014, grants of 20,000,000 NSO’s under the 2014 Plan have been made to certain of directors.

Our board of directors or our Compensation Committee administers the 2014 Plan with the discretion generally to determine the terms of any option grant, including the number of option shares, exercise price, term, vesting schedule and the post-termination exercise period.

2013 Equity Incentive Plan

Pursuant the approval of our board of directors, we adopted our 2013 Plan on March 1, 2013, whereby up to 30,000,000 shares of our common stock were reserved for issuance. The purpose of the 2013 Plan is to provide our directors, officers, employees and consultants with additional incentives by increasing their ownership interest in our Company. Our directors, officers, employees and consultants are eligible to participate in the 2013 Plan. Options in the form NSOs, as well as Restricted Stock, may be granted under the 2013 Plan. As of August 31, 2014, grants of 6,458,762 NSO’s and shares of Restricted Stock have been made to certain of our officers, directors and consultants, net of cancelations.

Our board of directors or our Compensation Committee administers the 2013 Plan with the discretion generally to determine the terms of any option grant, including the number of option shares, exercise price, term, vesting schedule and the post-termination exercise period.

2010 Equity Incentive Plan

Pursuant to the approval of our board of directors and of our stockholders, we adopted our 2010 Plan on June 1, 2010, whereby to 10,000,000 shares of our common stock were reserved for issuance. The purpose of the 2010 Plan is to provide our directors, officers, employees and consultants with additional incentives by increasing their ownership interest in our Company. Our directors, officers, employees and consultants are eligible to participate in the 2010 Plan. Options in the form of Incentive Stock Options and NSOs, as well as Restricted Stock, may be granted under the 2010 Plan. As of August 31, 2014, grants of 2,829,260 NSO’s and shares of Restricted Stock have been made to our officers, directors and consultants, net of cancelations.

Our board of directors or our Compensation Committee administers the 2010 Plan with the discretion generally to determine the terms of any option grant, including the number of option shares, exercise price, term, vesting schedule and the post-termination exercise period.

Incentive stock options may be granted under the 2010 Plan only to employees of our Company and its affiliates.  Employees, directors and consultants of our Company and its affiliates are eligible to receive all other types of awards under the 2010 Plan.  No incentive stock option may be granted under the 2010 Plan to any person who, at the time of the grant, owns (or is deemed to own) stock possessing more than 10% of the total combined voting power of our Company or any affiliate ours, unless the exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and the term of the option does not exceed five years from the date of grant.

EXECUTIVE COMPENSATION

The following table summarizes the total compensation paid or accrued during the last two fiscal years ended August 31, 2014 and 2013, to (i) the Company’s Chief Executive Officer, (ii) the Company’s two next most highly compensated executive officers (other than the Chief Executive Officer) who earned more than $100,000 during the fiscal year ended August 31, 2014, and were serving as executive officers as of such date, and (iii) two of our former executive officers who were set to earn more than $100,000 during the fiscal year ended August 31, 2014, had they been serving as executive officers as of such date.

Narrative Disclosure to Summary Compensation Table

Motti Kushnir

Our subsidiary, Infinity Israel Ltd., or Infinity Israel, entered into an employment agreement with Motti Kushnir (“Mr. Kushnir”) on December 29, 2013, pursuant to which Mr. Kushnir served as the Chief Operating Officer (“COO”) effective from December 29, 2013. In connection with his appointment as COO, Mr. Kushnir was entitled to receive annual compensation of approximately NIS 630,000 (approximately $179,000) as well as options to purchase 1,375,000 shares of our common stock with an exercise price of $0.40, vesting semiannually over a period of 3 years, and expiring on February 22, 2019. Mr. Kushnir's employment agreement is cancelable by either us or Mr. Kushnir with 60 days prior notice.

On March 24, 2014, our Board of Directors accepted the resignation of the former Chief Executive Officer of our Company and our wholly-owned subsidiary, Infinity Israel, Mr. Enon Landenberg, from such capacity, effective April 1, 2014, and elected Mr. Kushnir to serve as Chief Executive Officer of our Company. Mr. Kushnir was also elected to serve as the Chief Executive Officer of Infinity Israel. The change in Mr. Kushnir's position was not accompanied by any changes to his employment terms.

Ortal Zanzuri

Effective November 1, 2013, Infinity Israel entered into an employment agreement with Ms. Zanzuri pursuant to which she was appointed as the Chief Financial Officer of Infinity Israel. On November 11, 2013, our board of directors unanimously resolved to approve Ms. Zanzuri’s appointment as our Chief Financial Officer, effective on January 1, 2014, concurrently with accepting the resignation of Mr. Joshua Yifat, effective from said date. In connection with her appointment as Chief Financial Officer, Ms. Zanzuri is entitled to receive annual compensation of NIS 480,000 (approximately $136,000) and was granted options to purchase 400,000 shares of our common stock with an exercise price of $0.10 which vest semiannually over a period of 2 years, commencing from April 30, 2014, continuing through October 31, 2015, and expire on February 22, 2019. Total fair value of this grant was $87,875. Ms. Zanzuri's employment agreement is cancelable by either us or Ms. Zanzuri with 60 days prior notice.

Matan Protter

Infinity Israel entered into an employment agreement with Matan Protter (“Mr. Protter”) on December 29, 2013, pursuant to which Matan has been serving as the Chief Technology Officer (“CTO”) effective as of January 1, 2014. In connection with his appointment as CTO, Mr. Protter was entitled to receive annual compensation of approximately NIS 531,600 (approximately $151,000), and was granted options to purchase 1,375,000 shares of our common stock with an exercise price of $0.40, vesting semiannually over a period of 3 years, and expiring on February 22, 2019. Mr. Protter's employment agreement is cancelable by either us or Mr. Protter with 60 days prior notice.

Enon Landenberg

Effective May 30, 2013, we agreed in principle to employ Mr. Landenberg as President and Chief Executive Officer, through May 31, 2014, with an initial base compensation of $250,000 per year. Mr. Landenberg was also entitled to receive 300,000 Non-Qualified Stock Options with an exercise price of $0.405, vesting on May 30, 2013 and expiring on May 29, 2018. On July 31, 2013, Mr. Landenberg waived his rights to receive these o Non-Qualified Stock Options, which were summarily cancelled by us.

 On March 24, 2014, our Board of Directors accepted the resignation of the former Chief Executive Officer of our Company and our wholly-owned subsidiary, Infinity Israel Ltd., Mr. Enon Landenberg, from such capacity, effective April 1, 2014. Mr. Landenberg’s resignation was not the result of any disagreement regarding the operations, policies and procedures of our Company. Mr. Landenberg remains our President and a member of our board of directors.

Pursuant to the terms of an agreement reached between us and Mr. Landenberg, he was entitled to continue to receive his then current salary and full benefits until June 30, 2014. Mr. Landenberg had previously been granted options to purchase 1,500,000 shares of our common stock, of which 750,000 options were already fully vested at such time. Mr. Landenberg also received acceleration of the remaining unvested options to purchase 750,000 shares of our common stock, which vest in nine monthly installments commencing from April 30, 2014 through December 31, 2014.

Joshua Yifat

We entered into an employment agreement with Mr. Yifat, dated April 15, 2011, pursuant to which, Mr. Yifat served as our Treasurer and Chief Financial Officer and was entitled to an annual salary of $160,000, later increased to $171,600 effective September 1, 2012, until April 15, 2014. In addition, Mr. Yifat was entitled to receive a net year-end performance bonus, based on performance measurements approved by our independent directors, as well as certain other benefits. On November 11, 2013, our board of directors unanimously resolved to appoint Ms. Ortal Zanzuri to replace Mr. Yifat as Chief Financial Officer, effective on January 1, 2014, and accepted the resignation of Mr. Yifat, effective as of said date.

Upon being appointed as Chief Financial Officer, Mr. Joshua Yifat was granted 100,000 shares of common stock under our 2013 Plan. During the year ended August 31, 2013, Mr. Joshua Yifat was granted a total of 230,000 Options issued under the 2010 Plan with an exercise price of $0.25, which options were fully vested as of March 6, 2013. As of August 31, 2014, all the forgoing options were forfeited.

Outstanding equity awards at fiscal year end

The following table sets forth information for each named executive officer regarding outstanding stock options on the last day of the fiscal year ended August 31, 2014:

Director Compensation

The following table sets forth the compensation during the year ended August 31, 2014 of the non-employee members of our board of directors who serve on our board of directors.

 Narrative to Director Compensation Table

Our directors currently do not receive any cash compensation for service on the Board of Directors or any committee thereof, except for Mr. Inbar and Mr. Stern who each receive a monthly retainer fee of $2,000. However, directors may be reimbursed for certain expenses in connection with attendance at Board and Committee meetings. We may compensate independent directors for their service on the Board and any Committee at rates that are comparable to the compensation paid to independent directors of other similarly situated companies.

Board Recommendation

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE ADOPTION OF THE 2015 INCENTIVE PLAN.

STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL HOLDERS

The following table sets forth information, as of Record Date, concerning beneficial ownership of Common Stock, our only class of equity securities currently outstanding, by (i) the only persons known to the Company to be beneficial owners of more than 5% of the outstanding Common Stock, (ii) all directors, (iii) all executive officers (including named executive officers) and (iv) all directors and executive officers (including names executive officers) as a group.

Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under those rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of June 30, 2015, through the exercise or conversion of any stock option, convertible security, warrant or other right. Inclusion of shares in the table does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of capital stock listed as owned by that person or entity.

HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and related notices with respect to two or more stockholders sharing the same address by delivering a single proxy statement or notice addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. The Company and some brokers may household proxy materials, delivering a single proxy statement or notice to multiple stockholders sharing an address unless contrary instructions have been received from one or more of the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you instruct us to the contrary. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and related notices, or if you are receiving multiple copies of the proxy statement and related notices and wish to receive only one, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You may notify us by sending a written request to our Exchange Agent.

PRIOR TRANSACTIONS BETWEEN THE COMPANY AND RELATED PERSONS AND ENTITIES

During the year ended August 31, 2013, the Company completed a private placement of (i) five-year Series A-13 Convertible Debentures (the “A-13 Debentures”) for an aggregate principal amount of $1,927,543, bearing interest at 1.2% per annum, convertible into shares of common stock, at a conversion price of $0.25, and (ii) a five-year Warrant (the “2013 Warrants”) to purchase 7,710,172 shares of common stock, to certain accredited investors pursuant to a series of Securities Purchase Agreements.

During the year ended August 31, 2014, the Company completed a private placement of (i) five-year A-13 Debentures for an aggregate principal amount of $2,130,000, bearing interest at 1.2% per annum, convertible into shares of common stock, at a conversion price of $0.25, and (ii) a five-year 2013 Warrants to purchase 8,520,000 shares of common stock, to certain accredited investors pursuant to a series of Securities Purchase Agreements.

On March 24, 2014, our board of directors approved the Securities Purchase Agreement with each of the Purchasers, substantially upon the terms set forth in the Securities Purchase Agreement (the “2014 SPA”), and to accept the offer of each of the Purchasers, to purchase its respective portion of the $2,500,000 of our Convertible Debentures Series A-14 with Warrants on the terms previously set forth in the 2014 SPA. Under the 2014 SPA, the Company received a commitment from Credit Strategies, LLC (the “Lead Investor”), for itself and/or its affiliates, which are major investors in the Company, to purchase an additional $1,500,000 upon similar terms within 90 days. During July 2014, the Company’s board of directors approved the amendment of the 2014 SPA to provide that the Lead Investor will invest its $1,500,000 in several installments according to the Company’s needs. As of August 31, 2014, $750,000 of which had been received. During the first fiscal quarter of 2015, we received the remaining balance of $750,000.

On June 24, 2014, we entered into a new Securities Purchase Agreement with ALS Capital Ventures LLC (the "Investor”). Pursuant to the terms of the Securities Purchase Agreement, the investor purchased 1.20% convertible debentures (convertible into an aggregate of 4,944,000 shares of common stock at an exercise price of $0.25 per share) and warrants (to purchase an aggregate of 4,944,000 shares of common stock at an exercise price of $0.50 per share). The purchase price paid by the Investor was $1,236,000 which was paid through a combination of (a) $1,100,000 cash and (b) the exchange by the investor of a $136,000 payable owed by us to the investor as reimbursement of a reduction of premiums paid with regard to the insurance policies transferred to the Investor by us in 2012.

On March 26, 2014, we completed a private placement to Singulariteam Fund L.P. (f/k/a Genesis Angels Fund, LP), (“Singulariteam”) an entity for which Mr. Moshe Hogeg, the Chairman of our board of directors serves as Managing Partner & Chairman, pursuant to which we issued Singulariteam: (i) five-year Convertible Debentures for an aggregate principal amount of $1,000,000, bearing interest at 1.2% per annum, convertible into shares of common stock, at a conversion price of $0.25, and (ii) a five-year Warrant to purchase 4,000,000 shares of common stock.

In addition, on January 29, 2015, all of the Board of Directors and on February 2, 2015, the majority stockholder of the Company, have approved and authorized the execution of a certain Master Agreement by and between the Company, Credit Strategies LLC, Platinum Partners Value Arbitrage Fund L.P., ALS Capital Ventures LLC, SBO Trust U/A/D 4/13/10, MJSYRL Inc., CS Master Holdings LLC, Moshe Oratz, and Singulariteam, dated as of February 2, 2015, including all annexes, schedules, instruments, and documents ancillary thereto, providing for, inter alia, the raising of additional funds from some of the parties to such Master Agreement, which are stockholder of the Company as well as from third parties investors in consideration to the Company’s shares. Such transaction shall allow for the participating stockholders to increase their holdings in the Company.

Furthermore, Singulariteam Fund II L.P., an entity for which Mr. Moshe Hogeg, the Chairman of our board of directors serves as Principal Partner and Chairman, entered into a definitive agreement together with an affiliate of Credit Strategies LLC and other investors relating to a private placement of (i) $1,250,000 in principal amount of the Company’s convertible notes which are convertible into 71,621,565 shares of Series B Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”) which has not, as of the date hereof, been created and (ii) 214,864,694 shares of Series B Preferred Stock for an additional investment of $3,750,000, according to the terms contained therein upon completion of the financing round.

GOLDEN PARACHUTES AND OTHER COMPENSATION OF ANY OFFICERS

AS A RESULT OF THE REVERSE/FORWARD STOCK SPLIT

No officer is receiving golden parachutes or any cash payment as a result of the Reverse/Forward Stock Split.

As stated above, following the Reverse/Forward Stock Split, it is the intention of the Company to cause the issuance of 155,000,000 options or stock units to purchase Common Stock of the Company, to the Company’s and the its Israeli subsidiary's officers and employees, including to, Motti Kushnir (Chief Executive Officer), Ortal Zanzuri (Chief Financial Officer and Secretary) and Matan Protter (Chief Technology Officer of Infinity Israel). The number of options or stock units to be granted to each of such officers and employees shall be determined by the Board of Directors.

FINANCIAL INFORMATION

The following documents that we filed with the SEC, are incorporated by reference in this Proxy Statement: (i) the Annual Report on Form 10-K for the fiscal year ended August 31, 2014, (ii) the Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2015, and (v) any filings with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act following the date of this Proxy Statement.

The Reverse/Forward Stock Split is not anticipated to have a material effect on (1) the Company's balance sheet as of May 31, 2015; and (2) the Company's statement of income, earnings per share, and ratio of earnings to fixed charges for the fiscal year ended August 31, 2014 and the quarterly period ended May 31, 2015.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Proxy Statement to the extent that a statement contained herein (or in any other subsequently filed documents which also is deemed to be incorporated by reference herein) modifies or supersedes the statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Proxy Statement.

Going Concern Uncertainty

The Company will require additional funds to finance our augmented reality operations. The Company is dependent upon the expected demand for its software platform and its ability to generate sufficient cash from our augmented reality business to meet its obligations as they come due. The Company may not be able to obtain additional financing on reasonable terms or at all. However, there can be no assurance that we will be successful in implement our business plan, and it is uncertain whether the Company will be able to achieve a profitable level of operations and be able to obtain additional financing. There can be no assurance that any additional financings will be available to the Company on satisfactory terms and conditions, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company had a limited operating history in its current augmented reality business since November 2012. The Company has sustained operating losses since such date and will likely continue to sustain losses as it seeks to develop its augmented reality products. The Company expects these losses to be substantial because its product development and other costs that will be spent on development activities. For the year ended August 31, 2014, the Company had a net loss applicable to common shareholders of $7,874,588 as compared to $11,424,093 for the year ended August 31, 2013. As of August 31, 2014, we have an accumulated deficit of $66,180,566. Since the Company began augmented reality, it had generated no revenues and a large portion of its expenses are fixed, including expenses related to facilities, equipment, contractual commitments and personnel. As a result, the Company expects its net losses from operations to continue for the next few years.

 Net cash used in operating activities from continuing operations for the year ended August 31, 2014 was $3,432,834. Net cash used in investing activities was $51,300 resulted from net purchase of leasehold improvements and equipment. Net cash provided by financing activities was $5,144,717 arising from proceeds received from convertible debentures and exercise of stock options. The effect of exchange rate changes on cash was a decrease of $13,478. This resulted in an increase in cash of $443,678. Sources of cash flow for continuing operations resulted primarily from proceeds received from investments.

Without the continued capital and cash flow assistance from our shareholders and new investors in the Company, the Company's ability to continue as a viable business is in doubt, and it may not be able to continue as a going concern. These matters raise substantial doubt about the Company's ability to continue as a going concern. However, as contemplated by the transactions disclosed in the Current Report on Form 8-K filed by the Company on April 8, 2015, on April 6, 2015, the Company entered into a definitive agreement relating to a private placement of (i) $1,250,000 in principal amount of the Company’s convertible notes which are convertible into 71,621,565 shares of Series B Preferred Stock, par value $0.00001 per share (the “Series B Preferred Stock”) which has not, as of the date hereof, been created and (ii) 214,864,694 shares of Series B Preferred Stock for an additional investment of $3,750,000, according to the terms contained therein upon completion of the financing round.

Summary FINANCIAL INFORMATION

The following tables present summary financial information of the Company as of and for the years in the period ended as of August 31, 2014 and August 31, 2013 and the unaudited consolidated balance sheet as of May 31, 2015. Such summary financial data has been derived from the Company’s historical audited financial statements, as included with the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2014 and August 31, 2013. The summary financial data presented below should be read in conjunction with the Company’s financial statements and accompanying notes thereto as filed with the SEC.

INFINITY AUGMENTED REALITY, INC. AND ITS SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

INFINITY AUGMENTED REALITY, INC. AND ITS SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

The basic loss per common share for continuing operation was $(0.01) for the three months ended May 31, 2015 and $(0.03) for the three months ended May 31, 2014, $(0.04) for the nine months ended May 31, 2015 and $(0.06) for the nine months ended May 31, 2014, $(0.08) for the year ended August 31, 2014 and $(0.07) for the year ended August 31, 2013.

The book value per common share as of May 31, 2015 was a negative book value.

INFINITY AUGMENTED REALITY, INC. AND ITS SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

RATIO OF EARNINGS TO FIXED CHARGES

Our ratio of earnings as adjusted to fixed charges in accordance with US GAAP for the periods presented are as follows:

For the purpose of these computations, earnings (losses) have been calculated as the sum of (i) pretax income from continuing operations; and (ii) amortization of capitalized interest offset by interest capitalized.  Fixed charges consist of the sum of interest expenses and capitalized, amortized premiums, discounts and capitalized expenses related to indebtedness.