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InnoVision Labs, Inc – ‘S-1’ on 8/1/14

On:  Friday, 8/1/14, at 4:15pm ET   ·   Accession #:  1144204-14-46444   ·   File #:  333-197807

Previous ‘S-1’:  ‘S-1’ on 7/15/14   ·   Next & Latest:  ‘S-1/A’ on 9/19/14   ·   3 References:   By:  SEC – ‘UPLOAD’ on 10/3/14 By:  SEC – ‘UPLOAD’ on 9/26/14 By:  SEC – ‘UPLOAD’ on 8/27/14 

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

 8/01/14  InnoVision Labs, Inc              S-1                   86:11M                                    Toppan Merrill/FA

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As filed with the Securities and Exchange Commission on August 1, 2014

Registration No. 333-       

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

GlassesOff Inc.

(Exact Name of Registrant as Specified in Its Charter)

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:   x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

CALCULATION OF REGISTRATION FEE

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

5,000,000 Shares

Common Stock

This prospectus relates to the resale by the selling stockholders named herein, which we refer to as the selling stockholders, of up to an aggregate of 5,000,000 shares of common stock, par value $0.001 per share, of GlassesOff Inc., which we refer to as Common Stock. As used in this prospectus, the term “selling stockholders” means YA Global Master SPV Ltd., also referred to as YA Global, and YA Global II SPV LLC, also referred to as YA Global II, together with their respective pledgees, transferees or other successors in interest selling shares of Common Stock received from either YA Global or YA Global II after the date of this prospectus as a gift, pledge or other non-sale-related transfer.

The shares of Common Stock offered by the selling stockholders hereunder have been or may be issued pursuant to a standby equity distribution agreement, referred to as the SEDA, which we entered into with YA Global on July 1, 2014. Please refer to the section of this prospectus entitled “Standby Equity Distribution Agreement” for a description of the SEDA and the section entitled “Selling Stockholders” for additional information regarding YA Global.

GlassesOff Inc. is not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares of Common Stock by the selling stockholders. References in this prospectus to the “Company,” “we,” “our,” and “us” refer to GlassesOff Inc., together with its consolidated subsidiaries.

We are bearing all of the expenses in connection with the registration of the shares of Common Stock, but all selling and other expenses incurred by the selling stockholders, including commissions and discounts, if any, attributable to the sale or disposition of shares of Common Stock will be borne by the selling stockholders.

The shares of Common Stock described in this prospectus may be offered for sale from time to time by the selling stockholders. The selling stockholders may offer and sell the shares in a variety of transactions as described under the heading “Plan of Distribution” beginning on page 55. The Securities and Exchange Commission, which we refer to as the SEC, may take the view that, under certain circumstances, any broker-dealers or agents that participate with the selling stockholders in the distribution of the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, which we refer to as the Securities Act. Under the Securities Act, commissions, discounts or concessions received by any such broker-dealer or agent may be deemed to be underwriting commissions. YA Global and YA Global II have informed us that each is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

Our Common Stock is quoted on the OTCBB under the symbol “GLSO”. The last reported sale price of the Common Stock on the OTCBB on July 29, 2014 was $1.07 per share.

An investment in our Common Stock involves substantial risks.  See “Risk Factors” beginning on page 8 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                    , 2014.

TABLE OF CONTENTS

Prospectus

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements”. Forward-looking statements include statements about our expectations, beliefs or intentions regarding our product offerings, business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. We do not undertake any obligation to update forward-looking statements. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance. We undertake no obligation to update, and we do not have a policy of updating or revising, these forward-looking statements.

Risks and uncertainties, the occurrence of which could adversely affect our business, include, without limitation, the following:

* * * * *

RISK FACTORS

An investment in our Common Stock involves a high degree of risk. Before making an investment decision, you should carefully consider the following risk factors. If any of these risks actually occur, our business, financial condition and results of operations could be materially harmed, the trading price of our Common Stock could decline significantly and you could lose all or part of your investment.

Risks Related to Our Company and Our Business

We have a limited operating history, and we do not expect to become profitable in the near future.

We are a development stage vision exercise improvement software solutions company with a limited operating history. We are not profitable and have incurred losses since our inception. We have not generated significant operating revenue since our inception, and we continue to incur research and development and general and administrative expenses related to our operations. We expect to incur losses for the foreseeable future. If our products do not achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Accordingly, it is difficult to evaluate our business prospects. Moreover, our prospects must be considered in light of the risks and uncertainties encountered by an early-stage company operating in a market with regulatory issues and where the need for market acceptance of our products is uncertain. There can be no assurance that our efforts will ultimately be successful or result in revenues or profits.

We have only recently started limited commercialization of our first product, we have not generated significant revenues thus far and we may never become profitable.

We have only recently commercialized our first product. We will not be successful unless GlassesOff™ and any other products we develop, if any, gain market acceptance. The degree of market acceptance of our products will depend on a number of factors, including:

Physicians, users, thirty-party payors or the medical community in general may be unwilling to accept, utilize or recommend any of our products or products incorporating our technologies. As a result, we are unable to predict the extent of future losses or the time required to achieve profitability, if at all. Even if we successfully develop one or more products that incorporate our technologies, we may not become profitable.

Our future potential products in our application pipeline are in the early development stages and may never be commercially successful.

Our future potential products in our application pipeline are either at very early stages of product development or pre-definition and may never be developed or commercialized. The progress and results of any future products are uncertain, and may result in a failure to develop additional effective products. Even if we successfully complete one or more of our future potential products’ development, they may not be commercially successful due to, among other things, low users’ acceptance or criticism by clinicians and other third-party opinion leaders. Third parties may develop superior products or have proprietary rights that preclude us from marketing our products.

We are dependent on a small number of distribution channels, none of which we control, and changes in such channels could impair our ability to distribute our products and adversely impact our financial performance.

Currently, our only distribution channel for our applications is Apple’s App Store, and we expect that future distribution channels will comprise other similar popular application stores, such as Google Play. We do not control these application stores, and the owners of such stores can change various parameters, such as increasing fees or requiring additional product safeguards, any of which could have an adverse impact on our financial performance and our ability to distribute our products.

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.

Our independent registered public accounting firm noted in its report accompanying our financial statements for the fiscal year ended December 31, 2013 that we have incurred operating losses and our ability to continue to operate as a going concern is dependent upon additional financial support, which raises substantial doubt about our ability to continue as a going concern. We have not yet generated significant revenues from our operations to fund our activities, and are therefore dependent upon external sources for financing our operations. There can be no assurance that we will succeed in obtaining the necessary financing to continue our operations. As a result, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. Management’s plans concerning these matters are described in Note 1b to our financial statements; however, management cannot assure you that its plans will be successful in addressing these issues. Our financial statements do not include any adjustments relating to the recoverability and classification of assets’ carrying amounts or the amount and classification of liabilities that may be required should we be unable to continue as a going concern. If we cannot successfully continue as a going concern, our stockholders may lose their entire investment in our Common Stock.

It is highly likely that we will need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and could dilute current stockholders’ ownership interests.

Our future capital requirements will depend on many factors, including the progress and results of our product testing, the timing and outcome of regulatory review of our products (should some of our products require regulatory approval), the number and development requirements of other products that we pursue, and the costs of commercialization activities, including product marketing, sales, and distribution. Because of the numerous risks and uncertainties associated with the development and commercialization of our products, we are unable to reasonably estimate the amounts of additional capital outlays and operating expenditures that our business will require. It is likely that we will need to raise additional funds through public or private debt or equity financings to meet various objectives including, but not limited to:

Any additional capital raised through the sale of equity or equity-linked securities may dilute our current stockholders’ ownership in us and could also result in a decrease in the market price of our Common Stock. The terms of those securities issued by us in future capital transactions may be more favorable to new investors and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect.

Furthermore, any debt or equity financing that we may need may not be available on terms favorable to us, or at all. If we are unable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business, and we may not be able to continue operating if we do not generate sufficient revenues from operations needed to stay in business.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition.

If we fail to obtain necessary funds for our operations, we will be unable to maintain and improve our technology, and we will be unable to develop and commercialize our products and technologies.

Our present and future capital requirements depend on many factors, including:

If we are unable to obtain the funds necessary for our operations, we will be unable to maintain and improve our patented technology, and we will be unable to develop and commercialize our products and technologies, which would materially adversely affect our business, liquidity and results of operations.

We depend on key members of our management and advisory team and will need to add and retain additional leading experts.

We are highly dependent on our board members, executive officers and other key management and technical personnel. Our failure to retain our Chief Scientific Officer, Prof. Uri Polat, our Chairman, Mr. Shai Novik, and our CEO, Mr. Nimrod Madar, or any other key board members or management and technical personnel could have a material adverse effect on our future operations. Our success is also dependent on our ability to attract, retain and motivate highly trained technical, marketing, sales and management personnel, among others, to market our products and to continue to develop enhanced releases of our products. We presently do not maintain “key person” life insurance policies on any of our personnel.

Our success also depends on our ability to attract, retain and motivate personnel required for the development, maintenance and expansion of our activities. There can be no assurance that we will be able to retain our existing personnel or attract additional qualified employees. The loss of key personnel or the inability to hire and retain additional qualified personnel in the future could have a material adverse effect on our business, financial condition and results of operation.

Under current U.S. and Israeli law, we may not be able to enforce employees’ covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees. 

We have entered into non-competition agreements with our key employees. These agreements prohibit our key employees, if they cease working for us, from competing directly with us or working for our competitors for a limited period. Under applicable U.S. and Israeli law, we may be unable to enforce these agreements. If we cannot enforce our non-competition agreements with our employees, then we may be unable to prevent our competitors from benefiting from the expertise of our former employees, which could materially adversely affect our business, results of operations and ability to capitalize on our proprietary information.

We only recently established limited sales and marketing capabilities, and we may be unable to effectively sell, market and distribute our products in the future, and the failure to do so would have an adverse effect on our business and results of operations.

We only recently established limited sales and marketing capabilities. If we are unable to develop an effective sales, marketing, customer relationship management and distribution capabilities or enter into agreements with third parties to perform these functions, we will not be able to successfully commercialize any of our products. We currently have only limited internal sales and marketing capabilities, and we are entirely dependent on third parties for distribution of our products. In order to successfully commercialize any of our products, we must either further internally develop sales, marketing, customer relationship management and distribution capabilities or make arrangements with third parties to perform these services.

If we do not develop a skilled marketing and sales force and supporting customer relationship management, we will be unable to market any of our products directly. To promote any of our potential products through third parties, we will have to locate acceptable third parties for these functions and enter into agreements with them on acceptable terms, and we may not be able to do so. In addition, any third-party arrangements we are able to enter into, such as our agreement with Apple’s App Store, may result in lower revenues than we could achieve by directly marketing and selling our potential products.

We may suffer losses from product liability claims if our products cause harm to customers.

Any of our products could potentially cause adverse events. These reactions may not be observed during testing, but may nonetheless occur after commercialization. If any of these reactions occur, they may render our products ineffective or harmful in some customers, and our sales would suffer, materially adversely affecting our business, financial condition and results of operations.

In addition, potential adverse events caused by our products could lead to product liability lawsuits. If professional liability and/or product liability lawsuits are successfully brought against us, we may incur substantial losses and may be required to limit commercialization of our products. Our business exposes us to potential product liability risks, which are inherent in the testing, marketing and selling of brain training software products. We may not be able to avoid product liability claims. Product liability insurance for our products and products in development is generally expensive, if available at all. We do not currently have product liability insurance. If we are unable to obtain insurance coverage on reasonable terms or to otherwise protect against potential product liability claims, we may be unable to commercialize our products. A successful product liability claim brought against us in excess of our insurance coverage, if any, may cause us to incur substantial liabilities, and, as a result, our business, liquidity and results of operations would be materially adversely affected.

Failure by our customers to use our products correctly could lead to less than optimal results and customer dissatisfaction, which could have a material adverse effect on our business and results of operations.

Improper use of our products or failure by users to comply with the requirements for the correct use of our products could result in less than optimal results and customer dissatisfaction. The following, among other things, may result in poor results:

Poor results from our product could result in customer dissatisfaction and reduced product sales, which could have a material adverse effect on our business and results of operations.

Regulatory requirements may have an adverse effect on our business and results of operations.

Healthcare is heavily regulated by the federal government and by state and local governments. The federal laws and regulations affecting healthcare change constantly thereby increasing the uncertainty and risk associated with any healthcare-related venture, including our business.

The federal government regulates healthcare through various agencies, including but not limited to the following: (i) the Food and Drug Administration, which we refer to as the FDA, which administers the Food, Drug, and Cosmetic Act, which we refer to as the FD&C Act, and (ii) the Office of Civil Rights, which administers the privacy aspects of the Health Insurance Portability and Accountability Act of 1996, which we refer to as HIPAA. We do not envision seeking third-party coverage from any government healthcare program in the foreseeable future (e.g., Medicare, Medicaid, TriCare) or any private healthcare program, and therefore we believe that we will not be subject to regulation by certain other federal healthcare agencies such as the Centers for Medicare & Medicaid Services, Health and Human Services Office of Inspector General or the Department of Defense.

FDA

The FDA regulates medical devices. A “medical device” is as an article, including software associated with another medical device, which, among other things, is intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals. See FD&C Act § 201(h). We do not believe that our product is subject to FDA regulation as a medical device as its mode of operation is through exercise. However, there is a real risk, especially in light of the recent FDA Guidance entitled Mobile Medical Applications (Sept. 25, 2013), that the FDA may disagree with our assessment and conclude that it is in fact a medical device subject to FDA regulation. If such were to occur, the FDA may, among other things, order us to cease marketing the product until the product satisfies FDA’s regulatory regime and controls. This risk can be affected by the manner in which the product is marketed. Medical claims increase the risk that it would be viewed by the FDA as a medical device; while pure exercise claims may lead the FDA to use its discretion not to regulate the product.

The regulatory requirements that would apply if our product were deemed to be a medical device would depend on the level of risk to the patient or user of the device. There are three categories of medical devices based on risk: Class I, which is the lowest risk, Class II, and Class III, which is the highest risk.

Generally speaking, companies that manufacture Class I medical devices must register with the FDA and list their product. They must also comply with quality system regulations. These regulations require companies manufacturing Class I medical devices to manufacture products and maintain documents in a prescribed manner with respect to design, manufacturing, testing and control activities. Further, such companies are required to comply with various FDA and other agency requirements for labeling and promotion and managing product complaints, which, in certain instances, requires notifying the FDA. Most Class I devices can be marketed without having submitted a premarket notification or “510(k)” to the FDA and then receiving a “clearance” from the FDA to market the device.

In addition to the Class I requirements, manufacturers of Class II products, generally, need to receive an FDA “510(k) clearance” which permits commercial distribution of that device for its intended use. The FDA will “clear” a product if it finds that such product is substantially equivalent in terms of safety and effectiveness to a similar legally marketed device. If clinical trial data are required to support the 510(k) submission, then these data must be gathered in compliance with investigational device exemption (IDE) regulations. The FDA review process for 510(k) submissions should take on average about 90 days, but it can and usually takes substantially longer, and there is no guarantee that the agency will “clear” the device for marketing, in which case the device cannot be distributed in the United States. The agency could condition clearance on our narrowing the intended uses of the device so that it may no longer be commercially feasible to market. Additionally, there may be special controls what apply to the development of a Class II product, including FDA guidance documents and recognized standards relevant to the product, which we refer to as Special Controls.

Class III manufacturers must comply with the Class I requirements and, in some instances, Special Controls. In addition, manufacturers of Class III medical devices need to get approval from the FDA before marketing their device, which we refer to as Pre-Market Approval or PMA. The PMA process is a more comprehensive approval process and requires the sponsor of the application to submit adequate data permitting the FDA to find that there is reasonable assurance that the device is safe and effective for its intended use. The manufacturer must submit a PMA application, which contains, among other things, clinical trial data, which were obtained in compliance with IDE regulations. Clinical trials associated with a Class III device are typically more complex than those of a Class II product. The PMA process also takes substantially longer than the 510(k) process.

The FDA may inspect the manufacturer’s facilities and, upon the occurrence of certain events, have the power to withdraw the clearance or require changes to a device, its manufacturing process, or its labeling or additional proof that regulatory requirements have been met. The FDA can also seize the device, ban its importation into the United States, or restrict is distribution, issue warning letters, untitled letters, impose civil or criminal penalties, fines, and injunctions, criminally prosecute a company for violations of the FD&C Act, decline to clear or approve modifications to the device, or take other regulatory action against such company.

Privacy Provisions of HIPAA

HIPAA, among other things, protects the privacy and security of individually identifiable health information by limiting its use and disclosure. HIPAA directly regulates “covered entities” (healthcare providers, insurers and clearinghouses) and indirectly regulates “business associates” with respect to the privacy of patients’ medical information. All entities that receive and process protected health information are required to adopt certain procedures to safeguard the security of that information. It is uncertain whether we would be deemed to be a covered entity under HIPAA, and it is unlikely that we, based on our current business model, would be a business associate. Nevertheless, we may be contractually required to physically safeguard the integrity and security of any patient information that we receive, store, create or transmit. If we fail to adhere to our contractual commitments, then our physician customers may be subject to civil monetary penalties and this could adversely affect our ability to market our product. If we are deemed to be a vendor, under the Health Information Technology for Economic and Clinical Health Act, enacted as part of the American Recovery and Reinvestment Act of 2009, then we will be obligated to adopt various security measures. We may also be subject to state and foreign privacy laws under which breaches could lead to substantial fines and liability.

If we acquire or license additional technology or products, we may incur a number of costs, may have integration difficulties and may experience other risks that could harm our business and results of operations.

We may acquire or license additional products and technologies. Any product or technology we license or acquire will likely require additional development efforts prior to commercial sale, including extensive testing and, potentially, approval by the FDA and applicable foreign regulatory authorities, if any. All products are prone to risks of failure, including the possibility that the product or product developed based on licensed technology will not be shown to be sufficiently safe and effective for approval by applicable regulatory authorities. In addition, we cannot assure you that any product that we develop based on acquired or licensed technology that is granted regulatory approval will be produced economically, successfully commercialized or widely accepted in the marketplace. Moreover, integrating any newly acquired products could be expensive and time-consuming. If we cannot effectively manage these aspects of our business strategy, our business may not succeed.

Furthermore, proposing, negotiating and implementing an economically viable acquisition or license can be a lengthy, costly and complex process. Other companies, including those with substantially greater financial, marketing and sales resources, may compete with us for the acquisition or license of products and/or technologies. We may not be able to acquire the rights to alternative products and/or technologies on terms that we find acceptable, or at all. Our failure to acquire or license alternative products and/or technologies could have a material adverse effect on our business, prospects and financial condition.

We may not be able to successfully grow and expand our business.

We may not be able to successfully expand. Successful implementation of our business plan will require management of growth, which will result in an increase in the level of responsibility for management personnel. To manage growth effectively, we will be required to continue to implement and improve our operating and financial systems and controls to expand, train and manage our employee base. The management, systems and controls currently in place or to be implemented may not be adequate for such growth, and the steps taken to hire personnel and to improve such systems and controls might not be sufficient. If we are unable to manage our growth effectively, it will have a material adverse effect on our business, results of operations and financial condition.

We may encounter difficulties in managing our growth, which could increase our losses.

We may experience rapid and substantial growth in order to achieve our operating plans, which will place a strain on our human and capital resources. If we are unable to manage this growth effectively, our losses could materially increase. Our ability to manage our operations and growth effectively requires us to continue to expend funds to enhance our operational, financial and management controls, reporting systems and procedures and to attract and retain sufficient numbers of talented employees. If we are unable to scale up and implement improvements to our control systems in an efficient or timely manner, or if we encounter deficiencies in existing systems and controls, then we will not be able to make available the products required to successfully commercialize our technology. Failure to attract and retain sufficient numbers of talented employees will further strain our human resources and could impede our growth or result in ineffective growth.

If we are unable to obtain adequate insurance, our financial condition could be adversely affected in the event of uninsured or inadequately insured loss or damage. Our ability to effectively recruit and retain qualified officers and directors could also be adversely affected if we experience difficulty in obtaining adequate directors’ and officers’ liability insurance.

We may not be able to obtain insurance policies on terms affordable to us that would adequately insure our business and property against damage, loss or claims by third parties. To the extent our business or property suffers any damages, losses or claims by third parties, which are not covered or adequately covered by insurance, our financial condition may be materially adversely affected.

Additionally, we may be unable to maintain sufficient insurance as a public company to cover liability claims made against our officers and directors. If we are unable to adequately insure our officers and directors, we may not be able to retain or recruit qualified officers and directors.

We are a holding company that depends, in addition to our capital raising activities, on cash flows from our wholly owned subsidiaries to meet our obligations.

We are a holding company with no material assets other than the stock of our wholly owned subsidiaries, and all of our operations are conducted by EYEKON E.R.D. LTD, our indirect wholly owned subsidiary. We currently expect that the earnings and cash flow of EYEKON E.R.D. LTD will primarily be retained and used by it in its operations, including servicing any debt obligations it may have now or in the future. We have no current plans to pay any dividends, and our subsidiary may not be able to generate sufficient cash flow to distribute funds to us in order to allow us to pay any dividends in the future or otherwise make any distributions in respect of our Common Stock.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or detect fraud. Consequently, investors could lose confidence in our financial reporting and this may decrease the trading price of our Common Stock.

We must maintain effective internal controls to provide reliable financial reports and detect fraud. Our failure to properly maintain an effective system of internal controls could harm our operating results and cause investors to lose confidence in our reported financial information. In addition, such failure may cause us to suffer violations of the U.S. federal securities laws to the extent we are unable to maintain effective internal controls. Any such loss of confidence or violations would have a negative effect on the trading price of our Common Stock.

Potential political, economic and military instability in the State of Israel, where key members of our senior management and our main research and development facilities are located, may adversely affect our results of operations.

We maintain offices and research and development facilities in the State of Israel. Political, economic and military conditions in Israel may directly affect our ability to conduct business. Since the State of Israel was established in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries, as recently as July 2014. Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could affect adversely our operations. We believe that if conditions would require relocation of our offices and key persons out of Israel, we could do so within few weeks, ongoing and revived hostilities or other Israeli political or economic factors could potentially have a short-term negative effect on our operations and product development and may have a short-term negative effect to our revenues.

Disruptions in the financial markets and economic conditions could affect our ability to raise capital and could disrupt or delay the performance of our third-party contractors and suppliers.

The U.S. and global economies have historically suffered dramatic economic downturns, including, among other things, as the result of deterioration in the credit markets. Similarly, recent years have seen extreme volatility in security prices, severely diminished liquidity and credit availability, ratings downgrades of certain investments and declining valuations of others. The United States and certain foreign governments have recently taken unprecedented actions in an attempt to address and rectify these extreme market and economic conditions by providing liquidity and stability to the financial markets. If the actions taken by these governments are not successful, a continued economic decline may cause a significant impact on our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all. As a result of the current volatile and unpredictable global economic situation, our business could be severely adversely affected.

Risks Related to Our Intellectual Property

We license certain technology from RevitalVision LLC, and we could lose our rights to this license if a dispute with RevitalVision LLC arises or if we fail to comply with the financial and other terms of the license.

In July 2011, we entered into a license agreement with RevitalVision LLC, which we refer to as the License Agreement, pursuant to which we licensed intellectual property from RevitalVision LLC. Pursuant to the License Agreement, we have obtained a worldwide, nonexclusive, irrevocable, transferable, sub licensable through multiple tiers, license to the field of vision improvement software applications limited to near-vision deficiencies and reading improvement. Our current product and future products are partly based on the intellectual property licensed under the License Agreement. RevitalVision may terminate the License Agreement if we are in material breach of its terms and cannot cure such breach, which termination would have a material adverse effect on our business, prospects and results of operations.

The failure to obtain or maintain patents, licensing agreements and other intellectual property could impact our ability to compete effectively.

To compete effectively, we need to develop and maintain a proprietary position with regard to our own technologies, intellectual property, licensing agreements, products and business. Legal standards relating to the validity and scope of claims in the field of brain training based vision improvement technologies may still evolve. Therefore, the degree of future protection for our proprietary rights in our core technologies and any products that might be made using these technologies is also uncertain. The risks and uncertainties that we face with respect to our existing and future patents and other proprietary rights include the following:

We cannot be certain that patents will be issued as a result of any of our pending applications, and we cannot be certain that any of our issued patents, whether issued pursuant to our pending applications or licensed from a third party, will give us adequate protection from competing products. For example, issued patents, including the patents licensed from RevitalVision, may be circumvented or challenged, declared invalid or unenforceable, or narrowed in scope. In addition, since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain that we were the first to make our inventions or to file patent applications covering those inventions.

It is also possible that others may obtain issued patents that could prevent us from commercializing our products or require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. As to those patents that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement, and we may be unable to do so.

In addition to patents and patent applications, we depend upon trade secrets and proprietary know-how to protect our proprietary technology. We require our employees, consultants, advisors and collaborators to enter into confidentiality agreements that prohibit the disclosure of confidential information to any other parties. We require our employees and consultants to disclose and assign to us their ideas, developments, discoveries and inventions. These agreements may not, however, provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure.

Costly litigation may be necessary to protect our intellectual property rights, and we may be subject to claims alleging the violation of the intellectual property rights of others.

We may face significant expense and liability as a result of litigation or other proceedings relating to patents and other intellectual property rights of others. In the event that another party has also filed a patent application or been issued a patent relating to an invention or technology claimed by us in pending applications, we may be required to participate in an interference proceeding declared by the U.S. Patent and Trademark Office, which we refer to as the USPTO, to determine priority of invention, which could result in substantial uncertainties and costs for us, even if the eventual outcome were favorable to us. We, or our licensors, also could be required to participate in interference proceedings involving issued patents and pending applications of another entity. An adverse outcome in an interference proceeding could require us to cease using the technology or to license rights from prevailing third parties.

The cost to us of any patent litigation or other proceeding relating to our licensed patents or patent applications, even if resolved in our favor, could be substantial. Our ability to enforce our patent protection could be limited by our financial resources, and may be subject to lengthy delays. If we are unable to effectively enforce our proprietary rights, or if we are found to infringe the rights of others, we may be in breach of our License Agreement.

A third party may claim that we are using inventions claimed by their patents and may go to court to stop us from engaging in our normal operations and activities, such as research, development and the sale of any future products. Such lawsuits are expensive and would consume time and other resources. There is a risk that the court will decide that we are infringing the third party’s patents and will order us to stop the activities claimed by the patents. In addition, there is a risk that a court will order us to pay the other party damages for having infringed their patents.

Moreover, there is no guarantee that any prevailing patent owner would offer us a license so that we could continue to engage in activities claimed by the patent, or that such a license, if made available to us, could be acquired on commercially acceptable terms. In addition, third parties may, in the future, assert other intellectual property infringement claims against us with respect to our products, technologies or other matters.

We rely on confidentiality agreements that could be breached and may be difficult to enforce, which could result in third parties using our intellectual property to compete against us.

Although we believe that we take reasonable steps to protect our intellectual property, including the use of agreements relating to the non-disclosure of confidential information to third parties, as well as agreements that purport to require the disclosure and assignment to us of the rights to the ideas, developments, discoveries and inventions of our employees and consultants while we employ them, the agreements can be difficult and costly to enforce. Although we seek to obtain these types of agreements from our contractors, consultants, advisors and research collaborators, to the extent that employees and consultants utilize or independently develop intellectual property in connection with any of our projects, disputes may arise as to the intellectual property rights associated with our products. If a dispute arises, a court may determine that the right belongs to a third party. In addition, enforcement of our rights can be costly and unpredictable. We also rely on trade secrets and proprietary know-how that we seek to protect in part by confidentiality agreements with our employees, contractors, consultants, advisors or others. Despite the protective measures we employ, we still face the risk that:

International patent protection is particularly uncertain, and if we are involved in opposition proceedings in foreign countries, we may have to expend substantial sums and management resources.

Patent law outside the United States is in some cases different than in the United States and is currently undergoing review and revision in many countries. Further, the laws of some foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. For example, certain countries do not grant patent claims that are directed to the treatment of humans. We may participate in opposition proceedings to determine the validity of our foreign patents or our competitors’ foreign patents, which could result in substantial costs and diversion of our efforts.

We may be unable to protect the intellectual property rights of the third parties from whom we license certain of our intellectual property or with whom we have entered into other strategic relationships.

Certain of our intellectual property rights are currently licensed from a third party, and, in the future, we may license intellectual property from other key strategic third parties. We are, and will continue to be, reliant upon such third parties to protect their intellectual property rights to any licensed technology. Such third parties may determine not to protect the intellectual property rights that we license from them and we may be unable to defend such intellectual property rights on our own or we may have to undertake costly litigation to defend the intellectual property rights of such third parties. There can be no assurances that we will continue to have proprietary rights to any of the intellectual property that we license from such third parties or otherwise have the right to use through similar strategic relationships. Any loss or limitations on use with respect to our right to use such intellectual property licensed from third parties or otherwise obtained from third parties with whom we have entered into strategic relationships could have a material adverse effect on our business, operating results and financial condition.

Risks Related to Our Industry

We are potentially subject to government regulations, and we may experience delays in obtaining required regulatory approvals, if required, to market our proposed products.

Various aspects of our operations are or may become subject to federal, state or local laws, rules and regulations, any of which may change from time to time. Costs arising out of any regulatory developments could be time-consuming, expensive and could divert management resources and attention and, consequently, could adversely affect our business operations and financial performance.

Delays in regulatory clearance, approval, limitations in regulatory approval and withdrawals of regulatory approval, if any are required, may have a negative impact on our results. If we experience significant delays in testing or approvals, our product development costs will increase. If we are required or seek FDA regulatory clearance or approval for any of our products, then any such clearance or approval will be limited to those conditions for which the product has demonstrated, through testing, either substantially equivalent in terms of safety and effectiveness to another lawfully marketed and cleared device or to be safe and effective. Any product clearances or approvals that we receive in the future could also include significant restrictions on the use or marketing of our products. Product clearances, if issued, or approvals, if granted, can be withdrawn for failure to comply with regulatory requirements or upon the occurrence of adverse events following commercial introduction of the products. Failure to comply with applicable FDA or other applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure of products, total or partial suspension of production or injunction, as well as other regulatory action against our products or us. If clearance or approval is withdrawn for a product, we would be unable to sell or license that product and our revenues would suffer. In addition, outside the United States, our ability to market any of our potential products may be contingent upon receiving market application authorizations from the appropriate regulatory authorities and these foreign regulatory approval processes include all of the risks associated with the FDA clearance or approval process described above.

We face significant competition and continuous technological change.

If our competitors develop and commercialize products faster than we do, or develop and commercialize products that are superior to our products, our commercial opportunities will be reduced or eliminated. The extent to which any of our products achieve market acceptance will depend on competitive factors, many of which are beyond our control. Competition in the vision care industry is intense. Our competitors include substitute products such as glasses manufactures, contact lens manufacturers, refractive surgery technology companies as well as developers of eye exercise methodologies and companies, universities, and public and private research institutions developing methods for vision improvement via brain training or alternative solutions for vision correction, including:

Many of these entities have substantially greater research and development capabilities and financial, scientific, manufacturing, marketing and sales resources than we do, as well as more experience in research and development, clinical trials, regulatory matters, marketing and sales.

Risks Relating to Our Common Stock

Our Common Stock has an extremely limited trading history, and prospective investors may not be able to sell their shares at their purchase price, if at all.

There is currently an extremely limited public market for our Common Stock. Our Common Stock is listed for quotation on the OTCBB under the symbol “GLSO”, but there is no assurance that a regular trading market will develop or, if developed, will be sustained. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations of the price of, our Common Stock.

We expect that the market price of our Common Stock will fluctuate significantly in response to factors, some of which are beyond our control, such as the announcement of new products or product enhancements by us or our competitors, developments concerning intellectual property rights and regulatory approvals, quarterly variations in our and our competitors’ results of operations, changes in earnings estimates or recommendations by securities analysts, developments in our industry, and general market conditions and other factors, including factors unrelated to our own operating performance or the condition or prospects of our industry.

We cannot assure you that our Common Stock will become liquid or that it will be listed on a securities exchange.

We may seek listing of our Common Stock on the NYSE MKT or the Nasdaq Capital Market; however, we cannot assure you that we will be able to meet the initial listing standards of either of those or of any other stock exchange, or that we will be able to maintain any such listing. Until our Common Stock is listed on an exchange, we expect to remain eligible for quotation on the OTCBB, on another over-the-counter quotation system or in the “pink sheets.” In those venues, however, an investor may find it difficult to obtain accurate quotations for our Common Stock. In addition, if we fail to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling our Common Stock, which may further affect the liquidity of our Common Stock. This would also make it more difficult for us to raise additional capital or attract qualified employees or partners.

Additionally, the stock market in general, and securities of small-cap companies in particular, have historically experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme volatility in the price of our Common Stock, which could cause a decline in the value of our Common Stock. Price volatility might be worse if the trading volume of our Common Stock is low.

Because our Common Stock may be a “penny stock,” it may be more difficult for investors to sell shares of our Common Stock, and the market price of our Common Stock may be adversely affected.

Our Common Stock may be a “penny stock” if, among other things, the stock price is below $5.00 per share, it is not listed on a national securities exchange or it has not met certain net tangible asset or average revenue requirements. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser and obtain the purchaser’s written agreement to the purchase. Broker-dealers must also provide customers that hold penny stock in their accounts with such broker-dealer a monthly statement containing price and market information relating to the penny stock. If a penny stock is sold to an investor in violation of the penny stock rules, the investor may be able to cancel its purchase and get its money back.

If applicable, the penny stock rules may make it difficult for investors to sell their shares of our Common Stock. Because of the rules and restrictions applicable to a penny stock, there is less trading in penny stocks, and the market price of our Common Stock may be adversely affected. Also, many brokers choose not to participate in penny stock transactions. Accordingly, investors may not always be able to resell their shares of our Common Stock publicly at times and prices that they feel are appropriate.

We do not expect to pay dividends on our Common Stock, and investors will be able to receive cash in respect of their shares of our Common Stock only upon the sale of the shares.

Cash dividends have never been declared or paid on our Common Stock, and we do not anticipate such a declaration or payment in the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, an investor in our Common Stock will obtain an economic benefit from the Common Stock only after an increase in its trading price and only by selling the Common Stock. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure stockholders that they will not lose the entire amount of their investment in our Common Stock.

Securities analysts may not initiate coverage or continue to cover our Common Stock, and this may have a negative impact on its market price.

The trading market for our Common Stock will depend in part on the research and reports that securities analysts publish about our business and us. We do not have any control over these analysts. There is no guarantee that securities analysts will cover our Common Stock. If securities analysts do not cover our Common Stock, the lack of research coverage may adversely affect its market price. If we are covered by securities analysts, and our stock is the subject of an unfavorable report, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, we could lose visibility in the financial markets, which could cause our stock price and/or trading volume to decline. In addition, because we became public through a “reverse merger,” we may have additional difficulty attracting the coverage of securities analysts.

Stockholders may experience dilution of ownership interests because of the future issuance of additional shares of our Common Stock and our preferred stock, including issuances of shares of Common Stock pursuant to the SEDA.

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are authorized to issue an aggregate of 220,000,000 shares of capital stock, consisting of 200,000,000 shares of Common Stock and 20,000,000 shares of preferred stock with preferences and rights to be determined by our Board of Directors. Additionally, as of July 15, 2014, we had 57,708,758 shares of our Common Stock outstanding and a total of 20,135,657 shares of our Common Stock subject to outstanding options and warrants. We may also issue additional shares of our Common Stock or other securities that are convertible into or exercisable for Common Stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. Additionally, we may issue up to $15,000,000 of our Common Stock pursuant to the SEDA. The future issuance of any such additional shares of our Common Stock may create downward pressure on the trading price of the Common Stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with any capital raising efforts, including at a price (or exercise prices) below the price at which shares of our Common Stock are then traded on the OTCBB or otherwise.

Our issuance of shares of Common Stock under the SEDA could contribute to the decline of the price of the Common Stock, which may also lead to additional dilution of the ownership interests of our existing stockholders.

We believe YA Global intends to promptly resell the shares of Common Stock that we sell to it under the SEDA, and such resales could cause the market price of the Common Stock to decline significantly. If the market price of our Common Stock declines, then any subsequent sales by us to YA Global under the SEDA would require that we issue a greater number of shares of Common Stock to YA Global in exchange for each dollar paid to us by YA Global. Under these circumstances, our existing stockholders would experience greater dilution. Also, the sale of Common Stock under the SEDA could encourage short sales by third parties, which could contribute to the further decline of the price of the Common Stock.

A significant number of shares of our Common Stock are eligible for sale, including under this registration statement, which could depress the market price of our stock.

Sales of a significant number of shares of our Common Stock in the public market could harm the market price of our stock. As additional shares of our Common Stock become available for resale in the public market, the supply of the Common Stock will increase, which could decrease its price. Further, shares may be offered by selling stockholders from time to time in the open market pursuant to Rule 144 promulgated under the Securities Act, which we refer to as Rule 144, and these sales may have a depressive effect on the market for the shares of our Common Stock.

USE OF PROCEEDS

The selling stockholders will receive the proceeds from the sale of shares of Common Stock offered hereby. We will not receive any proceeds from the sale of the shares of Common Stock registered hereunder, but we will pay the expenses (other than any underwriting discounts and broker’s commissions and similar expenses) of this offering. While we will not receive any proceeds from the sale of the shares of Common Stock offered by the selling stockholders hereunder, we may receive gross proceeds of up to $15,000,000 under the SEDA over an approximately 36-month period, assuming that we sell the full amount of our Common Stock that we have the right, but not the obligation, to sell to YA Global under the SEDA. See “Standby Equity Distribution Agreement” elsewhere in this prospectus for additional information.

COMMON STOCK PRICE RANGE AND DIVIDENDS

Our Common Stock is quoted on the OTCBB under the symbol “GLSO.” All OTCBB quotations reproduced herein reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

The following table sets forth, for each quarter during the period commencing May 18, 2012 through March 31, 2014, the reported high and low bid prices of our common stock on the OTCBB. Prior to May 18, 2012, our Common Stock was not quoted on the OTCBB or otherwise. 

As of the close of business on July 15, 2014, there were approximately 85 holders of record of our Common Stock, and the closing price of a share of our Common Stock was $1.10.

We have never paid cash dividends in respect of our Common Stock, and we have no plans to pay any dividends or make any other distributions in the future.

Equity Compensation Plan Information

The following table sets forth information as of December 31, 2013 about securities authorized for issuance under the GlassesOff Inc. 2013 Incentive Compensation Plan, which we refer to as the Plan, which was adopted by our Board of Directors on June 26, 2013.

The purpose of the Plan is to assist us and our subsidiaries in attracting, motivating, retaining, and rewarding high-quality executives and other employees, officers, directors, and individual consultants, who provide services to us or our subsidiaries by enabling such persons to acquire or increase a proprietary interest in us, which we believe strengthens the mutuality of interests between such persons and our stockholders. We have reserved 14,000,000 shares of common stock for issuance under the Plan, of which 4,180,128 remain available for issuance. To the extent of a forfeiture, expiration, termination, non-issuance or cash settlement of shares of common stock subject to an award or to any award, as applicable, such shares will again be available for delivery with respect to awards under the Plan.

The Plan is administered by our Compensation Committee or a subcommittee thereof. If our Board of Directors fails to designate a committee or if there are no longer any members on the committee so designated by our Board of Directors, or for any other reason determined by our Board of Directors, then our Board of Directors will serve as the committee. The committee may appoint agents to assist it in administering the Plan. Subject to the terms of the plan, the committee is authorized to: (a) designate participants; (b) grant awards; (c) determine the type, number and other terms and conditions of, and all other matters relating to, awards; (d) prescribe award agreements; (e) construe and interpret the Plan and award agreements; (f) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it will deem appropriate for the proper administration of the Plan; (g) make any other determination and take any other action that the committee deems necessary or advisable for the administration of the Plan; (h) determine whether, to what extent, and under what circumstances awards may be settled or exercised in cash, shares, other awards, other property, net settlement, or any combination thereof, or canceled, forfeited, or suspended, and the method or methods by which awards may be settled, exercised, canceled, forfeited, or suspended; and (i) determine whether, to what extent, and under what circumstances cash, shares, other awards, other property, and other amounts payable with respect to an award under the Plan will be deferred either automatically or at the election of the holder thereof or of the committee. The committee has the authority to adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which we or our subsidiaries may operate to assure the viability of the benefits from awards granted to participants performing services in such countries and to meet the countries in which we objectives of the Plan.

The persons eligible to receive awards under the Plan are our officers, directors, employees and individual consultants of us or any of our subsidiaries, or our prospective employees or any of our subsidiaries (conditioned upon, and effective not earlier than, such person becoming an employee of GlassesOff or any of our subsidiaries). The Plan provides for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, stock granted as a bonus or in lieu of another award, other stock-based awards and performance awards. Stock options granted under the Plan will have an exercise price per share not less than 100% of the fair market value of our common stock on the grant date.

CAPITALIZATION

The table below sets forth our cash and cash equivalents balances and our capitalization as of March 31, 2014:

You should read this table together with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes thereto.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Prospective investors should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information contained in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Introduction

This management’s discussion and analysis of financial condition and results of operations is intended to provide investors with an understanding of GlassesOff’s financial condition, changes in financial condition and results of operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical consolidated financial statements and related notes thereto, which are contained in this prospectus. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” contained in this prospectus.

The discussion and analysis of GlassesOff’s financial condition and results of operations are based on GlassesOff’s financial statements, which GlassesOff has prepared in accordance with U.S. generally accepted accounting principles, which we refer to as GAAP. The preparation of these financial statements requires GlassesOff to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, GlassesOff evaluates such estimates and judgments, including those described in greater detail below. GlassesOff bases its estimates on historical experience and on various other factors that GlassesOff believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Business

We are a development stage neuroscience software technology company, utilizing patented technology to develop and commercialize consumer-oriented software applications for improving, through exercise, near vision sharpness by improving the image processing function in the visual cortex of the brain. We deliver our products through a cloud-based client server architecture to hand-held devices, currently implemented on the Apple iOS platform (iPhone, iPod, iPad), and which are planned to be offered on additional platforms, such as Android and Windows Phone platforms.

Plan of Operation

During December 2013, we completed the development of the first commercial version of our consumer-oriented software application for improving near vision sharpness by improving, through exercise, the brain’s image processing function, for the iOS platform and began marketing the product to end consumers via Apple’s App Store. During 2014, we plan to gradually increase our marketing and public relations campaigns, aiming to increase the awareness to our product and increase our number of customers. Additionally, we plan to participate in various conferences and conventions around the world to further expose our product and technology to professional audience and potentially form business partnerships.

In 2014, we have been developing our first product version for the Android platform, which we launched as planned on June 30, 2014, as a beta version. We are not currently planning any major purchase or sale of equipment in 2014, but we expect that employee headcount will increase.

Critical Accounting Policies

The financial statements have been prepared in accordance with GAAP. The significant accounting policies followed in the preparation of the financial statements, on a consistent basis are:

Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While management believes that such estimates are fair when considered in conjunction with the consolidated financial position and results of operations taken as a whole, actual results could differ from those estimates and such differences may be material to the financial statements.

Financial statements in U.S. dollars: The functional currency of GlassesOff is the U.S. dollar, as the U.S. dollar is the primary currency of the economic environment in which GlassesOff has operated and expects to continue to operate in the foreseeable future. The majority of Eyekon E.R.D. Ltd.’s operations are currently conducted in Israel, and most of the Israeli expenses are currently paid in new Israeli shekels, which we refer to as NIS; however, the subsidiary’s operations do not generate any positive cash flow to cover its expenses and is not able to exist without the parent company’s funding. Therefore the currency which is used in operating, financing and investing activities, including loans and equity transactions, is the U.S. dollar.

Accordingly, the functional and reporting currency of GlassesOff is the U.S. dollar. Monetary accounts maintained in currencies other than the U.S. dollar are remeasured into U.S. dollars. All transaction gains and losses from the remeasurement of monetary balance sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.

Principles of consolidation: The consolidated financial statements include the accounts of GlassesOff and its wholly owned direct and indirect subsidiaries: Ucansi Inc. and Eyekon E.R.D. Ltd. Intercompany transactions and balances have been eliminated upon consolidation.

Cash equivalents: For purposes of reporting within the statement of cash flows, GlassesOff considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Property and equipment: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets. The annual depreciation rates are as follows:

Long lived assets: GlassesOff reviews the carrying value of its long-lived assets, including intangible assets subject to amortization, for impairment whenever events and circumstances indicate that the carrying value of the assets may not be recoverable. Recoverability of these assets is measured by comparing the carrying value of the assets to the undiscounted cash flows estimated to be generated by those assets over their remaining economic life. If the undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are considered impaired. The impairment loss is measured by comparing the fair value of the assets to their carrying value.

Fair value is determined by either a quoted market price or a value determined by a discounted cash flow technique, whichever is more appropriate under the circumstances involved. No impairments were recognized from February 5, 2007 (inception date) through September 30, 2013.

ASC 718 - “Compensation-stock Compensation”, which we refer to as ASC 718, requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option Pricing Model, or OPM. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in GlassesOff’s consolidated income statements.

GlassesOff estimates the fair value of stock options granted using the Black-Scholes Merton OPM. This model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term. Until August 2013, there was no market for GlassesOff’s Common Stock. Thus, it was not possible to estimate the expected volatility of GlassesOff’s share price in estimating fair value of options granted. Accordingly, as a substitute for such volatility, GlassesOff used the historical volatility of comparable companies in the industry. The expected term of options granted represents the period of time that options granted are expected to be outstanding, management used the simplified method for estimating the expected term of options due to insufficient readily available historical exercise data. The risk-free interest rate was based on the yield rates of U.S. Government Treasury Bonds with an equivalent term. GlassesOff never paid dividends and has no foreseeable plans to pay dividends.

Determining the fair value of options granted on or after November 2013, has been made using GlassesOff’s share price, thus, the expected volatility is calculated on the basis of GlassesOff’s historical share price as GlassesOff’s management believes that, although GlassesOff’s shares have a short history of trading, the volatility of GlassesOff’s shares is a better indication of its future share volatility than those of comparable companies. The expected term of options granted on or after November 2013 is no longer based on the simplified method; it represents management’s estimate of the period of time that options granted are expected to be outstanding.

GlassesOff applies ASC 505-50, “Equity Based Payments to Non Employees”, which we refer to as ASC 505-50, with respect to options issued to non-employees.

Revenue: Revenues are derived from subscription fees for access to and use of its on-demand application services. Under such subscription arrangements for its on-demand application services, the customer does not have the contractual right to take possession of the software at any time during the subscription period. Thus, revenue for GlassesOff’s subscription services will be recognized in accordance with accounting standards for service contracts.

There are four basic criteria which must be met to recognize revenue. These are: 1) persuasive evidence of an arrangement exists; 2) delivery of the product has occurred; 3) a fixed or determinable fee; and 4) the collection of the fee is reasonably assured. The application of the relevant accounting standards will require GlassesOff to exercise significant judgment related to specific transactions and transaction types.

Research and development costs: Research and development, or R&D, costs are expensed as they are incurred and consist of salaries, stock-based compensation, benefits and other personnel-related costs, fees paid to consultants, clinical trials and related clinical manufacturing costs, license and milestone fees, and facilities and overhead costs.

Income taxes: GlassesOff accounts for income taxes in accordance with the provisions of ASC 740-10, “Income Taxes”, which we refer to as ASC 740-10. ASC 740-10 requires companies to recognize deferred tax assets and liabilities based on the differences between financial reporting and tax bases of assets and liabilities. These differences are measured using the enacted tax rates and laws that are expected to be in effect when the temporary differences are expected to reverse. A valuation allowance is established against net deferred tax assets, if based on the weighted available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized.

Concentrations of credit risk: Financial instruments that potentially subject GlassesOff and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents. Cash and cash equivalents are invested in major banks in Israel and in the U.S. Such deposits in Israel and the U.S. are not insured. Management believes that the financial institutions that hold GlassesOff’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. GlassesOff has no off-balance-sheet concentration of credit risk such as foreign exchange contracts or any other hedging arrangements.

Fair value measurements: As defined in ASC 820-10, “Fair Value Measurements and Disclosures”, which we refer to as ASC 820-10, fair value is based on the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820-10 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Other inputs that are observable, directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated inputs.

Level 3: Unobservable inputs are used when little or no market data is available, which requires GlassesOff to develop its own assumptions about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level 3 inputs.  In determining fair value, GlassesOff utilizes valuation techniques in its assessment that maximize the use of observable inputs and minimize the use of unobservable inputs.

(Loss) per share: Basic and Diluted losses per share are presented in accordance with ASC 260-10 “Earnings per share”. Outstanding restricted stock, options and warrants have been excluded from the calculation of the diluted loss per share because all such securities are antidilutive.

Recent Accounting Pronouncements

In December 2011, the FASB issued Accounting Standards Update No. 2011-11, “Disclosures about Offsetting Assets and Liabilities”, which we refer to as ASU 2011-11. The objective of ASU 2011-11 is to enhance disclosures by requiring improved information about financial instruments and derivative instruments in relation to netting arrangements. ASU 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. This became effective for GlassesOff on January 1, 2013 and its adoption did not impact GlassesOff’s consolidated financial statements.

On February 5, 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”, which adds additional disclosure requirements relating to the reclassification of items out of accumulated other comprehensive income.  This ASU is effective for the first quarter of 2013 and affects disclosures only; the ASU adoption did not impact GlassesOff’s consolidated results of operation and financial condition.

In March 2013, the FASB issued ASU No. 2013-05, “Foreign Currency Matters” (Topic 830), which provides clarifying guidance concerning the accounting for the cumulative translation adjustment (1) when a parent sells a portion or all of its investment in a foreign entity or no longer holds a controlling interest in a subsidiary or group of assets within a foreign entity, and (2) in connection with the acquisition of a foreign entity achieved in stages. The amended guidance, which should be applied prospectively, is effective for public entities for fiscal years and interim reporting periods within those years, beginning after December 15, 2013. Early adoption is permitted, with application as of the beginning of the fiscal year of adoption. The adoption of this new guidance will not have a material impact on GlassesOff’s consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (ASC Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry Forward Exists”, which we refer to as ASU 2013-11. The amendments contained in ASU 2013-11 provide explicit guidance that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward, with limited exceptions. The amendments contained in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 and do not require new recurring disclosures. The adoption of this new guidance will not have a material impact on GlassesOff’s consolidated financial statements.

There were various other updates recently issued.  None of the updates are expected to a have a material impact on GlassesOff’s financial position, results of operations or cash flows.

Results of Operations

Three Months Ended March 31, 2014 Compared to the Three Months Ended March 31, 2013

Revenue

GlassesOff recorded, for the first time, revenues in the sum of $28,000 for the three month period ended March 31, 2014.

Research and Development Expenses

GlassesOff expects its R&D expenses to increase as it continues to develop its products. R&D expenses consist of:

GlassesOff expects its R&D expenses to increase most significantly in the near future in connection with the development efforts for new device platforms, new operating systems and potentially new product applications. GlassesOff intends to continue to hire new employees in R&D in order to meet its operation goals and expedite the development of new product versions for the iOS platform, introduce a new product version for a new platform and potentially start working on new products. GlassesOff believes that significant investment in product development is a competitive necessity and plans to continue these investments in an effort to realize the potential of its product. For the three months ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March 31, 2014, GlassesOff incurred R&D expenses in the aggregate of $493,000, $273,000 and $7,114,000, respectively. The increase in R&D expenses for the three month period ended March 31, 2014 as compared to the 2013 period was primarily due to consultant and information technology expenses of $141,000 in the 2014 period as compared to $65,000 in the 2013 period, payroll expenses of $188,000 in the 2014 period as compared to $132,000 in the 2013 period and stock-based compensation expenses of $126,000 in the 2014 period as compared to $41,000 in the 2013 period.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of salaries and other related costs for employees of GlassesOff and external service providers for services, such as search engine optimization and public relations services. During 2013 and the three month period ended March 31, 2014, GlassesOff invested in building marketing infrastructure in anticipation of the launch of the GlassesOff product, which included, among other things, developing public relations networks to generate awareness of the GlassesOff’s product and launch date, preparing marketing materials and conducting search engine optimization for GlassesOff’s website to improve its ranking in search engine search results for certain relevant key words searches. For the three month periods ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March, 31 2014, GlassesOff incurred sales and marketing expenses of $310,000, $0 and $729,000, respectively. The increase for the three month period ended March 31, 2014 as compared to the 2014 period resulted primarily from an increase in GlassesOff’s marketing efforts as it commenced commercialization of its initial product.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation expenses for persons serving in GlassesOff’s executive and administration functions. Other general and administrative expenses include facility-related costs not otherwise included in R&D expenses, and professional fees for legal and accounting services, including those associated with reporting obligations applicable to public companies in the United States. GlassesOff expects that its general and administrative expenses will increase as it adds additional personnel in response to the increased responsibilities and reporting obligations imposed on GlassesOff as a publicly traded company and in connection with new product development. For the three month periods ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March 31, 2014, GlassesOff incurred general and administrative expenses of $688,000, $160,000 and $3,587,000, respectively. The increase for the three month period ended March 31, 2014 as compared to the 2013 period resulted primarily from stock-based compensation on options granted to employees and directors of $331,000 in 2014 as compared to $59,000 in 2013 and an increase in professional services expenses of $193,000 in 2014 as compared to $25,000 in 2013.

Financial Expenses and Income

Financial expenses and income consist of the following:

For the three month periods ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March 31, 2014, GlassesOff incurred net financial expenses of $5,000, $6,000 and $86,000, respectively. Financial expenses for the three month period ended March 31, 2014 decreased as compared to the 2013 period primarily due to currency fluctuations of the NIS.

Stock-based Compensation

GlassesOff’s stock-based compensation expenses with respect to employees are recorded according to ASC 718, which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors, including employee stock options under GlassesOff’s stock plans, based on estimated fair values.

ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in GlassesOff’s consolidated statement of operations.

GlassesOff applies ASC 505-50 with respect to options issued to non-employees.

GlassesOff estimates the fair value of stock options granted using the Black-Scholes-Merton OPM. For the three month periods ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March 31, 2014, GlassesOff’s stock-based compensation expenses were $470,000, $100,000 and $3,787,000, respectively. Stock-based compensation expenses for the three months ended March 31, 2014 increased as compared to the 2013 period primarily due to the absence of any stock options or restricted shares granted to employees or non-employees in 2013, compared to 1,333,000 stock options granted to non-employees and 125,000 restricted shares granted to employees and non-employees in 2014.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Revenue

GlassesOff did not generate any revenue until the first quarter of 2014. GlassesOff funded its operations for the years ended December 31, 2013 and 2012 and from inception (February 5, 2007) through December 31, 2013 through the sale of equity securities. If GlassesOff successfully commercializes its products, then it could generate revenue from sales of its products.

Research and Development Expenses

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, GlassesOff incurred R&D expenses in the aggregate of $1,678,000, $2,249,000 and $6,621,000, respectively. The decrease in R&D expenses for 2013 as compared to the 2012 was primarily due to stock-based compensation expenses of $560,000 in the 2013 period as compared to $1,241,000 in 2012, offset by an increase in salaries paid to employees of $601,000 in 2013 as compared to $482,000 in 2012 and an increase in other R&D expenses of $419,000 in 2013 as compared to $379,000 in 2012.

Sales and Marketing Expenses

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, GlassesOff incurred sales and marketing expenses of $419,000, $0 and $419,000, respectively. The increase for the year ended December 31, 2013 as compared to the prior year resulted primarily from the launch of GlassesOff’s marketing efforts as it moves toward commercialization of its initial product.

General and Administrative Expenses

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, GlassesOff incurred general and administrative expenses of $1,191,000, $1,238,000 and $2,899,000, respectively. The decrease for 2013 as compared to 2012 resulted primarily from a decrease in stock-based compensation expense from the award of options and restricted stock of $470,000 in 2013 as compared to $751,000 in 2012, offset by an increase in salaries paid to employees of $258,000 in 2013 as compared to $184,000 in 2012, an increase in directors fees of $39,000 in 2013 as compared to zero in 2012, and an increase in professional services expenses of $274,000 in 2013 as compared to $124,000 in 2012.

Financial Expenses and Income

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, GlassesOff incurred net financial expenses of $37,000, net financial income of $14,000 and net financial expenses of $81,000, respectively. Financial expenses for 2013 increased as compared to the 2012 primarily due to currency fluctuations of the NIS.

Stock-based Compensation

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, our stock-based compensation expenses were $1,072,000, $1,992,000 and $3,317,000, respectively. The decrease in expenses for 2013 as compared to 2012 resulted primarily a decrease in stock option grants from 7,804,864 in 2012 to 164,108 in 2013, offset by our issuance of 800,000 shares of restricted stock in 2013 as compared to no such issuances in 2012.

Cash Flows

Three Months Ended March 31, 2014 Compared to the Three Months Ended March 31, 2013

For the three months ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March 31, 2014, net cash used in operations was $813,000, $284,000 and $6,902,000, respectively. Cash was used primarily for salaries, subcontractors and software development expenses. The increase in cash used in operating activities for the three months ended March 31, 2014 as compared to the 2013 period resulted primarily from the hiring of new employees and an increase in subcontractor expenses.

For the three months ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March 31, 2014, net cash used in investing activities was $68,000, $1,000 and $293,000, respectively. The increase in cash used in investing activities for the three month period ended March 31, 2014 as compared to the 2013 period resulted primarily from the purchase of property and equipment in 2014.

For the three months ended March 31, 2014 and 2013 and for the period from February 5, 2007 (inception date) through March 31, 2014, net cash provided by financing activities was $0, $0 and $7,840,000, respectively.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, net cash used in operations was $2,014,000, $1,294,000 and $6,089,000, respectively. Cash was used primarily for salaries, subcontractors and software development expenses.

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, net cash (used in) provided by investing activities was ($95,000), $2,000 and ($225,000), respectively. The increase in cash used in investing activities for 2013 compared to 2012 resulted primarily from the purchase of property and equipment of $48,000 during 2013 as compared to the purchase of property and equipment of $2,000 in 2012 and due to increase in restricted cash of $47,000 in 2013 compared to $0 in 2012. Restricted cash primarily secures GlassesOff’s office lease and corporate credit cards.

For the years ended December 31, 2013 and 2012 and for the period from inception (February 5, 2007) through December 31, 2013, net cash provided by financing activities was $2,856,000, $1,634,000 and $7,840,000, respectively. The increase in cash provided by financing activities for 2013 as compared to 2012 resulted primarily from our issuance and sale of 2,490,000 shares of common stock and a net of issuance costs average price per share of $1.15 during 2013 as compared to the issuance and sale of 2,519,426 shares of preferred stock at a net of issuance costs average price per share of $0.65 during 2012.

Liquidity and Capital Resources

We expect to incur losses from operations for the foreseeable future, and we expect to incur increasing R&D expenses, including expenses related to the hiring of personnel and outsourcing of certain development projects. We expect that general and administrative expenses will also increase as we expand our finance and administrative staff and add infrastructure. We also expect that sales and marketing expenses will increase significantly in connection with the commercialization activities related to our product. Our future capital requirements will depend on a number of factors, including the continued progress of our R&D of our current product and potential products and the total average cost of customer acquisition, comprising initial acquisition cost and customer retention cost. 

We plan to continue to finance our operations with the issuance of equity securities and, in the longer term, revenues from our operations. There are no assurances, however, that we will be successful in obtaining the financing necessary for the long-term development of our current product or future products. Our future capital requirements will depend on many factors, including investment in developing new product versions for new territories (localization), new devices and new platforms, and potentially development of new potential products. Furthermore, the ramp-up in sales and marketing activities will require significantly higher resources. We did not generate product revenues during 2013, and we generated only limited revenue for the first quarter of 2014. We expect continuing operating losses to result in increases in cash used in operations over the next 12 months. To the extent that our capital resources are insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or private equity offerings, debt financings, or corporate collaboration and licensing arrangements. We currently do not have any commitments for future external funding. We will need to raise additional funds, and we may decide to raise additional funds even before we need such funds if the conditions for raising capital are favorable. We may seek to issue equity or debt securities or obtain a credit facility from one or more financial institutions or otherwise. The sale of equity or convertible debt securities may result in dilution to our existing stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also subject us to covenants that restrict our operations. Additional equity or debt financing, or corporate collaboration and licensing arrangements may not be available on acceptable terms, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate our R&D programs, reduce our planned commercialization efforts or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain potential products that it might otherwise seek to develop or commercialize independently. Our ability to continue to operate as a going concern is dependent upon additional financial support. Our consolidated financial statements contained in this prospectus do not include any adjustments relating to the recoverability and classification of assets’ carrying amounts or the amount and classification of liabilities that may be required should we be unable to continue as a going concern.

Effects of Inflation and Currency Fluctuations

Inflation generally affects us by increasing our cost of labor and other development costs. We do not believe that inflation has had a material effect on our results of operations for the three-month periods ended March 31, 2014 or 2013, or for the years ended December 31, 2013 or 2012, nor do we expect that inflation will have a material impact on our results of operations for the year ending December 31, 2014.

Currency fluctuations may affect us by increasing or decreasing costs. Currency fluctuations had no material effect on our results of operations for the three-month periods ended March 31, 2014 or 2013, or for the years ended December 31, 2013 or 2012. We do not purchase forward currency contracts for either hedging or speculative purposes. 

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

BUSINESS

Except where the context otherwise requires, the terms, “we,” “us,” “our” or “GlassesOff” refer to the business of GlassesOff Inc. and its consolidated subsidiaries, Ucansi Inc. and EYEKON E.R.D. LTD, which comprise our operating subsidiaries and all of our operations as of the date of this Registration Statement on Form S-1.

GlassesOff

On June 26, 2013, we (at the time known as Autovative Products, Inc.) entered into that certain Agreement and Plan of Merger, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of July 2, 2013, which we refer to collectively as the Merger Agreement, with Ucansi Acquisition Corp., a Delaware corporation and our wholly owned subsidiary, which we refer to as Merger Sub, and Ucansi Inc., a Delaware corporation, which we refer to as Ucansi. Pursuant to the Merger Agreement, on July 30, 2013, Merger Sub merged with and into Ucansi, with Ucansi surviving the merger as our wholly owned subsidiary, which we refer to as the Merger. Upon consummation of the Merger, we changed our name from Autovative Products, Inc. to GlassesOff Inc.

Ucansi was originally incorporated on February 5, 2007, under the laws of the state of Delaware, under the name Eyekon Inc. and, in April 2008, Ucansi changed its name to Ucansi Inc. In July 2007, GlassesOff formed EYEKON BLUE WHITE LTD., a wholly owned Israeli subsidiary focusing on development and commercialization of next-generation software applications for reading improvement based on GlassesOff’s proprietary intellectual property. In August 2007, EYEKON BLUE WHITE LTD. changed its name to EYEKON E.R.D. LTD.

Overview

We are a development stage neuroscience software technology company, utilizing patented technology to develop and commercialize consumer-oriented software applications for improving, through exercise, near vision sharpness by improving the image processing function in the visual cortex of the brain. We deliver our products through a cloud-based client server architecture to hand-held devices, currently implemented on the Apple iOS platform (iPhone, iPod, iPad), and which are planned to be offered on additional platforms, such as Android and Windows Phone platforms.

Industry Background and Target Markets

As we age, we normally experience changes in reading abilities. These changes are influenced, among other factors, by our brain’s visual processing capabilities. The effect of these changes on most people results in slower, more difficult and less effective reading. According to a scientific review (Holden, B. A. et al., 2008), more than one billion people worldwide suffer from such age-related changes and this number is expected to rise significantly through 2050. At some point, natural age-related changes in reading abilities affect most people, who typically attempt to improve their reading abilities through the aid of magnifying devices, typically reading glasses. Such devices increase the size of words in reading material, making it easier for a person who uses them, whether that person is in his or her twenties or fifties, to read easily and quickly.

The GlassesOff product enhances the image processing capabilities of the brain and thus improves a person’s reading abilities. The use of the GlassesOff product results in faster, more efficient and more comfortable reading, thereby correcting reading vision without use of reading glasses.

GlassesOff’s Technology

Human vision is limited by two main factors: (a) the quality of an image captured by the eyes; and (b) the image processing capabilities of the brain as it interprets an image captured by the eyes.

Our proprietary technology enables us to develop software product solutions that enhance the image processing abilities of the brain and therefore improve a person’s near vision sharpness and reading capabilities. Our unique software approach provides an alternative to existing solutions, which generally rely on magnifying devices, typically reading glasses. Our technology platform is based on advanced scientific research of image processing functionality, and our solution utilizes the remarkable ability of the brain’s plasticity (the brain’s ability to change), which constitutes the neuronal basis for “perceptual learning”, that is, repeated practice on a demanding visual task. Our founder’s academic research into the area of image processing functions during the last 20 years has yielded a breakthrough in perceptual learning methodologies, which enhance visual skills by improving image processing speed and efficiency in the visual cortex of the brain without altering optical functions. The use of perceptual learning methodologies improves both the processing speed and the sensitivity through repetitive exercise of the brain’s image processing function, resulting in improved near vision sharpness and improved reading capabilities.

GlassesOff’s technology and methods are based on scientific research and achievements that have been published in leading scientific publications, such as Nature, Science, PNAS, Vision Research, Scientific Reports and others. Our first product application, GlassesOff™, which is designed to improve near vision sharpness and reading capabilities, has been tested in several studies, including a study conducted at the University of California, Berkeley, whose results have been published in Nature’s Scientific Reports in February 2012.

The GlassesOff™ Application

For those persons who experience the natural age-related changes in reading abilities, GlassesOff™ is designed to exercise the visual cortex of the brain to achieve comfortable reading without the use of magnifying devices such as reading glasses. According to a scientific review (Holden, B. A. et al., 2008), the target market for natural age-related changes in reading abilities is estimated to include one billion people worldwide, which is the market targeted by GlassesOff™. GlassesOff™ is a software visual cortex exercise solution to improve users’ reading abilities and maintain the ability to read comfortably, through enhancement of their image processing capabilities aiming to achieve near vision sharpness. The GlassesOff™ program is delivered through cloud-based client server architecture to hand-held devices and is currently implemented on the Apple iOS platform, including iPhone, iPod and iPad. Users initially download the application via Apple’s App Store, while their improved reading abilities program is administrated through our dedicated servers.

GlassesOff™ is a personalized application that delivers our solution and monitors user performance and progress. The application automatically adjusts improved reading sessions based on each user’s ongoing progress.

The GlassesOff™ application is composed of two components:

GlassesOff™ Main Features

Simplicity. To facilitate its easy adoption, the GlassesOff™ application does not require any third-party intervention, such as an optometrist or ophthalmologist examination. The product independently assesses each user’s reading abilities and compatibility with the program.

Ease of Use. The GlassesOff™ application offers a user-friendly self-explanatory user interface, integrating interactive tutorials that allow users with no special technological or scientific background to complete the training program and follow their personal progress via easy to read charts.

Platform Compatibility. GlassesOff™ can be used on practically any device with a high quality display, including smart phones, tablets and personal computers. GlassesOff currently offers its solution on Apple’s iOS platform (iPhone, iPad and iPod), and plans to offer its solution on a wide range of additional devices, mainly those running on the Android operating system. GlassesOff’s client-server architecture allows users to seamlessly migrate between devices while keeping their progress history and personal data.

Compliance. Working under a client-server architecture, each session a user completes is logged and stored in our system, allowing us to closely monitor the progress of the user and include automatic protocols that assist him or her throughout the reading improvement program, including such protocols as session reminders and personal improvement tips.

Product Architecture

The client-server cloud-based architecture provides several key advantages for the security, scalability and redundancy of the infrastructure.

Client Security. GlassesOff™ is a “thin client”, meaning all algorithm and reading improvement logics reside on the server side. At the end of each session, the customer receives his or her personalized reading improvement session data from the server for the next session. All communications between the GlassesOff™ server and the customer are through an encrypted channel.

Server Scalability and Redundancy. All of our web services are hosted on the Amazon EC2 cloud, which is a web service that provides resizable compute capacity in the cloud. Our current architecture allows us to further scale out (add more servers) and/or scale up (add more capacity to an existing server) within minutes, and our current architecture has been tested successfully under load and stress storms and was able to serve more than 500,000 requests over a period of five minutes, which is equivalent to more than ten million users. Additionally, our load balancer layers enable updates and maintenance without any downtime and all of its data is backed up and mirrored between two SQL servers.

Server Security. GlassesOff™ web services on Amazon EC2 have gone through a hardening process to enhance their security according to known practices, and all algorithm and data servers are isolated from the internet. For example, only “sanitized” requests (those that comply with our predefined request methodology) received by our internet facing servers are delivered to our algorithm and data servers, with all other connections logged and ignored.

Application Pipeline

We plan to expand our product offerings to include additional suites of applications that would cater to other market segments related to enhancement of visual processing. Specifically, we intend to develop additional applications for:

Following our soft launch in the United States, we intend to market the English version of our product in additional English-speaking countries such as Canada, the United Kingdom and others. This launch will be followed by additional localized versions for other major markets, based on market research prior to each launch.

Customer Support

To ensure customer satisfaction, our customer support efforts include both proactive and responsive models.

Intellectual Property

We have filed several patent applications to protect our core technology platform and products. We have issued patents protecting our core technology platform and products in the United States (US 7,866,817), Australia (AU 2005278771), Korea (KO 10-1016429), Japan (JP 5222556), Canada (CA 2578932) and Israel (IL 181660). Our pending patent applications are still in different evaluation phases in Europe, China and India.

We have also filed a patent application for our vision evaluation method, which was recently issued by the USPTO (US 8,403,485).

In addition to our patent portfolio, we have entered into an intellectual property license agreement with RevitalVision LLC, a Kansas limited liability company, which is the owner of several patents in the area of perceptual learning systems and methods. Under this agreement, referred to as the License Agreement, we have a non-exclusive license to certain patents for the field of near-vision solutions. The License Agreement does not assign any technology to us, and, unless earlier terminated, the License Agreement terminates upon the expiration of the last of RevitalVision’s patents, which is expected to be in 2024. Under the License Agreement, we have paid an initial fee of $75,000 in installments over a period of 24 months following the effective date of the License Agreement, and we are required to pay quarterly royalty payments of 5.5% of net sales up to aggregate net sales of $3 million and of 4.5% of net sales over $3 million (calculated annually).

Competition

Our initial product competes in the market of solutions for better, faster and more effective reading. The natural changes in reading capabilities with age have typically been addressed by traditional products for improvement of reading capabilities, mainly magnification devices, such as reading glasses or contact lenses, that support reading. Manufactures of such magnifier devices could therefore be considered as competition. We believe that our product, which is designed to eliminate the constant dependency on magnifiers, is therefore highly competitive with such devices.

In addition, there are several methods and products that claim to improve reading vision through various means, usually related to muscle exercises (e.g. the Bates method, the See Clearly Method and the Power Vision Program), whereas the GlassesOff solution does not involve any such corrective methods.

Finally, there are several competitors offering vision improvement solutions based on neuroscience methods, such as PositScience and RevitalVision (which obtained FDA clearance for a product that treats amblyopia, a condition typically referred to as “Lazy Eye”). We believe that there is no other software solution for the improvement of reading capabilities to the extent that magnifying devices, such as reading glasses, are not required that has also demonstrated efficacy in controlled studies.

We believe that our technology platform and unique intellectual property assets present a high barrier to entry for others who would try to develop and sell software products for improvement of near vision sharpness and reading capabilities using hand-held devices.

Employees

We currently have one part-time employee in the United States and twenty-nine employees in Israel, of whom fourteen are full-time employees, and fifteen are part-time employees (including three part-time employees with Ph.D. degrees, two of whom are certified optometrists, one part time employee with an MSc degree in neuroscience and two additional part-time employees who are also certified optometrists). All four neuroscientists focus on R&D. None of our employees is represented by a labor union, and we consider our employee relations to be good. We also utilize a number of consultants to assist with R&D and commercialization activities, generally on a monthly retainer.

We intend to hire additional personnel to focus on marketing, customer support and technological support.

Properties

Our principal corporate office is located at 5 Jabotinski St., POB 12, Ramat Gan 5252006, Israel.

GlassesOff’s subsidiary, Eyekon, leases approximately 3,950 square feet of office space in Ramat Gan, Israel. Eyekon pays quarterly rental and management fees of approximately $19,000, plus approximately $9,600 per quarter for taxes and utilities. Eyekon’s facility lease will expire in August 2016.

Legal Proceedings

From time to time we may be named in claims arising in the ordinary course of business. Currently, we are not a party to any legal proceedings nor is any of our property subject to any legal proceedings.

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS

As of July 15, 2014, the following table sets forth information regarding the beneficial ownership of our Common Stock by:

Beneficial ownership is determined in accordance with the rules of the SEC. Except as indicated by footnote and subject to community property laws, where applicable, to our knowledge the persons named in the table below have sole voting and investment power with respect to all shares of our Common Stock that are shown as beneficially owned by them. In computing the number of shares of Common Stock owned by a person and the percentage ownership of that person, any such shares subject to options and warrants held by that person that are exercisable as of July 15, 2014 or that will become exercisable within 60 days thereafter are deemed outstanding for purposes of that person’s percentage ownership but not deemed outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the mailing address of each individual is c/o GlassesOff Inc., 5 Jabotinski St., POB 12, Ramat Gan, Israel 5252006. The following information is based upon information provided to us or filed with the SEC by the persons named below.

THE STANDBY EQUITY DISTRIBUTION AGREEMENT

General

On July 1, 2014, we entered into the SEDA with YA Global, pursuant to which we may, at our election and in our sole discretion, issue and sell to YA Global, from time to time as provided in the SEDA, and YA Global has agreed to purchase, up to $15,000,000 of Common Stock. We refer to the Common Stock issuable under the SEDA as the Equity Line Shares. Pursuant to the terms of the SEDA, we have filed with the SEC a registration statement on Form S-1, of which this prospectus forms a part, to register for resale under the Securities Act the Equity Line Shares that have been or may be issued to the selling stockholders under the SEDA.

Concurrently with the execution of the SEDA, we issued to YA Global II, as designee of YA Global, an aggregate of 103,301 shares of our Common Stock in satisfaction of that portion of the commitment fee payable to YA Global or its designee that became due upon execution of the SEDA. Other than the Common Stock issued to YA Global II upon entering into the SEDA, we do not have the right to commence any sales to YA Global under the SEDA until the SEC has declared effective the registration statement of which this prospectus forms a part. Thereafter, and upon satisfaction of the other conditions set forth in the SEDA, we may, from time to time and at our sole discretion, direct YA Global to purchase Equity Line Shares in accordance with the SEDA. As described in more detail below under “Purchase of Equity Line Shares Under the SEDA,” the purchase price per Equity Line Share is based on the market price of our Common Stock immediately preceding the time of sale as computed under the SEDA less a fixed discount of 1.5%.

Pursuant to the terms of the SEDA, the Company agreed to pay to YA Global or its designee a structuring and due diligence fee in an amount equal to $3,000 and a commitment fee in an aggregate amount of up to $450,000, which is payable either in cash or shares of Common Stock. The first $150,000 of the commitment fee became payable upon execution of the SEDA, and the Company issued to YA Global II an aggregate of 103,301 shares of Common Stock in satisfaction thereof. We are obligated to pay additional commitment fees in cash or shares of our Common Stock, at our election, each in an amount equal to $150,000 if, and only if, YA Global purchases a cumulative amount of Equity Line Shares the value of which exceeds (i) $3,000,000 and (ii) $6,000,000.

YA Global may not assign or transfer its rights or obligations under the SEDA.

Purchase of Equity Line Shares Under the SEDA

In accordance with the terms, and subject to the conditions, of the SEDA, we may elect from time to time, in our sole discretion, to issue and sell Equity Line Shares to YA Global, each of which issuances and sales we refer to as an Advance, at a per share price equal to 98.5% of the lowest daily volume weighted average price of the Common Stock as quoted by Bloomberg, L.P., which we refer to as the Market Price, during the five consecutive trading days commencing immediately subsequent to the date on which we deliver to YA Global a notice of our election to effect an Advance, which we refer to as an Advance Notice.

The amount of the Advance set forth in an Advance Notice shall automatically be reduced by 20%, which we refer to as an Adjusted Advance Notice, for each trading day, which we refer to as an Excluded Day, during the five consecutive trading days commencing immediately subsequent to the date on which we deliver to YA Global an Advance Notice for which the daily volume weighted average price of the Common Stock as quoted by Bloomberg, L.P. is below the Minimum Acceptable Price (as defined below) in effect with respect to such Advance Notice. However, an Adjusted Advance Notice shall be automatically increased by an amount equal to the number of Equity Line Shares sold by YA Global on such Excluded Day (in a total amount for each Excluded Day not to exceed 20% of the amount of the Advance set forth in the original Advance Notice) at a price per share equal to the Minimum Acceptable Price (as defined below) in effect with respect to such Advance Notice (without any further discount).

The amount of each Advance may not exceed the lesser of (x) $500,000 or (y) the Daily Value Traded for the five consecutive trading days immediately prior to the date of the applicable Advance Notice. The “Daily Value Traded” is the product obtained by multiplying the trading volume for a given day by the volume weighted average price of the Common Stock for such date as reported by Bloomberg L.P. during regular trading hours for such day. Pursuant to the SEDA, YA Global is obligated to purchase the Equity Line Shares subject to certain conditions, including, among others, our filing of a registration statement with the SEC to register the resale by YA Global of the Equity Line Shares acquired pursuant to the SEDA and the SEC declaring such registration statement effective.

Minimum Acceptable Price

Under the SEDA, we have set a floor price equal to 85% of the daily volume weighted average price of the Common Stock on the trading day immediately preceding the date of the Advance Notice, which we refer to as the Minimum Acceptable Price. We are not obligated to sell, and YA Global shall not purchase, any Equity Lines Shares below the Minimum Acceptable Price with respect to the applicable Advance Notice.

Ownership Limitation and Commitment Amount

In connection with each Advance Notice delivered by us, any portion of an Advance that would (i) cause the aggregate number of shares of Common Stock beneficially owned (as calculated pursuant to Section 13(d) of the Exchange Act) by YA Global and its affiliates to exceed 9.99% of the then outstanding Common Stock or (ii) cause the aggregate amount of Advances to exceed $15,000,000 shall automatically be withdrawn with no further action required by us, and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by an amount equal to such withdrawn portion.

Our Termination Rights

Unless earlier terminated in accordance with its terms, the SEDA will terminate automatically on the earliest of (i) the first day of the month next following the 36-month anniversary of the date of the SEDA and (ii) the date on which YA Global shall have purchased Equity Line Shares in the aggregate amount of $15,000,000.

We may terminate the SEDA effective upon ten trading days’ prior written notice to YA Global; provided that (i) there are no outstanding Advance Notices under which the applicable Equity Line Shares have not yet been issued, and (ii) we have paid all amounts owed to YA Global pursuant to the SEDA. In addition, the SEDA may be terminated at any time by the mutual written consent of the parties thereto.

No Short-Selling or Hedging by YA Global

YA Global has agreed that neither it nor any of its affiliates shall engage in any short-sales or hedging transactions with respect to our Common Stock at any time prior to the termination of the SEDA; provided however, that upon receipt of an Advance Notice from the Company, YA Global may begin to sell Equity Line Shares to be issued to it in connection with the Advance Notice.

Effect of Performance of the SEDA on Our Stockholders

All shares of Common Stock registered in this offering are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period of up to 36 months commencing on the date that the registration statement, of which this prospectus forms a part, becomes effective. The sale by YA Global of a significant amount of shares registered in this offering at any given time could cause the market price of our Common Stock to decline and to be highly volatile. See “Risk Factors – Our issuance of shares of Common Stock under the SEDA could contribute to the decline of the price of the Common Stock, which may also lead to additional dilution of the ownership interests of our existing stockholders.”

YA Global may ultimately purchase all, some or none of the shares of Common Stock not yet issued but registered in this offering. If we sell these shares to YA Global, it may sell all, some or none of such shares. Therefore, sales to YA Global by us under the SEDA may result in substantial dilution to the interests of other holders of our Common Stock. In addition, if we sell a substantial number of shares to YA Global under the SEDA, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with YA Global may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales. However, we have the right to control the timing and amount of any sales of our shares to YA Global, and the SEDA may be terminated by us in accordance with the terms set forth under the heading “-Our Termination Rights.”

Pursuant to the terms of the SEDA, we have the right, but not the obligation, to direct YA Global to purchase up to $15,000,000 of our Common Stock. Depending on the price per share at which we sell our Common Stock to YA Global, we may be authorized to issue and sell to YA Global under the SEDA more shares of our Common Stock than are offered under this prospectus. If we choose to do so, we must first register for resale under the Securities Act any such additional shares, which could cause additional substantial dilution to our stockholders. The number of shares ultimately offered for resale by YA Global under this prospectus is dependent upon the number of shares we direct YA Global to purchase under the SEDA.

SELLING STOCKHOLDERS

The following table sets forth the name of the selling stockholders and the number of shares of Common Stock that the selling stockholders may offer pursuant to this prospectus. The shares of Common Stock offered by the selling stockholders hereunder were or may be acquired by the selling stockholders pursuant to the SEDA. The shares of Common Stock offered by the selling stockholders hereunder consist of up to 5,000,000 shares, comprising up to 4,896,699 shares that we may issue and sell to YA Global under the SEDA and 103,301 shares that we issued to YA Global II in satisfaction of the commitment fee payable by us upon execution of the SEDA.

Neither selling stockholder has had a material relationship with us other than as a stockholder at any time within the past three years or has ever been one of our or our affiliates’ officers or directors.  The selling stockholders have acquired, or will acquire, their respective shares of Common Stock to be resold hereunder in the ordinary course of business and, at the time of acquisition, the selling stockholders were not a party to any agreement or understanding, directly or indirectly, with any person to distribute the shares of Common Stock to be resold by them under this registration statement. As used in this prospectus, the term “selling stockholders” means YA Global Master SPV Ltd., also referred to as YA Global, and YA Global II SPV LLC, also referred to as YA Global II, together with their respective pledgees, transferees or other successors in interest selling shares of Common Stock received from either YA Global or YA Global II after the date of this prospectus as a gift, pledge or other non-sale-related transfer.

Because the selling stockholders may sell all, some or none of their respective shares of Common Stock, and because the offering contemplated by this prospectus is not underwritten, no estimate can be given as to the number of shares of Common Stock that will be held by the selling stockholders upon termination of the offering. The information set forth in the following table regarding the beneficial ownership after resale of shares held by the selling stockholders is based upon the assumption that the selling stockholders will sell all of their respective shares of Common Stock owned by them and covered by this prospectus.

In accordance with the rules and regulations of the SEC, in computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, shares issuable through the exercise of any option, warrant or right, through conversion of any security held by that person that are currently exercisable or that are exercisable within 60 days are included. These shares are not, however, deemed outstanding for the purpose of computing the percentage ownership of any other person.

MANAGEMENT

Directors and Executive Officers

The following table sets forth information concerning our executive officers and directors, including their ages. The directors hold office for one year terms and until their respective successors are elected or appointed and qualified or until their earlier death, retirement, disqualification, resignation or removal. The executive officers hold office for one year terms or until their respective successors are elected or appointed and qualified or until their earlier resignation or removal.

Shai Novik, M.B.A, Chairman of the Board. Mr. Novik has served as our Chairman of the Board since July 2013. Mr. Novik founded PROLOR Biotech, Inc., a biopharmaceutical company developing long-acting therapeutic proteins, in 2005, and served as its President through its acquisition by OPKO Health (NYSE: OPK) in 2013. Mr. Novik is a co-founder of GlassesOff, and previously served as Chief Operating Officer and Head of Strategic Planning of THCG, a technology and life sciences investment company. THCG was a portfolio company of Greenwich Street Partners, one of the largest U.S. private equity funds. THCG’s own portfolio included several life sciences and medical devices companies. Prior to his position at THCG, Mr. Novik served as Chief Operating Officer and Chairman of Strategy Committee of RogersCasey, an investment advisory company serving Fortune 500 companies such as DuPont, Kodak, General Electric and others.

Sasson Darwish, M.B.A, Vice Chairman of the Board. Mr. Darwish has served as our Vice Chairman of the Board since November 2013. Mr. Darwish currently serves as a Managing Partner of DS Advisory Group, Inc., a strategic and M&A advisory boutique serving the technology industry, which is based in New York. Mr. Darwish served as the Managing Director and Head of the Americas Technology Investment Banking Group at Nomura from April 2010 to December 2011. Prior to joining Nomura, Mr. Darwish served as Managing Director and Head of East Coast Coverage for the Technology Investment Banking Group at Bank of America Merrill Lynch from April 2005 to March 2010. From June 2000 until 2003, Mr. Darwish served as President of U.S. operations at Emblaze Ltd., an Israeli corporation publicly-traded on the London Stock Exchange. Prior to joining Emblaze Ltd., Mr. Darwish was an investment banker at Lehman Brothers’ Investment Banking Global Technology Group from 1994 to 2000, covering telecommunications equipment, software and Internet infrastructure industries. Mr. Darwish earned his B.A. in Economics and Management at Tel Aviv University and his MBA at Yale School of Management.

Nimrod Madar, M.B.A, President, Chief Executive Officer and Director. Mr. Madar has served as our President and Chief Executive Officer and as a director of GlassesOff since July 2013. Mr. Madar previously founded and served as Chairman at iMind Networks, a cognitive training venture specializing in assessing and training cognitive capabilities, such as working memory, attention, visual search, etc. Prior to his position at iMind Networks, Mr. Madar served as VP Strategic Alliances at 888 Holdings Public Limited Company traded on the London Stock Exchange, one of the world’s most popular online gaming entertainment companies with both PC and mobile offering for end users (B2C) as well as white label customers (B2B). Prior to his position at 888 Holdings, Mr. Madar served as a Managing Partner at POC Management Consulting, a management consulting firm consulting to leading corporations in the Israeli market, to include: financial institutes, communication companies, leading manufacturers and retailers.

Prof. Uri Polat Ph.D., Chief Scientific Officer and Director. Prof. Polat has served as our Chief Scientific Officer and as a director of GlassesOff since July 2013. Prof. Polat is the director of the Visual and Clinical Neuroscience Laboratory at the Eye Research Institute at the Sheba Medical Center, Faculty of Medicine, Tel-Aviv University. He received a Ph.D. in Brain Research from the Weizmann Institute of Science, Rehovot, Israel. He was at the Smith-Kettlewell Eye Research Institute, San-Francisco, USA for several years as a Fellow and Associate Scientist. Prof. Polat was the Founder and Chief Scientific Officer of NeuroVision Inc. and developed the first FDA approved training for adult Amblyopia. Prof. Polat is a member of the Association for Research in Vision and Ophthalmology (ARVO), the Visual Sciences Society, The Israel Society for Neuroscience, and the International Brain Organization. His research and scientific publications received international recognition and are highly influential in the field of neuronal interaction, brain plasticity and perceptual learning in improving visual functions.

Ram Shaffir, Chief Technology Officer and Director. Mr. Shaffir has served as our Chief Technology Officer and as a director of GlassesOff since July 2013. Mr. Shaffir previously served as Chief Executive Officer of Odysseus-Ventures, a private investment company specializing in early stage life science companies, and currently serves as a director at Stentomics, one of Odysseus Ventures’ portfolio companies. Prior to his position at Odysseus-Ventures, Mr. Shaffir founded and managed VbaTech, a specialized software house providing software architecture and development services to leading financial institutes in Israel. In additional to his extensive investment activities over the last 10 years, Mr. Shaffir consulted many of Israel’s leading insurance companies in IT issues.

Steve Schaeffer, CPA, Chief Financial Officer. Mr. Schaeffer has served as our Chief Financial Officer since July 2013. Mr. Schaeffer has more than 30 years of accounting and tax experience. His specialty is corporate tax including reorganizations, acquisitions and dispositions. In 1993, he co-founded Cohen & Schaeffer, P.C., a full service CPA firm. Prior to founding Cohen & Schaeffer, Mr. Schaeffer was a tax partner at BDO Seidman and a principal at Laventhol & Horwath heading up the mergers and acquisitions department. Before entering public accounting, he worked for ten years at the Internal Revenue Service. In addition, he taught graduate level tax courses and presented seminars in corporate tax.

Director Compensation

Members of our board of directors who are also officers do not receive separate compensation for their respective service on our board of directors. Mr. Novik receives annual compensation of $75,000 for his service as Chairman of our board of directors, and Mr. Darwish receives annual compensation of $50,000 for his service as Vice Chairman of our board of directors. We reimburse each director for reasonable travel expenses related to such director’s attendance at board of directors and committee meetings. On July 30, 2013, we granted Mr. Novik 300,000 shares of restricted common stock, which vest in substantially equal monthly installments over a period of 12 months from the date of grant.  

Executive Compensation

The following table sets forth the 2013 and 2012 compensation for Mr. Madar, our principal executive officer, and our two other most highly compensated executive officers, for the years ended December 31, 2013 and 2012.

All officers, whether executive or non-executive, serve at the discretion of our Board of Directors.

We have entered into an Employment Agreement with Mr. Madar, which we refer to as the Madar Employment Agreement, a part-time Consulting Agreement with Prof. Polat, Ph.D., which we refer to as the Polat Consulting Agreement, and a Consulting Agreement with Mr. Shaffir, which we refer to as the Shaffir Consulting Agreement, and a part-time Consulting Agreement, with Cohen & Schaeffer LLP, which we refer to as the Schaeffer Consulting Agreement, pursuant to which Steve Schaeffer acts as our Chief Financial Officer. Collectively the foregoing employment and consulting agreements are referred to as the Officer Agreements. The Officer Agreements each have an initial one-year term, which term, except under the Schaeffer Consulting Agreement, shall be automatically extended for additional successive one-year terms on each one-year anniversary, unless either party gives the other party written notice, no less than 60 days prior to the end of the then-current term, of an election not to renew the Officer Agreement. Under the Schaeffer Consulting Agreement, the term may be extended for subsequent one-year terms upon mutual agreement of the parties. Pursuant to their Officer Agreements, Prof. Polat and Messrs. Madar, Shaffir and Schaeffer will receive annual base salaries or compensation, as the case may be, of $100,000, $180,000, $50,000 and $48,000, respectively, provided, that Mr. Shaffir’s base compensation will increase to $120,000 following our consummation of a financing round in excess of $6,000,000. In addition, each of Prof. Polat and Messrs. Madar and Shaffir are entitled to an annual cash bonus of up to 25% of his base salary or compensation, as the case may be, based on corporate and personal milestones together with equity performance awards, each as determined by the compensation committee of our Board of Directors, which we refer to as our Compensation Committee. Upon execution of the Officer Agreements on July 30, 2013, we agreed to grant Prof. Polat and Messrs. Madar and Shaffir options to purchase 350,000, 150,000 and 50,000 shares of Common Stock, respectively, which were granted on February 7, 2014, at an exercise price of $1.93 per share, which options will vest in substantially equal amounts on the first, second and third anniversaries of the date of grant. In addition we granted Messrs. Madar and Shaffir 200,000 and 300,000 shares, respectively, of restricted Common Stock, vesting in substantially equal amounts on the first, second and third anniversaries of the date of grant.

Prof. Polat’s and Messrs. Madar’s and Shaffir’s Officer Agreements provide that if such person voluntarily terminates his employment or consultancy, as the case may be (other than in connection with a change of control of GlassesOff and certain other reasons), or we terminate his employment or consultancy, as the case may be, for “cause” (as defined in the agreement) then he will be entitled only to payment of his base salary or compensation, as the case may be, through the date of termination, and will not be entitled to any performance bonus for that year. However, if any such person terminates his Officer Agreement as the result of a material breach by us, he will be entitled to continued payment of his base salary for a period of six months following such termination, plus the value of any accrued benefits (if any), and all unvested options and shares of restricted Common Stock granted to him shall immediately vest and become exercisable. If we terminate any such person other than for cause or if the term expires and is not renewed by us, then, (i) in the case of Mr. Madar, he will be entitled to continued payment of his base salary or compensation, as the case may be, for a period of six months following such termination or non-renewal, and he would additionally receive the value of accrued benefits and a pro-rata portion of the current year’s performance bonus, and (ii) in the case of Prof. Polat and Mr. Shaffir, he will be entitled to receive an amount equal to his then-current base salary for a period of six months following such termination or non-renewal, and he would additionally receive the value of accrued benefits and a pro-rata portion of the current year’s performance bonus.

If either (a) Prof. Polat or Messrs. Madar or Shaffir terminates his employment or consultancy, as the case may be, for “good reason” (as defined in the agreement) or (b) we or our successor terminates his employment or consultancy, as the case may be, within 12 months following a change in control (as defined in the agreement), then he will be entitled to receive a lump-sum payment equal to the lesser of (i) his base salary or compensation, as the case may be, for six months and (ii) his base salary or compensation, as the case may be, for the remainder of the then unexpired term, and all unvested stock options and shares of Restricted Common Stock will immediately vest and become exercisable. This amount is subject to reduction so that the total amount of payments or benefits provided to him under his agreement or any benefit plans or agreements will not constitute an “excess parachute payment” under the Internal Revenue Code.

The Officer Agreements include covenants limiting the ability of each of Prof. Polat and Messrs. Madar and Shaffir to compete with us during the term of his employment or during the consulting period, as the case may be, and for a period of one year following his termination for cause by us, and includes a nonsolicitation provision that applies during the same period.

The Officer Agreements provide Mr. Madar and, to the extent not inconsistent with an independent contractor relationship, each of Prof. Polat and Mr. Shaffir, with such benefits as are provided generally to our executive officers, which includes the use of a company car for which he will be grossed-up for any tax liability incurred with respect to the car’s “value equivalent” (the value of the car usage) for tax purposes as updated from time to time, provided, that, the use of a company car for Prof. Polat and Mr. Shaffir is subject to approval of our Board of Directors.

Pursuant to their Officer Agreements, each of Prof. Polat and Mr. Shaffir, are entitled to assign all or a part of his rights and obligations thereunder to a controlled entity (a “Controlled Entity” is an entity wholly owned by such individual and/or members of such individual’s immediate family); provided, that (i) the Controlled Entity joins as a party to the Officer Agreement and agrees to be bound by the provisions thereof, (ii) the Controlled Entity shall at all times after such assignment employ or otherwise retain the services of such individual, (iii) such individual remains personally bound by and subject to the certain confidentiality and non-competition restrictions contained in the Officer Agreement, (iv) the management services and other duties required under the Officer Agreement shall be rendered by the Controlled Entity only through such individual and (v) we incur no additional cost due to such assignment.

The three primary components of compensation for our organization are salary, bonuses and equity incentives (stock options). Each is described in more detail below.

Salary

Salaries are initially negotiated and generally set forth in employment or consulting agreements between each of our executives and us. Thereafter, our Compensation Committee reviews the salaries of our executive management annually. Salaries are established by (a) reviewing the performance of the executive, (b) adjusting (upwards or downward) to reflect individual qualifications, job uniqueness and performance and (c) engaging in discussions between the CEO and the Compensation Committee in order to make revisions as needed.

Bonuses

We believe that bonuses based on both personal and corporate targets are important in order to incentivize employees and management to achieve our goals. We grant bonuses based on corporate and personal milestones, each as determined by our Compensation Committee.

Equity Compensation

We believe that equity ownership by executive management is important in order to align our long-term rewards program with the interests of our stockholders. Additionally, long-term awards are needed to attract and retain talented and success-driven employees.

Benefits and Perks

We do not currently have a written benefits and perks policy. We intend to provide our executive officers with benefits and perks that are customarily provided to executive officers of public companies of similar size, including, for example, the use of a company car for which we will gross-up the executive’s compensation for any tax liability incurred with respect to the car’s “value equivalent”.

Employment Agreements

We generally negotiate employment or consulting agreements with our named executive officers. The purpose of these arrangements is to secure qualified executives for leadership positions in our organization, as well as to protect our intellectual property by virtue of restrictive covenants contained in the agreements. As described above, we currently have an employment or consulting agreement with each of Prof. Polat, Mr. Madar and Mr. Shaffir.

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the equity awards made to our named executive officers that were outstanding at December 31, 2013.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Related Persons

On May 16, 2014, we consummated a private placement, pursuant to which certain investors purchased an aggregate of 4,000,000 shares of our Common Stock for a purchase price in cash of $1.25 per share. Before expenses, we received an aggregate of approximately $5,000,000 in gross proceeds from the issuance of such shares. Shai Novik, our Chairman of the Board, and Sasson Darwish, our Vice Chairman of the Board, each participated in this private placement as an investor. Messrs. Novik and Darwish each participated on the same terms as the other investors in the private placement, and purchased 335,000 shares of Common Stock for a total of $418,750 and 160,000 shares of Common Stock for a total of $200,000, respectively.

On July 30, 2013, in connection with the Merger, we consummated a private placement, pursuant to which certain investors purchased an aggregate of 2,490,000 units for a purchase price in cash of $1.25 per unit, which we refer to as the Units, each of which comprised one share of our Common Stock and one warrant to purchase one share of our Common Stock at an exercise price of $1.25 per share. Before expenses, we received an aggregate of approximately $3,112,500 in gross proceeds from the issuance of the Units. Ram Shaffir, our Chief Technology Officer and a director, participated in this private placement as an investor. Mr. Shaffir participated on the same terms as the other investors, and he purchased 400,000 Units for a total of $500,000.

Review, Approval or Ratification of Transactions with Related Persons

Our Board of Directors conducts an appropriate review of and oversees all related-party transactions. We have not yet adopted formal standards in respect of the review and approval or ratification of related-party transactions; however, our board has conformed to the following standards: (i) all related-party transactions must be fair and reasonable to us and on terms comparable to those reasonably expected to be agreed to with independent third parties for the same goods and/or services at the time authorized by the board; and (ii) all related-party transactions must be authorized, approved or ratified by the affirmative vote of a majority of the directors who have no interest, either directly or indirectly, in any such related party transaction.

Director Independence

We evaluate the independence of directors and the composition of the committees of the Board of Directors in accordance with the rules of the NYSE MKT, notwithstanding that our Common Stock is not listed for trading on the NYSE MKT or any other national securities exchange. Our board utilizes the definition of “independence”, including for Audit Committee purposes, as that term is defined by the applicable NYSE MKT rules. Our Board of Directors analyzes whether a director is independent by evaluating, among other factors, the following:

The above list is not exhaustive, and our Board of Directors considers other factors when determining whether a director is independent.

Our board is composed of Shai Novik, M.B.A., Nimrod Madar, M.B.A., Uri Polat, Ph.D., Ram Shaffir and Sasson Darwish. Based on the independence standards discussed above, our board has affirmatively determined that each of Mr. Novik and Mr. Darwish is independent. Mr. Madar, Prof. Polat and Mr. Shaffir are not independent because each serves as one of our executive officers.

DESCRIPTION OF SECURITIES

General

The following description of our capital stock and provisions of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws are summaries and are qualified by reference to our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws.

Common Stock

We are authorized to issue up to 200,000,000 shares of our Common Stock, par value $0.001 per share, of which 57,708,758 shares are issued and outstanding as of July 15, 2014. Our outstanding Common Stock is held of record by approximately 85 holders as of July 15, 2014. Additionally, we are authorized to issue up to 20,000,000 shares of preferred stock, par value $0.001 per share, of which no shares are issued and outstanding.

Description of Common Stock

Preemptive Rights

The holders of Common Stock do not have preemptive rights to purchase or subscribe for any stock or other securities of ours.

Voting Rights

Each outstanding share of Common Stock is entitled to one vote per share with respect to each matter on which holders of Common Stock are entitled to vote.

Dividends

Holders of Common Stock are entitled to receive dividends or other distributions when and if declared by the Board, subject to any rights of the holders of other classes of our capital stock and the availability of sufficient funds under applicable law to pay dividends.

Liquidation Rights

In the event of the liquidation of GlassesOff, subject to the rights, if any, of the holders of other classes of our capital stock, the holders of Common Stock are entitled to receive any of our assets available for distribution to our stockholders ratably in proportion to the number of shares held by them.

Preferred Stock

The Board may issue shares of Preferred Stock in one or more series without stockholder approval, and each such series of Preferred Stock may have such preferences, liquidation, dividend, voting and other rights and limitations as the Board may determine, any of which could adversely affect the relative rights of the holders of Common Stock. Additionally, the Board could authorize and issue Preferred Stock as a method of discouraging, delaying or preventing a change in control of GlassesOff or making removal of management more difficult.

Anti-Takeover Effects of Nevada Law and our Charter Documents

Nevada Law

As a corporation incorporated under the laws of the State of Nevada, we are subject to the Nevada Revised Statutes, or NRS, including Nevada’s “control share” and “business combination” statutes. Among other requirements, Nevada’s control share statute may apply to us if we have 200 or more stockholders of record, at least 100 of who have addresses in Nevada, and Nevada’s “business combination” statute may apply to us if we have 200 or more stockholders of record.

In general, the control share statute, under certain circumstances, prohibits a person from voting shares of a Nevada corporation’s voting stock after such person acquires an ownership percentage of such corporation in excess of certain thresholds, unless such corporation’s disinterested stockholders approve the granting of voting rights to such person’s shares.

In general, the business combination statute prohibits a publicly-held Nevada corporation from engaging in a business combination with an interested stockholder for a period of two years following the date on which the person became an interested stockholder, unless the business combination or the transaction pursuant to which the person became an interested stockholder was approved in a prescribed manner. Generally, a business combination includes a merger or consolidation with an interested stockholder, or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with: (i) an interested stockholder having direct or indirect beneficial ownership of 10% or more of outstanding voting stock of a Nevada corporation; or (ii) an affiliate or associate of a Nevada corporation who, at any time within two years before the date in question, was the direct or indirect owner of 10% or more the corporation’s outstanding voting stock. An interested stockholder cannot engage in specified business combinations with the corporation for a period of two years after the date on which the person became an interested stockholder.

Amended and Restated Articles of Incorporation and Bylaws

Our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws contain material provisions that may make the acquisition of control of GlassesOff more difficult.

Blank Check Preferred Stock. We are authorized to issue up to 20,000,000 shares of preferred stock in one or more series without stockholder approval, and each such series of preferred stock may have such preferences, rights and limitations as our Board of Directors may determine.

Stockholder Action by Written Consent. Our Amended and Restated Bylaws provide that any action which our stockholders may take at a stockholders’ meeting can be taken by written consent in lieu of a meeting.

Indemnification. Our Amended and Restated Articles of Incorporation provide that we will indemnify each of our directors and officers to the fullest extent permitted by applicable law. Additionally, our Amended and Restated Bylaws permit us to purchase insurance on behalf of our directors, officers, employees and agents against liabilities that they may incur in those capacities, whether or not we would have the power to indemnify them against such liabilities.

Transfer Agent and Registrar

VStock Transfer, LLC serves as transfer agent and registrar for our Common Stock.

PLAN OF DISTRIBUTION

The selling stockholders and any of their respective pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their Common Stock on the OTCBB or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

The selling stockholders may also sell shares under Rule 144, if available, rather than under this prospectus.

Each selling stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.

In connection with the sale of the Common Stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Common Stock in the course of hedging the positions they assume. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

Each selling stockholder is, and any broker-dealers or agents that are involved in selling the shares may be deemed to be, an “underwriter” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

Because each selling stockholder is an “underwriter” within the meaning of the Securities Act, it is subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than under this prospectus. There is no underwriter (other than the selling stockholders) or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.

We have agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the selling stockholders without registration and without regard to any volume limitations by reason of Rule 144 or any other rule of similar effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Expenses, Indemnification

We will not receive any of the proceeds from the sale of the Common Stock sold by the selling stockholders and will bear all expenses related to the registration of this offering, but will not pay for any commissions, fees or discounts, if any, relating to the sale of the Common Stock sold by either selling stockholder. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

Supplements

In the event of a material change in the plan of distribution disclosed in this prospectus, the selling stockholders will not be able to effect transactions in the shares pursuant to this prospectus until such time as a post-effective amendment to the registration statement is filed with, and declared effective by, the SEC.

Regulation M

We have informed each selling stockholder that it is required to comply with Regulation M promulgated under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, with respect to any purchase or sale of our Common Stock. In general, Rule 102 under Regulation M prohibits any person connected with a distribution of our Common Stock from directly or indirectly bidding for, or purchasing for any account in which it has a beneficial interest, any of the shares or any right to purchase the shares, for a period of one business day before and after completion of its participation in the distribution.

During any distribution period, Regulation M prohibits the selling stockholders and any other persons engaged in the distribution from engaging in any stabilizing bid or purchasing our Common Stock except for the purpose of preventing or retarding a decline in the open market price of the Common Stock. None of these persons may affect any stabilizing transaction to facilitate any offering at the market.

We have also advised each selling stockholder that it should be aware that the anti-manipulation provisions of Regulation M under the Exchange Act will apply to purchases and sales of Common Stock by such selling stockholder, and that there are restrictions on market-making activities by persons engaged in the distribution of the shares. Under Regulation M, neither selling stockholder nor its agents may bid for, purchase, or attempt to induce any person to bid for or purchase, shares of our Common Stock while such selling stockholder is distributing shares covered by this prospectus. Regulation M may prohibit the selling stockholders from covering short sales by purchasing shares while the distribution is taking place, despite any contractual rights to do so under the SEDA. We have advised each selling stockholder that it should consult with its own legal counsel to ensure compliance with Regulation M.

LEGAL MATTERS

The legality of the securities offered by this prospectus has been passed upon by Greenberg Traurig, LLP, Las Vegas, Nevada.

EXPERTS

The audited consolidated financial statements of GlassesOff Inc. contained in this prospectus have been so included in reliance upon the report of Yarel + Partners CPA (ISR), independent registered public accountants, upon the authority of said firm as experts in accounting and auditing in giving said report.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Common Stock. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some items of which are contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our Common Stock, we refer you to the registration statement, including the exhibits and the consolidated financial statements and notes that are filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The exhibits to the registration statement should be reviewed for the complete contents of these contracts and documents.

We also file annual, quarterly and current reports and other information with the SEC. We are not required under applicable SEC rules and regulations to deliver an annual report to security holders, and we do not voluntarily mail an annual report to security holders. Our annual report on Form 10-K, which contains our audited financial statements, is available on our corporate website, www.glassesoff.com. Any document we file with the SEC (including the registration statement of which this prospectus is a part) may be inspected without charge at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of any such document may be obtained from the SEC upon the payment of fees prescribed by it. You may call the SEC at 1-800-SEC-0330 for more information on the operation of the public reference facilities. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with it.

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S. DOLLARS IN THOUSANDS

(Except shares and per share amounts)

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements.

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of the unaudited consolidated financial statements.

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S. DOLLARS IN THOUSANDS

(Except shares and per share amounts)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

The accompanying notes are an integral part of the unaudited consolidated financial statements.

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S. DOLLARS IN THOUSANDS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S. DOLLARS IN THOUSANDS

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

*   Less than one.

The accompanying notes are an integral part of the unaudited consolidated financial statements.

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S DOLLARS IN THOUSANDS (except shares and per share amounts)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

(Unaudited)

NOTE 1 - GENERAL

GlassesOff Inc. (the “Company”) formerly named Autovative Products, Inc., was formed on December 8, 2004 under the laws of the State of Nevada.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S DOLLARS IN THOUSANDS (except shares and per share amounts)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

(Unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Ucansi Inc. and Eyekon E.R.D. Ltd.  

Intercompany transactions and balances have been eliminated upon consolidation.

Revenues are derived from subscription fees for access to and use of its on-demand application services. Under such subscription arrangements for its on-demand application services, the customer does not have the contractual right to take possession of the software at any time during the subscription period. Thus, revenue for the Company’s subscription services will be recognized in accordance with accounting standards for service contracts. There are four basic criteria which must be met to recognize revenue: 1) persuasive evidence of an arrangement exists; 2) delivery of the product has occurred; 3) a fixed or determinable fee; and 4) the collection of the fee is reasonably assured. The application of the relevant accounting standards will require the Company to exercise significant judgment related to specific transactions and transaction types.

Basic and Diluted losses per share are presented in accordance with ASC 260-10 “Earnings per share”. Outstanding restricted stock, options and warrants have been excluded from the calculation of the diluted loss per share because all such securities are antidilutive. The total weighted average number of shares of common stock related to outstanding restricted stock, options and warrants excluded from the calculations of diluted loss per share were 20,480,668 and 16,475,749 for the three months ended March 31, 2014 and 2013, respectively.

The following data show the amounts used in computing (losses) per share and the effect on income and the weighted average number of shares of dilutive potential common stock:

Series A Preferred Stock holders participated in dividends with common stock holders and were therefore included in the computation of basic EPS. All Series A preferred stock ceased to exist upon consummation of the Merger on the Closing Date.

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S DOLLARS IN THOUSANDS (except shares and per share amounts)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

(Unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

As defined in ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

In determining fair value, the Company utilizes valuation techniques in its assessment that maximize the use of observable inputs and minimize the use of unobservable inputs.
The following table presents the Company’s financial assets and liabilities that are carried at fair value, classified according to the three categories described above:

In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). ASU 2013-11 requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. The standard is effective for interim and annual periods beginning after December 15, 2013 and is to be applied prospectively with optional retrospective adoption permitted. The Company adopted this standard prospectively as of January 1, 2014. The adoption of ASU 2013-02 did not have a material impact on its consolidated results of operation and financial condition.

There were various other updates recently issued. None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows.

GLASSESOFF INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

U.S DOLLARS IN THOUSANDS (except shares and per share amounts)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

(Unaudited)

NOTE 3 - ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

NOTE 4 - PROPERTY AND EQUIPMENT, NET

Depreciation expenses for the three months ended March 31, 2014 and 2013 and for the period of February 5, 2007 (inception date) through March 31, 2014 were $8, $4 and $96, respectively.

NOTE 5 - ACCRUED EXPENSES AND OTHER LIABILITIES