My Size (MYSZ) Files Lawsuit Against the Lazar/Ault Activist Group Over Attempts to Mislead Stockholders and Wage an Unlawful Proxy Contest
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My Size, Inc. ("My Size" or the "Company") (NASDAQ: MYSZ) (TASE: MYSZ), a leading developer and creator of smartphone measurement solutions, announced that it has filed a lawsuit in the United States District Court for the Southern District of New York against David Lazar, Milton C. Ault III and others (collectively, the "Defendants" or the "Activist Group"). The suit seeks, among other things, to enjoin the Activist Group from misleading My Size stockholders and waging an illegal proxy contest to seize control of the Company's Board of Directors (the "Board").
In its suit, My Size asserts that the Activist Group has been engaged in a "wolf pack" campaign over the past year to take control of the Board through an unlawful proxy solicitation and by the filing of false and misleading Schedule 13Ds with the Securities and Exchange Commission. Notably, My Size contends the Activist Group failed to disclose that the true purpose underlying its security purchases was to merge My Size with another company. My Size was left with no other option than to take legal action to enjoin the Defendants from continuing to violate the federal securities laws and misleading stockholders for their own benefit.
Ronen Luzon, Chief Executive Officer and Founder of My Size, commented:
"The Board and management team have decided to take this extraordinary step to protect My Size for the benefit of all stockholders. We firmly believe that the Activist Group has purposefully misled stockholders for its own benefit and in doing so, has violated the federal securities laws. We look forward to resolving this matter as quickly as possible, so management can turn its focus back to commercializing our cutting-edge technology and strengthening our market position. Following the addition of a seasoned industry executive to our Board in August and the consolidation of our IP portfolio exclusively within the Company, we believe My Size is well-positioned to seize greater market share and deliver value for stockholders in the coming quarters."
In its complaint, the Company asserts that the Activist Group has carried out a number of unlawful activities, including:
- The Defendants made false and misleading regulatory filings that failed to properly disclose the formation and membership of the Activist Group. The Defendants failed to fully disclose that they had entered into one or more undisclosed contracts, arrangements, understandings or relationships to gain control of the Company.
- The Activist Group made false and misleading regulatory filings that failed to reveal its true purpose for purchasing shares of the Company. My Size contends the Activist Group failed to disclose in its filings with the Securities and Exchange Commission that its purchases of the Company's securities were done to facilitate a shell-style reverse merger or other similar transaction, with another company replacing the Company's current business with an entirely different one. In an episode on Mr. Ault's YouTube channel, which was published the day after the filing of Mr. Ault's Schedule 13D and Mr. Lazar's second Schedule 13D/A, Mr. Ault boasted that he and Mr. Lazar collectively controlled 20% of the outstanding stock in the Company and believed My Size "should merge with another public company very similar to Ikonics […] we are going to be pushing for them to take action and get the company into another business."
- The Defendants violated the Exchange Act proxy rules in their attempts to solicit votes without a proxy statement on file with the Securities and Exchange Commission. My Size has learned that Mr. Lazar has utilized WhatsApp Messenger to contact at least one investor as part of an effort to solicit votes in favor of the slate of insurgent director nominees consisting of Mr. Lazar and certain other Defendants. Mr. Lazar went as far as to instruct the investor when they should purchase shares in the Company, so that those shares could be eligible to be voted at the Company's 2021 Annual Meeting of Stockholders.
Stockholders are not required to take any action at this time. The Board intends to schedule the 2021 Annual Meeting of Stockholders and will present its director candidates for election at the meeting in its proxy materials, which will be filed with the Securities and Exchange Commission in due course.
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