Filed Pursuant to General Instruction II.L. of Form F-10
File No. 333-194940
No securities regulatory authority
has expressed an opinion about these securities and it is an offence to claim otherwise.
Information has been incorporated
by reference in this prospectus supplement and the accompanying short form base shelf prospectus dated April 8, 2014 to which
it relates, as amended or supplemented, from documents filed with, or furnished to, the U.S. Securities and Exchange Commission
and filed with securities commissions or similar regulatory authorities in Canada. Copies of the documents incorporated
herein by reference may be obtained on request without charge from the office of our Chief Financial Officer at 220 Admiral Boulevard,
Mississauga, Ontario, Canada L5T 2N6, (905) 361-3638, and are also available electronically at www.sec.gov and www.sedar.com.
PROSPECTUS
SUPPLEMENT
(To the Short Form Base Shelf Prospectus dated April 8, 2014)
New Issue |
December 11, 2015 |
$16,499,990
HYDROGENICS
CORPORATION
2,129,031
Common Shares
This offering (the
“offering”) of $16,499,990 of common shares (the “common shares”) of Hydrogenics
Corporation (the “Company”) under this prospectus supplement (the “prospectus
supplement”) consists of 2,129,031 common shares
(collectively, with the common shares issuable upon the exercise of the over-allotment option (as defined below), the “offered
common shares”) at a price of $7.75 per common share (the “offering price”). The offering is
being made in the United States under the terms of a Registration Statement on Form F-10 filed with the U.S. Securities and
Exchange Commission (the “SEC”) and this prospectus supplement.
Investing in our common shares involves
risks. See “Risk Factors” on page S-3 of this prospectus supplement and on page 7 of the accompanying short form base
shelf prospectus of the Company dated April 8, 2014 (the “prospectus”) and in other documents incorporated by reference
in this prospectus supplement and the prospectus.
| |
Price to Public | |
Underwriters’ Fee(1) | |
Net Proceeds to
the Company(1)(2) |
Per Common Share | |
$ | 7.75
| | |
$ | 0.446
| | |
$ | 7.304
| |
Total | |
$ | 16,499,990
| | |
$ | 948,749
| | |
$ | 15,551,241
| |
| (1) | The underwriters’ fee is equal
to 5.75% of the gross proceeds of the offering. We have also agreed to reimburse certain expenses of the representative. See “Underwriting”. |
| (2) | After deducting the underwriters’
fee but before deducting the expenses of this offering, estimated to be $275,000, all of which will be paid by the Company. |
Craig-Hallum
Capital Group
Sole Book-Running Manager
Roth Capital Partners
Co-Manager
The date of this prospectus supplement
is December 11, 2015.
Our common shares are listed on the NASDAQ
Global Market (“NASDAQ”) under the symbol “HYGS” and listed on the Toronto Stock Exchange (the “TSX”)
under the symbol “HYG”. On December 4, 2015, the last trading day prior to the public announcement of the offering,
the closing prices of our common shares on the NASDAQ and the TSX were US$10.64 and Cdn$14.19, respectively. The common shares
offered by this prospectus supplement will be listed on NASDAQ. We have applied to the TSX for the additional listing of the common
shares offered by this prospectus supplement. Listing on the TSX will be subject to our fulfillment of all of the listing requirements
of the TSX.
The
offered common shares are being offered by the underwriters pursuant to an underwriting agreement dated December 11, 2015
(the “underwriting agreement”) between the
Company and Craig-Hallum Capital Group LLC (the “representative”)
as the representative of the underwriters named in the underwriting agreement (the “underwriters”). In
certain circumstances, the underwriters may offer the offered common shares at a price lower than the offering price in this
prospectus supplement. See “Underwriting”.
The underwriters may also exercise an option (the “over-allotment option”), exercisable
in full or in part from time to time until the date which is 30 days following the closing date of this offering, to purchase
from the Company on the same terms up to 319,354 common
shares (the “additional common shares”), being a number equal to 15% of the number of common shares sold in
the offering. If the over-allotment option is exercised in full, the total price to the public will be $18,974,984,
the underwriters’ fee will be $1,091,061.57 and the net proceeds to the Company
will be $17,883,922, before deducting the expenses of this offering, estimated to be $275,000.
This prospectus supplement also registers the additional common shares issuable upon the exercise of the over-allotment option.
The offering price will
be determined by negotiation between the Company and the underwriters. In connection with the offering, the underwriters may over-allot
or effect transactions which stabilize or maintain the market price of the common shares at a level above that which might otherwise
prevail in the open market. Such transactions, if commenced, may be discontinued at any time. See “Underwriting”.
The common shares offered by this prospectus
supplement are not being offered for sale in Canada or to any resident of Canada and may not be offered or sold, directly or indirectly,
in Canada, or to or for the account of any resident of Canada.
We are permitted, as a Canadian issuer,
under the multi-jurisdictional disclosure system adopted by Canada and the United States, to prepare this prospectus supplement
and the prospectus in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements
are different from those of the United States. The Company’s financial statements are prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board and are subject to Canadian auditing and
independence standards, and thus may not be comparable to financial statements of U.S. companies.
Prospective investors should be aware
that the acquisition of common shares may have tax consequences both in Canada and the United States. Such consequences for investors
who are resident in, or citizens of the United States may not be described fully herein or in the prospectus. Prospective investors
should consult their own tax advisors prior to deciding to purchase common shares. See “Certain Income Tax Considerations”
on page S-11 of this prospectus supplement.
Your ability to enforce civil liabilities
under the U.S. federal securities laws may be affected adversely because we are incorporated in Canada, many of our officers and
directors and certain of the experts named in this prospectus supplement and the accompanying prospectus are non-U.S. residents,
and many of our assets and those of said persons may be located in Canada or outside the United States.
Neither
the u.s. 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 SUPPLEMENT OR THE accompanying PROSPECTUS. Any representation to the
contrary is a criminal offense.
Our
headquarters and registered office is located at 220 Admiral Boulevard, Mississauga, Ontario, Canada L5T 2N6.
TABLE OF CONTENTS
Prospectus Supplement
|
Page |
|
|
ABOUT THIS PROSPECTUS SUPPLEMENT |
S-1 |
EXCHANGE RATE DATA |
S-1 |
FORWARD-LOOKING STATEMENTS |
S-2 |
THE COMPANY |
S-3 |
RECENT DEVELOPMENTS |
S-3 |
PRE-EMPTIVE RIGHTS |
S-3 |
RISK FACTORS |
S-3 |
USE OF PROCEEDS |
S-4 |
PRIOR SALES |
S-5 |
PRICE RANGE AND TRADING |
S-5 |
CAPITALIZATION |
S-5 |
DESCRIPTION of Share Capital |
S-6 |
Underwriting |
S-6 |
CERTAIN INCOME TAX CONSIDERATIONS |
S-11 |
DOCUMENTS INCORPORATED BY REFERENCE |
S-14 |
LEGAL MATTERS |
S-15 |
Auditors, Transfer Agents and Registrars |
S-15 |
Prospectus
Page
about this prospectus |
5 |
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES |
5 |
EXCHANGE RATE DATA |
5 |
FORWARD-LOOKING STATEMENTS |
6 |
RISK FACTORS |
7 |
THE COMPANY |
8 |
OUR BUSINESS |
8 |
Recent Developments |
10 |
Prior Sales |
10 |
Price Range and Trading |
10 |
USE OF PROCEEDS |
12 |
Capitalization and indebtedness |
12 |
Earnings coverage ratios |
13 |
DESCRIPTION OF common shares and PREFERRED SHARES |
13 |
DESCRIPTION OF DEBT SECURITIES |
15 |
DESCRIPTION OF SUBSCRIPTION RECEIPTS |
18 |
DESCRIPTION OF WARRANTS |
19 |
DESCRIPTION OF SHARE PURCHASE CONTRACTS |
22 |
DESCRIPTION OF UNITS |
22 |
PLAN OF DISTRIBUTION |
23 |
selling securityholders |
24 |
CERTAIN INCOME TAX CONSIDERATIONS |
25 |
DOCUMENTS INCORPORATED BY REFERENCE |
25 |
LEGAL MATTERS |
26 |
auditors, transfer agents and registrars |
27 |
AGENT FOR SERVICE OF PROCESS |
27 |
STATUTORY and contractual RIGHTS OF WITHDRAWAL AND RESCISSION |
27 |
CERTIFICATE OF THE COMPANY |
29 |
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part
is this prospectus supplement, which describes the specific terms of the offered common shares and also adds to and updates certain
information contained in the prospectus and the documents incorporated by reference therein. The second part, the prospectus, gives
more general information, some of which may not apply to the offered common shares. This prospectus supplement is deemed to be
incorporated into the accompanying prospectus solely for the purpose of the offering.
You should only rely on the information contained
or incorporated by reference in this prospectus supplement or the prospectus. Neither we nor the underwriters have authorized anyone
to provide you with different information. If anyone provides you with additional, different or inconsistent information, you should
not rely on it. You should not assume that the information contained in this prospectus supplement or the prospectus, as well as
the information we previously filed with the SEC in the United States and the securities commissions or similar authorities in
Canada that is incorporated by reference in this prospectus supplement, is accurate as of any date other than its respective date.
Our business, financial condition, results of operations and prospects may have changed since such dates.
Capitalized terms which are used but not otherwise
defined in this prospectus supplement shall have the meaning ascribed thereto in the prospectus. All references in this prospectus
supplement to “Canada” mean Canada, its provinces other than Québec (and excluding its territories), its possessions
and all areas subject to its jurisdiction.
In this prospectus supplement, unless the context
otherwise requires, the terms “Hydrogenics”, “we”, “us”, “our” and the “Company”
refer to Hydrogenics Corporation and its consolidated subsidiaries and, where the context requires, includes our predecessor (“Old
Hydrogenics”) and its consolidated subsidiaries prior to October 27, 2009.
In this prospectus supplement and the prospectus,
except where otherwise indicated, all dollar amounts are expressed in U.S. dollars, references to “US$”, “$”
and “dollars” are to U.S. dollars, and references to “Cdn$” are to Canadian dollars.
EXCHANGE
RATE DATA
The following table sets forth, for each period
indicated, the low and high exchange rates for Canadian dollars expressed in United States dollars, the exchange rate at the end
of such period and the average of such exchange rates for each day during such period, based on the noon rate of exchange as reported
by the Bank of Canada for the conversion of Canadian dollars into United States dollars:
| |
Year Ended December 31, |
| |
2010 | |
2011 | |
2012 | |
2013 | |
2014 |
Low | |
| 0.9278 | | |
| 0.9430 | | |
| 0.9599 | | |
| 0.9348 | | |
| 0.8568 | |
High | |
| 1.0054 | | |
| 1.0583 | | |
| 1.0299 | | |
| 1.0164 | | |
| 0.9444 | |
Period End | |
| 1.0054 | | |
| 0.9833 | | |
| 1.0051 | | |
| 0.9402 | | |
| 0.8620 | |
Average | |
| 0.9709 | | |
| 1.0111 | | |
| 1.0004 | | |
| 0.9710 | | |
| 0.9052 | |
On December 10, 2015, the noon buying rate as reported by the Bank of Canada was Cdn$1.00
= US$0.7353.
FORWARD-LOOKING
STATEMENTS
Certain statements included and incorporated
by reference in this prospectus supplement and the prospectus constitute “forward-looking information”, within the
meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of the United States
Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking statements”).
Forward-looking statements can be identified by the use of words, such as “plans”, “expects”, “budget”,
“scheduled”, “estimates”, “forecasts”, “intend”, “anticipates”, “objectives”
or “believes” or variations of such words and phrases or statements that certain actions, events or results “may”,
“could”, “would”, “might” or “will” be taken, occur or be achieved. These forward-looking
statements relate to, among other things, our future results, levels of activity, performance, goals, achievements, competitive
advantages, industry trends, or other future events. These forward-looking statements are based on current expectations and various
assumptions and analyses made by us in light of our experience and our perceptions of historical trends, current conditions and
expected future developments and other factors that we believe are appropriate in the circumstances. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from
those anticipated in our forward-looking statements.
These risks, uncertainties and factors include,
but are not limited to: our inability to execute our business plan, realize as revenue our backlog, or to grow our business; inability
to address a slow return to economic growth, and its impact on our business, results of operations and consolidated financial condition;
our limited operating history; inability to implement our business strategy; fluctuations in our quarterly results; failure to
maintain our customer base that generates the majority of our revenues; currency fluctuations; failure to maintain sufficient insurance
coverage; changes in value of our goodwill; failure of a significant market to develop for our products; failure of hydrogen being
readily available on a cost-effective basis; changes in government policies and regulations; lack of new government policies and
regulations for the energy storage technologies; failure of uniform codes and standards for hydrogen-fuelled vehicles and related
infrastructure to develop; liability for environmental damages resulting from our research, development or manufacturing operations;
failure to compete with other developers and manufacturers of products in our industry; failure to compete with developers and
manufacturers of traditional and alternative technologies; failure to develop partnerships with original equipment manufacturers,
governments, systems integrators and other third parties; inability to obtain sufficient materials and components for our products
from suppliers; failure to manage expansion of our operations; failure to manage foreign sales and operations; failure to recruit,
train and retain key management personnel; inability to integrate acquisitions; failure to develop adequate manufacturing processes
and capabilities; failure to complete the development of commercially viable products; failure to produce cost-competitive products;
failure or delay in field testing of our products; failure to produce products free of defects or errors; inability to adapt to
technological advances or new codes and standards; failure to protect our intellectual property; our involvement in intellectual
property litigation; exposure to product liability claims; failure to meet rules regarding passive foreign investment companies;
actions of our significant and principal shareholders; failure to maintain the requirements for continued listing on NASDAQ; dilution
as a result of significant issuances of our common shares and preferred shares; inability of U.S. investors to enforce U.S. civil
liability judgments against us; volatility of our common share price; dilution as a result of the exercise of options, warrants
and performance share units; the absence of an existing public market for the preferred shares, debt securities, subscription receipts,
warrants, share purchase contracts or units; the reduced public float and liquidity of our common shares; the effect of prevailing
interest rates on the market price of our preferred shares and debt securities; and our debt securities not being secured by any
of our assets. These risk factors and others are discussed in more detail herein under “Risk Factors” on page S-3
of this prospectus supplement, as well as under “Risk Factors” in the prospectus and under “Risk Factors”
in our most recent annual information form, incorporated by reference herein, and under “Risks and Uncertainties” and
“Forward-looking Statements” in our management’s discussion and analysis of financial condition and results of
operations as at and for the year ended December 31, 2014, which was filed in Canada at www.sedar.com and with the SEC as Exhibit
99.2 to our report on Form 6-K on March 4, 2015, and which is also incorporated by reference herein.
These factors may cause our actual performance
and financial results in future periods to differ materially from any estimates or projections of future performance or results
expressed or implied by such forward-looking statements. Forward-looking statements do not take into account the effect that transactions
or non-recurring or other special items announced or occurring after the statements are made have on our business. For example,
they do not include the effect of business dispositions, acquisitions, other business transactions, asset write-downs or other
charges announced or occurring after forward-looking statements are made. The financial impact of such transactions and non-recurring
and other special items can be complex and necessarily depends on the facts particular to each of them.
We believe the expectations represented by our
forward-looking statements are reasonable, yet there can be no assurance that such expectations will prove to be correct. Unless
otherwise stated, the forward-looking statements contained herein are made as of the date of this prospectus supplement and we
do not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result
of new information, future events or otherwise unless required by applicable legislation or regulation. The forward-looking statements
contained in this prospectus supplement are expressly qualified by this cautionary statement.
THE
COMPANY
This summary does not contain
all the information about us that may be important to you. You should read the more detailed information and financial statements
and related notes that are incorporated by reference and are considered to be part of this prospectus supplement.
We were incorporated on June 10, 2009 under
the Canada Business Corporations Act, under the name “7188501 Canada Inc.” We changed our name to “Hydrogenics
Corporation–Corporation Hydrogenique” on October 27, 2009 in connection with a transaction involving Algonquin Power
Income Fund (the “APIF Transaction”).
Old Hydrogenics was founded in 1988 under the
name “Traduction Militech Translation Inc.” It subsequently changed its name to “Société Hydrogenique
Incorporée–Hydrogenics Corporation Incorporated.” From 1990 to August 1995, Société Hydrogenique
Incorporée–Hydrogenics Corporation Incorporated did not actively carry on business. In August 1995, we commenced our
fuel cell technology development business, and in 2000, changed our name to Hydrogenics Corporation – Corporation Hydrogenique.
Until October 27, 2009, we were a wholly-owned subsidiary of Old Hydrogenics.
We are a globally recognized developer and provider
of hydrogen generation and fuel cell products. We conduct our business through the following business units: (i) OnSite Generation,
which focuses on hydrogen generation products for renewable energy, industrial and transportation customers and (ii) Power Systems,
which focuses on fuel cell products for original equipment manufacturers, systems integrators and end users for stationary applications,
including backup power, and motive applications, such as forklift trucks. In November 2007, we announced we were exiting the fuel
cell test products, design, development and manufacturing business, that was conducted through our Test Systems business unit.
Our business units are supported by a corporate
services group providing finance, insurance, investor relations, communications, treasury, human resources, strategic planning,
compliance, and other administrative services.
Our principal executive offices are located
at 220 Admiral Boulevard, Mississauga, Ontario, Canada L5T 2N6. Our telephone number is (905) 361-3660. Our agent for service in
the United States for any actions relating to our common shares is CT Corporation System, 111 Eighth Avenue, New York, New York
10011, (212) 894-8400.
RECENT
DEVELOPMENTS
On November
16, 2015, the Company announced the signing of separate supply agreements with several Chinese electronic vehicle integrators.
These agreements cover more than 2,000 vehicles over the course of the next three to five years. Included in the agreements are
heavy-duty fuel cells, fueling stations, and assessments for converting wind energy and other forms of surplus electricity to hydrogen
using the Company’s Power-to-Gas energy storage technology.
PRE-EMPTIVE
RIGHTS
Pursuant to
the Governance Agreement (the "Governance Agreement") dated October 16,
2001 between General Motors Corporation ("GM") and the Company, GM has
the right to participate in any equity financing by the Company on a pro rata basis based on the number of common shares on a fully
diluted basis held by GM on the date notice was given to GM of such equity financing (the "Pre-Emptive Right").
GM has not waived such Pre-Emptive Right as of the date of this prospectus supplement and has not confirmed whether or not it will
exercise the Pre-Emptive Right. GM has until 10 days after notice was given in accordance with the Governance Agreement in order
to exercise the Pre-Emptive Right. To the extent GM decides to exercise the Pre-Emptive Right, the Company would be required to
issue additional common shares to GM on the same terms as the common shares that are issued pursuant to this offering in an amount
equal to GM's pro rata amount of this offering based on the number of common shares held by GM. As of the date of this prospectus
supplement, GM owns approximately 4.5% of the common shares of the Company on a fully-diluted basis.
RISK
FACTORS
An investment in our common
shares involves risk. In addition to the other information contained in this prospectus supplement and the prospectus, you should
carefully consider the risk factors described below, as well as the risk factors described under “Risk Factors” in
the prospectus and “Risk Factors” in our most recent annual information form, incorporated by reference herein, under
“Risks and Uncertainties” and “Forward-looking Statements” in our management’s discussion and analysis
of financial condition and results of operations as at and for the year ended December 31, 2014, filed in Canada at www.sedar.com
and with the SEC as Exhibit 99.2 to our report on Form 6-K on March 4, 2015, which is also incorporated by reference herein, and
the other information contained in and incorporated by reference into this prospectus supplement and the accompanying prospectus,
before deciding whether to invest in our common shares. Any of such risks could materially adversely affect our business, financial
condition or results of operations.
We do
not anticipate declaring any cash dividends on our common shares. Investors in this offering may never obtain a return on their
investment.
We have never declared or paid cash dividends
on our common shares and do not plan to pay any cash dividends in the near future. Our current policy is to retain all funds and
earnings for use in the operation and expansion of our business. Accordingly, you may need to rely on sales of your common shares
after price appreciation, which may never occur, in order to realize a return on your investment.
You will
experience immediate dilution in the book value per share of the common shares you purchase.
Given that the price per share of our
common shares being offered is substantially higher than the book value per share of our common shares, you will suffer
substantial dilution in the net tangible book value of the offered common shares you purchase in this offering. Based on the
public offering price of $7.75 per share and the equity book value per common share of $0.65 as of September 30, 2015, if you
purchase common shares in this offering, you will suffer dilution of $6.48 per share in the net tangible book value of the
offered common shares.
The market
price of our stock may be affected by low volume.
Our common shares have a relatively low average
daily volume. The average daily trading volume on NASDAQ during the 90 trading days prior to December 4,
2015 was 40,291 shares. Without a significantly larger average trading volume, our common shares will be less liquid than the common
shares of companies with higher trading volume. As a result, the trading prices for our common shares may be more volatile.
The number
of common shares available for future sale could adversely affect the market price of our common shares.
We cannot predict whether future
issuances of our common shares or the availability of common shares for resale in the open market will decrease the market
price of our common shares. Upon completion of this offering, we will have 12,221,406 common shares outstanding (12,540,760
common shares if the underwriters exercise their over-allotment option in full), based on the number of common shares
outstanding as of December 10, 2015.
We have a short form base shelf prospectus on
file with the Canadian Securities Administrators and the SEC that permits us, from time to time, to offer and sell up to an aggregate
of $100 million of common shares, preferred shares, subscription receipts, warrants, debt securities, share purchase contracts
and units to the extent necessary or advisable to meet our liquidity needs.
Any of the following could have an adverse effect
on the market price of our common shares:
| · | the exercise of the underwriters’ over-allotment option; |
| · | issuances of securities that are exchangeable or convertible into common shares; |
| · | issuances of preferred shares with liquidation or distribution preferences; and |
| · | other issuances of common shares. |
In connection with this offering, we and our
executive officers and directors have entered into lock-up agreements restricting, subject to certain exceptions, the sale of any
of our common shares or any securities convertible into or exercisable or exchangeable for our common shares for 90 days following
the date of the underwriting agreement. If the restrictions under such agreements are waived, the affected common shares or other
securities may be available for sale into the market, which could reduce the market price of our common shares.
USE
OF PROCEEDS
As of September 30, 2015, we had an
unrestricted cash and cash equivalent balance of $6.9 million. We estimate that the
net proceeds to us from this offering will be approximately $15.3 million, after deducting underwriters discounts and
commissions and estimated offering expenses payable by us, as described in “Underwriting”.
We intend to use the net proceeds we receive
from this offering for general corporate purposes, including to support any negative cash flows from operating activities.
PRIOR
SALES
We have not issued any securities in the 12-month
period prior to the date of this prospectus supplement other than as described in the prospectus. See “Prior Sales”
in the prospectus, which contains information with respect to all issuances of our securities during the 12-month period prior
to the date of this prospectus supplement.
PRICE
RANGE AND TRADING
Our outstanding common shares are listed on
NASDAQ under the symbol “HYGS” and are listed and posted for trading on the TSX under the symbol “HYG”.
The following tables, together with the information contained under the heading “Price Range and Trading” in the accompanying
prospectus, set forth the high and low sale prices (which are not necessarily the closing prices) and total trading volumes of
the common shares on NASDAQ and the TSX for the twelve month period prior to the date of this prospectus supplement.
NASDAQ
The following table sets forth the high and
low sale prices (which are not necessarily the closing prices) and total trading volumes on NASDAQ (as reported by Standard &
Poor’s Capital IQ) for the periods indicated for our common shares under the symbol “HYGS”.
Period | |
High Price (US$ per share) | |
Low Price (US$ per share) | |
Total Volume |
| |
| |
| |
|
January 1, 2015 to March 31, 2015 | |
| 17.55 | | |
| 11.21 | | |
| 4,380,100 | |
April 1, 2015 to June 30, 2015 | |
| 13.36 | | |
| 8.51 | | |
| 3,966,500 | |
July 1, 2015 to September 30, 2015 | |
| 10.50 | | |
| 7.32 | | |
| 2,752,000 | |
October 2015 | |
| 10.25 | | |
| 7.61 | | |
| 562,200 | |
November 2015 | |
| 12.08 | | |
| 9.43 | | |
| 1,282,900 | |
December 1, 2015 to December 10, 2015 | |
| 11.89
| | |
| 7.59
| | |
| 633,400
| |
TSX
The following table sets forth the high and
low sale prices (which are not necessarily the closing prices) and total trading volumes on the TSX (as reported by TMX Datalinx)
for the periods indicated for our common shares under the symbol “HYG”.
Period | |
High Price (Cdn$ per share) | |
Low Price (Cdn$ per share) | |
Total Volume |
| |
| |
| |
|
January 1, 2015 to March 31, 2015 | |
| 19.75 | | |
| 14.12 | | |
| 397,100 | |
April 1, 2015 to June 30, 2015 | |
| 16.58 | | |
| 10.51 | | |
| 362,600 | |
July 1, 2015 to September 30, 2015 | |
| 13.49 | | |
| 9.42 | | |
| 147,600 | |
October 2015 | |
| 13.50 | | |
| 9.69 | | |
| 44,800 | |
November 2015 | |
| 16.19 | | |
| 12.50 | | |
| 70,700 | |
December 1, 2015 to December 10,
2015 | |
| 15.90
| | |
| 10.44
| | |
| 34,300
| |
CAPITALIZATION
The following table sets forth our consolidated
capitalization as of September 30, 2015, the date of our most recently filed financial statements: (i) before the offering and
(ii) after giving effect to the completion of the offering (assuming no exercise by the underwriters of their over-allotment option).
Other than the proposed offering, there have been no material changes to our capitalization since September 30, 2015. The
information in this table should be read in conjunction with our unaudited interim consolidated financial statements as at and
for the three months ended September 30, 2015, which are incorporated by reference in this prospectus supplement.
| |
As of September 30, 2015 (US$ in thousands) |
| |
|
| |
Actual (Unaudited) | |
Adjusted (Unaudited) |
Shareholders’ equity | |
| | | |
| | |
Common shares(1) | |
| 348,275 | | |
| 363,551
| |
Contributed surplus | |
| 20,262 | | |
| 20,262
| |
Deficit | |
| (358,921 | ) | |
| (358,921)
| |
Accumulated
other comprehensive loss | |
| (3,063 | ) | |
| (3,063)
| |
Total
capitalization | |
$ | 6,553 | | |
$ | 21,829
| |
____________
| (1) | Assuming no exercise of the over-allotment option. If the over-allotment
option is exercised in full, the “adjusted” amount for the shareholders’ equity of the common shares would be
$17.6 million. |
DESCRIPTION
of Share Capital
As of December 10, 2015, there were 10,092,375
common shares outstanding and no preferred shares outstanding. After giving effect to the offering (assuming the exercise of the
over-allotment option in full), there would be 12,540,760 common shares outstanding.
See “Description of Common Shares and
Preferred Shares” in the accompanying prospectus for further information regarding the principal rights, privileges, restrictions
and conditions attaching to the common shares and the preferred shares.
Underwriting
The Company has entered into the
underwriting agreement with Craig-Hallum Capital Group LLC (the “representative”) as the representative of the
underwriters set forth below in connection with the offered common shares. Subject to certain terms and conditions in the
underwriting agreement, we have agreed to sell to the underwriters, and the underwriters have, severally and not jointly,
agreed to purchase from us, 2,129,031 common shares as set forth opposite the underwriters’ names below.
Underwriter |
Number of Common Shares |
Craig-Hallum Capital Group LLC |
1,703,225
|
Roth Capital Partners, LLC |
425,806
|
Total |
2,129,031
|
The underwriters propose to offer the common
shares to the public at the public offering price set forth on the cover page of this prospectus supplement. If all of the common
shares are not sold at the public offering price, the underwriters may change the offering price and other selling terms and we
will file a supplement to this prospectus to reflect such modified terms.
The underwriters are offering the offered common
shares, subject to prior sale, if, as and when issued to (or sold and delivered to) and accepted by them. The underwriting agreement
provides that the obligations of the underwriters to pay for and accept delivery of the common shares offered by this prospectus
supplement and the accompanying prospectus are subject to the approval of certain legal matters by its counsel and to certain other
conditions. The obligations of the underwriters may be terminated upon the occurrence of certain stated events. The underwriters
are, however, obligated to take up and pay for all of the offered common shares if any such offered common shares are purchased
under the underwriting agreement, provided that the underwriters are not obligated to take up or pay for any offered common shares
covered by the underwriters’ over-allotment option described below. The Company will deliver the offered common shares to
or for the accounts of the underwriters with The Depository Trust Company on the closing date.
The common shares offered by this prospectus
supplement and accompanying prospectus have not been and will not be qualified for sale under the securities laws of any province
or territory of Canada and are not being offered for sale in Canada or to any resident of Canada and may not be offered or sold,
directly or indirectly, in Canada, or to or for the account of any resident of Canada. This prospectus supplement and accompanying
prospectus have not been filed in respect of, and will not qualify, any distribution of shares in any province or territory of
Canada.
The underwriters have agreed that the underwriters will:
(a) not, directly or indirectly, offer, sell or deliver common shares
in Canada or to persons who are residents of Canada or acting on the behalf of residents of Canada or to any person whom it believes
intends to reoffer, resell or deliver the shares in Canada or to any persons who are residents of Canada or acting on the behalf
of residents of Canada; and
(b) cause any dealer to whom it may sell such shares to agree to
observe a similar restriction.
Confirmations of the acceptance of offers to
purchase any common shares will be sent to purchasers who have not withdrawn their offers to purchase prior to the issuance of
such confirmations. Each purchaser of common shares who receives a purchase confirmation is, by the purchaser’s receipt thereof,
deemed to represent to the Company, the underwriters and the dealers from whom such purchase confirmation is received, that such
purchaser is not a resident of Canada or acting on behalf of any resident of Canada and does not have any intention to reoffer,
resell or deliver the common shares in Canada or to a resident of Canada or a person acting on behalf of a resident of Canada.
Stock Exchange Listing
Our outstanding common shares are listed on
NASDAQ under the symbol “HYGS” and are listed and posted for trading on the TSX under the trading symbol “HYG”.
The common shares offered by this prospectus supplement will be listed on NASDAQ. We have also applied to the TSX for the listing
of the common shares offered by this prospectus supplement. Listing on the TSX will be subject to our fulfillment of all of the
listing requirements of the TSX.
Over-Allotment Option
The Company has granted to
the underwriters an option for 30 days from the initial closing date of this offering to purchase up to an
additional 319,354 common shares from the Company at the offering price listed on the cover page of this prospectus
supplement, less the underwriting discounts and commissions, to cover over-allotments, if any, and for market stabilization
purposes. The underwriters may exercise this option at any time, in whole or in part, within 30 days after the initial
closing date. This prospectus supplement and the accompanying prospectus register the additional offered common shares
issuable upon exercise of the over-allotment option.
Commissions and Expenses
The Company has agreed to pay a cash fee
to the underwriters in the amount equal to 5.75% ($0.446 per offered common share sold) of the gross proceeds of the sale of
the offered common shares, including gross proceeds realized on the sale of additional common shares issuable upon exercise
of the over-allotment option, if any. The following table shows the underwriting discounts and commissions payable to the
underwriters by the Company in connection with this offering. Such amounts are shown assuming both no exercise and full
exercise of the underwriters’ over-allotment option:
| |
Per
Share | |
Total |
| |
Without
Over-Allotment Option | |
With
Over-Allotment Option | |
Without
Over-Allotment Option | |
With
Over-Allotment Option |
Public offering price | |
$ | 7.75 | | |
$ | 7.75 | | |
$ | 16,499,990
| | |
$ | 18,974,984
| |
Underwriting discounts and commissions paid by the Company | |
$ | 0.446 | | |
$ | 0.446 | | |
$ | 948,749
| | |
$ | 1,091,062
| |
Expenses payable by the Company | |
$ | 0.13 | | |
$ | 0.11 | | |
$ | 275,000
| | |
$ | 275,000
| |
We estimate that expenses payable by the Company
in connection with this offering, other than the underwriting discounts and commissions referred to above, will be approximately
$275,000. We have agreed to reimburse the representative for certain out-of-pocket expenses (including fees and expenses of counsel)
in an aggregate amount not to exceed $100,000.
Indemnification and Contribution
Pursuant to the underwriting agreement, the
Company has agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of
1933, as amended, and applicable Canadian securities legislation, or to contribute to payments that the underwriters or such other
indemnified parties may be required to make in respect of those liabilities.
Lock-Ups/Restrictions on Future
Sales
We have agreed, subject to limited exceptions,
for a period of 90 days after the date of the underwriting agreement, not to: (i) issue, offer, sell (including, without limitation,
any short sale), contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree
to dispose of or transfer, directly or indirectly, or establish a “put equivalent position” or liquidate or decrease
a “call equivalent position” (within the meaning of section 16 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) with respect to, (ii) file a prospectus in Canada, or file or cause to become effective a registration
statement in the United States, relating to the offer of, or (iii) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of, our common shares or any other securities of the Company
that are substantially similar to our common shares, or any securities convertible into or exchangeable for, or any warrants or
other rights to purchase, the foregoing, whether any such transaction is to be settled by delivery of our common shares or such
other securities, in cash or otherwise, or publicly announce any intention to do any of the foregoing, without the prior written
consent of the representative. These restrictions on future issuances are subject to exceptions for: (i) the issuance of our common
shares sold in this offering, (ii) the issuance of our common shares upon the exercise of options or warrants disclosed as outstanding
in this prospectus supplement and the accompanying prospectus, and (iii) the issuance of stock options not exercisable during this
90-day period and the issuance of our common shares pursuant to our equity compensation plans. This 90-day period may be extended
if: (1) during the last 17 days of the 90-day period, we issue an earnings release or material news or a material event regarding
us occurs or (2) prior to the expiration of the 90-day period, we announce that we will release earnings results during the 16-day
period beginning on the last day of the 90-day period, then the period of such extension will be 18 days, beginning on the issuance
of the earnings release or the occurrence of the material news or material event. If after any announcement described in clause
(2) of the preceding sentence we announce that we will not release earnings results during the 16-day period, the lock-up period
shall expire on the later of the expiration of the 90-day period and the end of any extension of such period made pursuant to clause
(1) of the preceding sentence. The representative may, in its sole discretion and at any time or from time to time before the termination
of the lock-up period, without notice, release all or any portion of the securities subject to lock-up agreements.
In addition, each of our directors and executive
officers has entered into a lock-up agreement with the underwriters. Under the lock-up agreements, the directors and executive
officers may not, for a period of 90 days from the date of the underwriting agreement: (i) issue, offer, sell (including, without
limitation, any short sale), contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose
of or agree to dispose of or transfer, directly or indirectly, or establish a “put equivalent position” or liquidate
or decrease a “call equivalent position” (within the meaning of section 16 of the Exchange Act) with respect to, (ii)
file a prospectus in Canada, or file or cause to become effective a registration statement in the United States, relating to the
offer of, or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of, our common shares or any other securities of the Company that are substantially similar to our common
shares, or any securities convertible into or exchangeable for, or any warrants or other rights to purchase, the foregoing, or
publicly announce any intention to do any of the foregoing, without the prior written consent of the representative, subject to
an 18 day extension under certain circumstances. This consent may not be unreasonably withheld and may be given at any time without
public notice. These restrictions on future dispositions by our directors and executive officers are subject to exceptions for:
(i) bona fide gifts, (ii) transfers to any trust for the direct or indirect benefit of immediate
family members, or to certain affiliates, and (iii) transfers pursuant to a bona fide third party take-over bid made to
all holders of our common shares or a similar acquisition transaction, in the case of (i) and (ii) so long as the transferee agrees
to be bound by these restrictions, and in the case of (iii) so long as the director or executive officer will remain bound by these
restrictions in the event that the take-over bid or acquisition transaction is not completed.
Electronic Distribution
This prospectus supplement and the accompanying
prospectus may be made available in electronic format on websites or through other online services maintained by the underwriters
or by their respective affiliates. In those cases, prospective investors may view offering terms online and prospective investors
may be allowed to place orders online. Other than this prospectus supplement and the accompanying prospectus in electronic format,
the information on the underwriters’ websites or our website and any information contained in any other website maintained
by the underwriter or by us is not part of this prospectus supplement, the accompanying prospectus or the Registration Statement
on Form F-10 of which this prospectus supplement and the accompanying prospectus form a part, has not been approved and/or endorsed
by us or the underwriter in its capacity as an underwriters, and should not be relied upon by investors.
Price Stabilization and Short
Positions
Until the distribution of the common shares
is completed, SEC rules may limit the underwriters from bidding for and purchasing common shares. However, the underwriters may
engage in transactions that stabilize the market price of the common shares, such as bids or purchases to peg, fix or maintain
that price so long as stabilizing transactions do not exceed a specified maximum in accordance with Regulation M under the Exchange
Act.
In connection with this offering, in order to
facilitate the offering of the common shares, the underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the common shares. Specifically, the underwriters may sell more common shares than they are obligated to purchase
under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the
number of common shares available for purchase by the underwriters under the over-allotment option. The underwriters can close
out covered short sales by exercising their over-allotment option or purchasing common shares in the open market. In determining
the source of common shares to close out a covered short sale, the underwriters will consider, among other things, the open market
price of common shares compared to the price available under their over-allotment option. The underwriters may also sell common
shares in excess of their over-allotment option, creating a naked short position. The underwriters must close out any naked short
position by purchasing common shares in the open market. A naked short position is more likely to be created if the underwriters
are concerned that there may be downward pressure on the price of the common shares in the open market after pricing that could
adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters
may bid for, and purchase, common shares in the open market to stabilize the price of the common shares. These activities may raise
or maintain the market price of the common shares above independent market levels or prevent or retard a decline in the market
price of the common shares. No representation is made as to the magnitude or effect of any such stabilization or other activities.
The underwriters are not required to engage in these activities and may end any of these activities, if commenced, at any time.
Affiliations
The underwriters and their affiliates have provided,
or may in the future provide, various investment banking, commercial banking, financial advisory and other services to the Company
for which services they have received, and may in the future receive, customary fees. In the course of their businesses, the
underwriters and their affiliates may actively trade securities or loans of the Company for its own account or for the accounts
of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities
or loans.
Selling Restrictions
Canada
The offered common shares offered by this prospectus supplement and accompanying
prospectus have not been and will not be qualified for sale under the securities laws of any province or territory of Canada and
are not being offered for sale in Canada or to any resident of Canada and may not be offered or sold, directly or indirectly, in
Canada, or to or for the account of any resident of Canada. This prospectus supplement and accompanying prospectus will not qualify
any distribution of shares in any province or territory of Canada.
Switzerland
This prospectus supplement and the accompanying
prospectus do not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of Obligations (“CO”)
and the offered common shares will not be listed on the SIX Swiss Exchange. Therefore, the prospectus supplement and the accompanying
prospectus may not comply with the disclosure standards of the CO and/or the listing rules (including any prospectus schemes) of
the SIX Swiss Exchange. Accordingly, the offered common shares may not be offered to the public in or from Switzerland, but only
to a selected and limited circle of investors, which do not subscribe to the offered common shares with a view to distribution.
United Kingdom
This prospectus supplement and the accompanying
prospectus are only being distributed to and is only directed at: (1) persons who are outside the United Kingdom; (2) investment
professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
“Order”); or (3) high net worth companies, and other persons to whom it may lawfully be communicated, falling
within Article 49(2)(a) to (d) of the Order (all such persons falling within (1)-(3) together being referred to as “relevant
persons”). The offered common shares are only available to, and any invitation, offer or agreement to subscribe, purchase
or otherwise acquire such offered common shares will be engaged in only with, relevant persons. Any person who is not a relevant
person should not act or rely on this prospectus or any of its contents.
European Economic Area
In relation to each member state that is party
to the European Economic Area Agreement which has implemented the Prospectus Directive (as defined below) (each such member state,
a “Relevant Member State”), an offer to the public of any offered common shares may not be made in that Relevant
Member State except that an offer to the public in that Relevant Member State of any offered common shares may be made at any time
under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
(a) to any legal entity which is a qualified
investor as defined under the Prospectus Directive;
(b) to fewer than 150 natural or legal
persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives
of the underwriters for any such offer; or
(c) in any other circumstances falling
within Article 3(2) of the Prospectus Directive, provided that no such offer of the offered common shares shall result in a requirement
for us, the selling shareholder or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or
supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression
an “offer to the public” in relation to any offered common shares in any Relevant Member State means the communication
in any form and by any means of sufficient information on the terms of the offer and any offered common shares to be offered so
as to enable an investor to decide to purchase any offered common shares, as the same may be varied in that Member State by any
measure implementing the Prospectus Directive in that Member State. The expression “Prospectus Directive” means Directive
2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member
State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending
Directive” means Directive 2010/73/EU. The European Economic Area selling restriction is in addition to any other selling
restrictions set out in this prospectus.
Australia
This prospectus supplement and the accompanying
prospectus are not formal disclosure documents and have not been, nor will be, lodged with the Australian Securities and Investments
Commission. It does not purport to contain all information that an investor or their professional advisers would expect to find
in a prospectus or other disclosure document (as defined in the Corporations Act 2001 (Australia)) for the purposes of Part 6D.2
of the Corporations Act 2001 (Australia) or in a product disclosure statement for the purposes of Part 7.9 of the Corporations
Act 2001 (Australia), in either case, in relation to the securities.
The securities are not being offered in Australia
to “retail clients” as defined in sections 761G and 761GA of the Corporations Act 2001 (Australia). The offering is
being made in Australia solely to “wholesale clients” for the purposes of section 761G of the Corporations Act 2001
(Australia) and, as such, no prospectus, product disclosure statement or other disclosure document in relation to the securities
has been, or will be, prepared.
This prospectus supplement and the accompanying
prospectus does not constitute an offer in Australia other than to persons who do not require disclosure under Part 6D.2 of the
Corporations Act 2001 (Australia) and who are wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Australia).
By submitting an application for our securities, you represent and warrant to us that you are a person who does not require disclosure
under Part 6D.2 and who is a wholesale client for the purposes of section 761G of the Corporations Act 2001 (Australia). If any
recipient of this prospectus is not a wholesale client, no offer of, or invitation to apply for, our securities shall be deemed
to be made to such recipient and no applications for our securities will be accepted from such recipient. Any offer to a recipient
in Australia, and any agreement arising from acceptance of such offer, is personal and may only be accepted by the recipient. In
addition, by applying for our securities you undertake to us that, for a period of 12 months from the date of issue of the securities,
you will not transfer any interest in the securities to any person in Australia other than to a person who does not require disclosure
under Part 6D.2 and who is a wholesale client.
CERTAIN
INCOME TAX CONSIDERATIONS
United States Federal Income
Taxation
The following discussion is a summary of the
material U.S. federal income tax consequences relating to the acquisition, ownership and disposition of our common shares acquired
pursuant to this offering. Except where otherwise stated, this discussion only applies to “U.S. Holders” (as defined
below) who hold our common shares as “capital assets” within the meaning of Section 1221 of the United States Internal
Revenue Code of 1986, as amended (the “Code”). This discussion is intended for general information only and
does not discuss all of the tax consequences that may be relevant to the particular circumstances of a U.S. Holder. Furthermore,
the discussion does not address special situations that may apply to particular U.S. Holders including, but not limited to, holders
subject to the U.S. federal alternative minimum tax, U.S. expatriates or former U.S. citizens, tax-exempt organizations, qualified
retirement plans, individual retirement accounts or other tax-deferred accounts, dealers in securities, private foundations, traders
in securities who elect to apply a mark-to-market method of accounting, financial institutions, banks, insurance companies, regulated
investment companies, partnerships or other pass-through entities, U.S. Holders who own (directly, indirectly or by attribution)
10 per cent or more of the total combined voting power of all classes of our stock entitled to vote, U.S. Holders whose “functional
currency” is not the U.S. dollar, or persons who hold our common shares in connection with a “straddle”, “hedging”,
“conversion” or other risk reduction transaction. This discussion does not address the tax consequences to U.S. Holders
of our common shares under any state, local, foreign or other tax laws and does not address any aspect of U.S. federal tax law
other than income taxation.
The U.S. federal income tax consequences set
forth below are based upon the Code, existing and proposed Treasury regulations promulgated thereunder, court decisions, revenue
rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), all as in effect on the
date hereof and all of which are subject to change or changes in interpretation. Prospective investors should particularly note
that any such change or changes in interpretation could have retroactive effect so as to result in U.S. federal income tax consequences
different from those discussed below. No advance income tax ruling has been or will be sought or obtained from the IRS with respect
to the tax consequences described below, and, as a result, there can be no assurance that the IRS will take a similar view as to
any of the tax consequences described in the summary.
As used herein, the term “U.S. Holder”
means a beneficial owner of our common shares that is for U.S. federal income tax purposes:
| · | an individual who is a citizen or resident of the United States; |
| · | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created
or organized in or under the laws of the United States or any state thereof (including the District of Columbia); |
| · | an estate the income of which is subject to U.S. federal income taxation regardless of its source;
or |
| · | a trust, if (a) a court within the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have the authority to control all of the substantial decisions of the
trust, or (b) the trust has validly made an election to be treated as a U.S. person under the applicable Treasury regulations. |
If a partnership (including for this purpose
any entity treated as a partnership for U.S. federal income tax purposes) is the holder of our common shares, the U.S. federal
income tax treatment of a partner in the partnership generally will depend on the status of the partner and the status and activities
of the partnership. A holder of common shares that is a partnership and partners in such partnership should consult their own tax
advisors regarding the U.S. federal income tax consequences of acquiring, holding and disposing of our common shares.
Prospective investors are urged to consult their
own tax advisors with respect to the particular tax consequences to them of the purchase, ownership and disposition of our common
shares, including the tax consequences under any state, local, foreign and other tax laws.
Distributions
Subject to the discussion below under “Passive
Foreign Investment Company Rules”, the gross amount of any distribution received by a U.S. Holder with respect to our common
shares (including amounts withheld to pay Canadian withholding taxes) will be included in the gross income of such U.S. Holder,
as a dividend, to the extent attributable to our current or accumulated earnings and profits, as determined under U.S. federal
income tax principles. To the extent the amount of any distribution exceeds our current and accumulated earnings and profits, such
distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s adjusted tax basis in
its common shares, causing a reduction in the adjusted basis of such common shares. Thereafter, to the extent that such distribution
exceeds a U.S. Holder’s adjusted tax basis in its common shares, the distribution will be treated as gain from the sale or
exchange of such common shares. We do not intend to calculate our earnings and profits under U.S. federal income tax rules. Accordingly,
U.S. Holders should expect that a distribution generally will be treated as a dividend for U.S. federal tax information reporting
purposes.
A dividend received by a non-corporate U.S.
Holder generally will qualify for the reduced federal income tax rates applicable to capital gains, provided that: (i) we are
not treated as a passive foreign investment company for the taxable year the dividend is paid or for the preceding taxable year,
(ii) we are treated as a “qualified foreign corporation” and (iii) certain holding period requirements are met. If
we are a passive foreign investment company under the rules discussed below, distributions treated as dividends will be taxable
at the higher ordinary income tax rates. We will be treated as a qualified foreign corporation if our common shares are readily
tradable on an established securities market in the United States, which we believe should be the case. Dividends on our common
shares paid to non-corporate U.S. Holders will not be eligible for the dividends received deduction allowed to U.S. corporations
under the Code. Additionally, a U.S. Holder may be subject to an additional Medicare tax on unearned income of 3.8% (see “Additional
Tax on Passive Income” below).
Generally, the amount of any dividend paid in
Canadian dollars (including amounts withheld to pay Canadian withholding taxes) will equal the U.S. dollar value of the Canadian
dollars calculated by reference to the spot rate in effect on the date the dividend is received by the U.S. Holder, regardless
of whether the Canadian dollars are converted into U.S. dollars. If the Canadian dollars received as a dividend are converted into
U.S. dollars on the date of receipt, the U.S. Holder generally should not be required to recognize foreign currency gain or loss
in respect of the dividend income. If the Canadian dollars received as a dividend are not converted into U.S. dollars on the date
of receipt, a U.S. Holder will have a tax basis in the Canadian dollars equal to their U.S. dollar value on the date of receipt.
Any gain or loss realized on a subsequent conversion or other disposition of the Canadian dollars by a U.S. Holder will be treated
as U.S.-source ordinary income or loss.
A U.S. Holder may be entitled to deduct or credit
the amount of Canadian withholding tax imposed on dividends paid to such holder, subject to applicable limitations in the Code.
For purposes of calculating the foreign tax credit, dividends paid on our common shares generally will be treated as income from
foreign sources and generally will constitute “passive category income”. The rules governing the foreign tax credit
are complex. U.S. Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under
their particular circumstances.
Sale,
Exchange or Other Taxable Disposition
A U.S. Holder will recognize gain or loss on
the sale, exchange or other taxable disposition of our common shares in an amount equal to the difference between the amount realized
for our common shares and the U.S. Holder’s adjusted tax basis in our common shares. Subject to the discussion below under
“Passive Foreign Investment Company Rules”, the gain or loss will be capital gain or loss. Capital gains of non-corporate
U.S. Holders derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations. Any capital gain or loss recognized by a U.S. Holder generally will
be treated as U.S.-source gain or loss for U.S. foreign tax credit purposes. Additionally, a U.S. Holder may be subject to an additional
Medicare tax on unearned income of 3.8% (see Additional Tax on Passive Income” below).
Passive
Foreign Investment Company Rules
Generally adverse U.S. federal income tax rules
apply to U.S. Holders owning shares of a passive foreign investment company (a “PFIC”). A non-U.S. corporation
generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying relevant
look-through rules with respect to the income and assets of subsidiaries, either at least 75% of its gross income is “passive
income”, or on average at least 50% of the quarterly gross value of its assets is attributable to assets that produce passive
income or are held for the production of passive income. For this purpose, passive income generally includes, among other things,
dividends, interest, certain rents and royalties, certain gains from the sales of commodities, and gains from the disposition of
property that gives rise to passive income.
Based upon the composition of our expected income
and assets, we do not expect to be a PFIC for the current year or for subsequent taxable years. However, because the PFIC determination
is made annually at the close of the taxable year in question on the basis of facts and circumstances that may be beyond our control
and because the principles and methodology for applying the PFIC tests are not entirely clear, there can be no assurance that we
will not be a PFIC in the current or subsequent taxable years.
If we were a PFIC in any taxable year during
a U.S. Holder’s holding period for our common shares, the U.S. Holder generally would be subject to special rules with respect
to “excess distributions” made by us on our common shares and with respect to gain from the sale, exchange or disposition
of our common shares. An “excess distribution” generally is defined as the excess of distributions with respect to
the common shares received by a U.S. Holder in any taxable year over 125% of the average annual distributions the U.S. Holder has
received from us during the shorter of the three preceding taxable years or the U.S. Holder’s holding period for the common
shares. Generally, a U.S. Holder would be required to allocate any excess distribution or gain from the sale, exchange or disposition
of our common shares ratably over its holding period for the common shares. The amounts allocated to the taxable year of the sale,
exchange or disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each
other taxable year would be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for
such other taxable year, and an interest charge would be imposed on the amount allocated to the taxable year. These rules would
apply to a U.S. Holder that held our common shares during any year in which we were a PFIC, even if we were not a PFIC in the year
in which the U.S. Holder sold our common shares or received an excess distribution in respect of its common shares.
If we were a PFIC in any taxable year, and provided
certain requirements were met, a U.S. Holder might be able to make a mark-to-market election to alleviate certain of the tax consequences
referred to above. A “qualified electing fund” election would not be available to U.S. Holders, because we do not intend
to provide the necessary information to allow U.S. Holders to make such an election for any tax year in which we are a PFIC. In
addition, if we were a PFIC, each U.S. Holder would be required to file an annual report with the IRS containing certain information,
and the failure to file such report could result in the imposition of penalties on such U.S. Holder and in the extension of the
statute of limitations with respect to federal income tax returns filed by such U.S. Holder. U.S. Holders are urged to consult
their own tax advisors regarding the tax consequences that would arise if we were treated as a PFIC for any year as well as the
availability of any elections to mitigate the adverse tax consequences to a U.S. Holder if we were a PFIC.
Information
Reporting and Backup Withholding
Information reporting requirements will apply
to the payment of dividends on our common shares or the proceeds received on the sale, exchange, or other taxable disposition of
common shares paid within the United States (and in certain cases, outside the United States) to U.S. Holders other than certain
exempt recipients (such as corporations). In addition, a backup withholding tax (currently imposed at a rate of 28%) may apply
to such amounts if the U.S. Holder fails to timely provide an accurate taxpayer identification number, or is notified by the IRS
that it has failed to report dividends or interest required to be shown on its U.S. federal income tax returns. Backup withholding
is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder generally will be allowed as a credit
against the U.S. Holder’s U.S. federal income tax liability, and may entitle the U.S. Holder to a refund, provided that the
required information is provided to the IRS in a timely manner.
Additional
Tax on Passive Income
Non-corporate U.S. Holders (including individuals,
estates or trusts) may be subject to a 3.8% Medicare tax on the lesser of: (i) the U.S. Holder’s “net investment income”
(or “undistributed net investment income” in the case of estates and trusts) for the relevant taxable year and (ii)
the excess of the U.S. Holder’s “modified adjusted gross income” (or “adjusted gross income” in the
case of estates and trusts) for the taxable year over a certain threshold. A U.S. Holder’s net investment income will generally
include, among other things, dividends on, and capital gains from the sale or other taxable disposition of our common shares, subject
to certain limitations and exceptions. Non-corporate U.S. Holders are urged to consult their tax advisors regarding the applicability
of the Medicare tax to their income and gains.
Information
Reporting with Respect to Foreign Financial Assets
U.S. individuals that own “specified foreign
financial assets” with an aggregate fair market value in excess of $50,000 on the last day of the taxable year (or $75,000
at any time during the taxable year) generally are required to file an information report with respect to such assets with their
tax returns. Significant penalties may apply to persons who fail to comply with these rules. “Specified foreign financial
assets” include any financial accounts maintained by foreign financial institutions, as well as any of the following, but
only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons,
(ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in
foreign entities. Under these rules, our common shares may be treated as “specified foreign financial assets”. U.S.
Holders are urged to consult their own tax advisors regarding the foregoing reporting requirements.
Special
Reporting Requirements for Transfers to Foreign Corporations
A U.S. Holder that acquires our common shares
generally will be required to file Form 926 with the IRS if (i) immediately after the acquisition such U.S. Holder, directly or
indirectly, owns at least 10% of our common shares or (ii) the amount of cash transferred in exchange for our common shares during
the 12-month period ending on the date of the acquisition exceeds $100,000. Significant penalties may apply for failing to satisfy
these filing requirements. U.S. Holders are urged to consult their own tax advisors regarding these filing requirements.
The above summary is not
intended to constitute a complete analysis of all tax consequences relating to the purchase, ownership and disposition of our common
shares. Each prospective investor should consult with its own tax advisor concerning the tax consequences with regard to its particular
circumstances.
Canadian Federal Income Tax
Considerations For United States Residents
The following is a
summary of the principal Canadian federal income tax considerations generally applicable to the holding and disposition of our
common shares acquired pursuant to this prospectus supplement by a holder who, at all relevant times, (a) for the purposes of the
Income Tax Act (Canada) (the “Tax Act”), (i) is not resident, or deemed to be resident, in Canada, (ii) deals
at arm’s length with us, and is not affiliated with us, (iii) holds our common shares as capital property, (iv) does not
use or hold the common shares in the course of carrying on, or otherwise in connection with, a business carried on or deemed to
be carried on in Canada, (v) is not a registered “non-resident insurer” or “authorized foreign bank”, each
within the meaning of the Tax Act, and (vi) does not carry on an insurance business in Canada and elsewhere, and (b) for the purposes
of the Canada-United States Income Tax Convention (the “Convention”), is a resident of the United States, has
never been a resident of Canada, does not have and has not had, at any time, a permanent establishment or fixed base in Canada,
and who otherwise qualifies for the full benefits of the Convention.
Our common shares will generally be considered
to be capital property to a holder unless such common shares are held in the course of carrying on a business of buying or selling
securities, or in an adventure or concern in the nature of trade. Holders who meet all the criteria in clauses (a) and (b) are
referred to herein as a “U.S. Shareholder” or “U.S. Shareholders”. This summary does not
deal with special situations, such as the particular circumstances of traders or dealers, United States limited liability companies
(which may not be considered to be a resident of the United States for the purposes of the Convention), tax exempt entities, insurers
or financial institutions. Such holders and other holders who do not meet the criteria in clauses (a) and (b) should consult their
own tax advisers.
This summary is based upon the current provisions of the Tax Act,
the regulations thereunder in force at the date hereof (“Regulations”), all specific proposals to amend the
Tax Act and Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, the current
provisions of the Convention and our understanding of the administrative and assessing practices of the Canada Revenue Agency published
in writing prior to the date hereof. This summary does not otherwise take into account or anticipate any changes in law or administrative
or assessing practices, whether by legislative, governmental or judicial decision or action, nor does it take into account tax
laws of any province or territory of Canada or of any other jurisdiction outside Canada.
For the purposes of the Tax Act, all amounts relating to the acquisition,
holding or disposition of our common shares must be expressed in Canadian dollars. Amounts denominated in United States currency
generally must be converted into Canadian dollars using the rate of exchange quoted by the Bank of Canada at noon, or such other
rate of exchange as is acceptable to the Canada Revenue Agency.
This summary is of a general nature only and is not intended to
be, nor should it be construed to be, legal or tax advice to any particular U.S. Shareholder and no representation with respect
to the Canadian federal income tax consequences to any particular U.S. Shareholder or prospective U.S. Shareholder is made. This
summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, prospective purchasers should consult
with their own tax advisors for advice with respect to their own particular circumstances.
DOCUMENTS
INCORPORATED BY REFERENCE
This prospectus supplement is deemed to be incorporated
by reference into the accompanying prospectus solely for the purpose of the offering. Other documents are also incorporated, or
are deemed to be incorporated, by reference into the prospectus and reference should be made to the prospectus for full particulars
thereof. The following documents filed by us with the securities commission or similar authority in each of the provinces of Canada
or filed with or furnished to the SEC under the Exchange Act, are specifically incorporated by reference in this prospectus:
| (a) | our annual information form for the year ended December 31, 2014; |
| (b) | our audited consolidated financial statements and results of operations of the company as at and
for the years ended December 31, 2014 and December 31, 2013, together with the notes thereto and the independent auditor’s
report thereon; |
| (c) | our management’s discussion and analysis of financial condition and results of operations
as at and for the year ended December 31, 2014; |
| (d) | our management proxy circular dated March 23, 2015 in connection with our annual meeting of shareholders
held on May 6, 2015; |
| (e) | our unaudited interim consolidated financial statements and results of operations of the company
as at and for the three and nine months ended September 30, 2015; |
| (f) | our management’s discussion and analysis of financial condition and results of operations
as at and for the three and nine months ended September, 2015; |
| (g) | our material change report dated May 12, 2015; |
| (h) | our material change report dated June 3, 2015; and |
| (i) | our press release issued May 27, 2015. |
Our 2014 annual financial statements, annual
management’s discussion and analysis and annual information form referred to above are contained in our 2014 annual
report, which is included in our annual report on Form 40-F for the year ended December 31, 2014.
Any documents of the type described in section
11.1 of Form 44-101F1 – Short Form Prospectus filed by us and any template version of marketing materials (each as defined
in National Instrument 41-101 – General Prospectus Requirements) filed by us with the securities regulatory authorities in
Canada after the date of this prospectus supplement and prior to the termination of the offering shall be deemed to be incorporated
by reference into this prospectus supplement.
Any statement contained in
this prospectus supplement, the prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus
supplement or the prospectus shall be deemed to be modified or superseded, for the purposes of this prospectus supplement, to the
extent that a statement contained in this prospectus supplement, or in the accompanying prospectus or in any other subsequently
filed document which also is or is deemed to be incorporated by reference in this prospectus supplement or the accompanying prospectus,
modifies or supersedes that statement. The modifying or superseding statement need not state that it has modified or superseded
a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying
or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made,
constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required
to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement
so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.
LEGAL
MATTERS
Certain legal matters relating to the securities
offered hereby will be passed upon on our behalf by Torys LLP as to Canadian law and U.S. federal and New York law, and on behalf
of the representative by Ellenoff Grossman & Schole LLP as to U.S. federal law. As of the date hereof, the lawyers of Torys
LLP, directly or indirectly, in the aggregate, own less than 1% of any of our securities.
Auditors,
Transfer Agents and Registrars
Our auditors are PricewaterhouseCoopers LLP,
Chartered Accountants, PwC Tower, Suite 2600, 18 York Street, Toronto, Ontario, Canada M5J 0B2. PricewaterhouseCoopers LLP is independent
of us within the meaning of the Rules of Professional Conduct of Chartered Professional Accountants of Ontario.
Our transfer agent and registrar in Canada is
CST Trust Company at its principal office in Toronto, Ontario, Canada and the co-transfer agent and co-registrar for our common
shares in the United States is Computershare Investor Services LLC at its offices in New York, New York.
This short form base shelf prospectus has been filed
under legislation in each of the provinces of Canada, except Québec, that permits certain information about these securities
to be determined after this prospectus has become final and that permits the omission from this prospectus of that information.
The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified
period of time after agreeing to purchase any of these securities.
A registration statement relating to these securities
has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This short form base shelf prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.
Information has been incorporated by reference in this prospectus
from documents filed with securities commissions or similar regulatory authorities in Canada and filed with, or furnished to, the
U.S. Securities and Exchange Commission. Copies of the documents incorporated herein by reference may be obtained on
request without charge from the office of our Chief Financial Officer at 220 Admiral Boulevard, Mississauga, Ontario, Canada L5T
2N6, (905) 361-3638, and are also available electronically at www.sedar.com and www.sec.gov.
This short form base shelf prospectus constitutes a public offering
of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted
to sell such securities. No securities commission or similar authority in Canada or the United States of America has in any way
passed upon the merits of the securities offered by this short form base shelf prospectus and any representation to the contrary
is an offence.
Short Form BASE SHELF
Prospectus
new issue and/or secondary
offering
April 8, 2014
hydrogenics
corporation
US$100,000,000
Common Shares
Preferred Shares
Debt Securities
Subscription Receipts
Warrants
Share Purchase Contracts
Units
_________________________
We may offer from time to time, during the 25
month period that this prospectus, including any amendments hereto, remains effective, up to US$100 million of the securities listed
above in one or more series or issuances and their total offering price, in the aggregate, will not exceed US$100 million. Our
securities may be offered separately or together, in amounts, at prices and on terms to be determined based on market conditions
and set forth in an accompanying prospectus supplement.
We will provide the specific terms of any securities
we actually offer in supplements to this prospectus. You should read this prospectus and any applicable prospectus supplement carefully
before you invest. This prospectus may not be used to offer securities unless accompanied by a prospectus supplement. Any net proceeds
we expect to receive from the issue of our securities will be set forth in a prospectus supplement.
All information permitted under applicable securities
laws to be omitted from this prospectus will be contained in one or more prospectus supplements that will be delivered to purchasers
together with this prospectus. Each prospectus supplement will be deemed to be incorporated by reference in this prospectus as
of the date of such prospectus supplement but only for the purposes of the distribution of the securities to which the prospectus
supplement pertains.
This prospectus does not qualify for issuance
debt securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference
to one or more underlying interests including, for example, an equity or debt security, a statistical measure of economic or financial
performance including, but not limited to, any currency, consumer price or mortgage index, or the price or value of one or more
commodities, indices or other items, or any other item or formula, or any combination or basket of the foregoing items. For greater
certainty, this prospectus may qualify for issuance debt securities in respect of which the payment of principal and/or interest
may be determined, in whole or in part, by reference to published rates of a central banking authority or one or more financial
institutions, such as a prime rate or bankers’ acceptance rate, or to recognized market benchmark interest rates such as
LIBOR, EURIBOR or a U.S. Federal funds rate.
Our outstanding common shares are listed on
the Toronto Stock Exchange (the “TSX”) under the symbol “HYG” and quoted on the Nasdaq Global Market
(the “Nasdaq”) under the symbol “HYGS”.
Investing in our securities
involves risks. See “Risk Factors” on page 7 of this prospectus.
Our head and registered office is at 220 Admiral
Boulevard, Mississauga, Ontario, Canada L5T 2N6.
This offering is made by
a Canadian issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States and Canada, to
prepare this prospectus in accordance with Canadian disclosure requirements, which are different from those of the United States.
Our financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board and are subject to Canadian auditing and independence standards, and thus may not be comparable to financial
statements of U.S. companies.
Owning the securities may
subject you to tax consequences both in the United States and Canada. This prospectus or any applicable prospectus supplement may
not describe these tax consequences fully. You should read the tax discussion in any applicable prospectus supplement.
Your ability to enforce civil
liabilities under the U.S. federal securities laws may be affected adversely because we are incorporated in Canada, most of our
officers and directors and certain of the experts named in this prospectus are Canadian residents, and many of our assets and those
of said persons may be located in Canada or outside the United States.
NEITHER THE U.S. SECURITIES
AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE OR PROVINCIAL SECURITIES REGULATOR 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.
In connection with any underwritten offering
of securities, the underwriters, dealers or agents may over-allot or effect transactions which stabilize or maintain the market
price of the securities offered at levels other than those which might otherwise prevail in the open market. Such transactions
may be commenced, interrupted or discontinued at any time. See “Plan of Distribution”.
We may sell securities through underwriters
or dealers directly pursuant to applicable statutory exemptions, or through agents designated by us from time to time. Each prospectus
supplement will identify each person who may be deemed to be an underwriter with respect to securities being offered and will set
forth the terms of the offering of such securities, including, to the extent applicable, the purchase price or prices of the offered
securities, the initial offering price, the proceeds to us from the sale of the offered securities, any underwriting discounts
and other items constituting underwriters’ compensation and any discounts or concessions allowed or reallowed or paid to
dealers. The managing underwriter or underwriters with respect to the securities sold to or through underwriters will be named
in the applicable prospectus supplement.
Unless otherwise specified
in a prospectus supplement relating to a series of preferred shares, debt securities, subscription receipts, warrants, share purchase
contracts or units, the preferred shares, debt securities, subscription receipts, warrants, share purchase contracts and units
will not be listed on any securities or stock exchange or on any automated dealer quotation system. There is no market through
which the preferred shares, debt securities, subscription receipts, warrants, share purchase contracts or units may be sold and
purchasers may not be able to resell the preferred shares, debt securities, subscription receipts, warrants, share purchase contracts
or units purchased under this prospectus. This may affect the pricing of our preferred shares, debt securities, subscription receipts,
warrants, share purchase contracts and units in the secondary market, the transparency and availability of trading prices, the
liquidity of our preferred shares, debt securities, subscription receipts, warrants, share purchase contracts or units, and the
extent of issuer regulation. See “Risk Factors”.
The earnings coverage ratio
of the Company for the 12 months ended December 31, 2013 is less than one-to-one. See “Earnings Coverage Ratios” on
page 13 of this prospectus.
about this prospectus |
5 |
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES |
5 |
EXCHANGE RATE DATA |
5 |
FORWARD-LOOKING STATEMENTS |
6 |
RISK FACTORS |
7 |
THE COMPANY |
8 |
OUR BUSINESS |
8 |
Recent Developments |
10 |
Prior Sales |
10 |
Price Range and Trading |
10 |
USE OF PROCEEDS |
12 |
Capitalization and indebtedness |
12 |
Earnings coverage ratios |
13 |
DESCRIPTION OF common shares and PREFERRED SHARES |
13 |
DESCRIPTION OF DEBT SECURITIES |
15 |
DESCRIPTION OF SUBSCRIPTION RECEIPTS |
18 |
DESCRIPTION OF WARRANTS |
19 |
DESCRIPTION OF SHARE PURCHASE CONTRACTS |
22 |
DESCRIPTION OF UNITS |
22 |
PLAN OF DISTRIBUTION |
23 |
selling securityholders |
24 |
CERTAIN INCOME TAX CONSIDERATIONS |
25 |
DOCUMENTS INCORPORATED BY REFERENCE |
25 |
LEGAL MATTERS |
26 |
auditors, transfer agents and registrars |
27 |
AGENT FOR SERVICE OF PROCESS |
27 |
STATUTORY and contractual RIGHTS OF WITHDRAWAL AND RESCISSION |
27 |
CERTIFICATE OF THE COMPANY |
29 |
You should rely only on the information contained
in or incorporated by reference into this prospectus or any prospectus supplement. References to this “prospectus”
include documents incorporated by reference herein. See “Documents Incorporated by Reference” at page 25 of this prospectus.
The information in or incorporated by reference into this prospectus is current only as of its date. We have not authorized anyone
to provide you with information that is different. This document may only be used where it is legal to offer these securities.
about
this prospectus
In this prospectus, unless the context otherwise
requires, the terms “Hydrogenics”, “Company”, “Corporation”, “we”, “us”
and “our” refer to Hydrogenics Corporation and its consolidated subsidiaries and, where the context requires, includes
our predecessor (“Old Hydrogenics”) and its consolidated subsidiaries prior to October 27, 2009.
Except where otherwise indicated, all dollar amounts
are expressed in U.S. dollars, references to “US$” and “dollars” are to U.S. dollars, and references to
“Cdn$” are to Canadian dollars.
ENFORCEABILITY
OF CERTAIN CIVIL LIABILITIES
We are a corporation organized under the laws
of Canada. Most of our directors and officers, as well as certain of the experts named in this prospectus, are residents of Canada
and all or a substantial portion of our assets and the assets of such persons may be located outside the United States. As a result,
it may be difficult for U.S. investors to effect service of process within the United States upon our directors or officers, or
to realize in the United States upon judgments of courts of the United States predicated upon civil liability of such directors
or officers under U.S. federal securities laws. We believe that a judgment of a U.S. court predicated solely upon civil liability
under such laws would likely be enforceable in Canada if the U.S. court in which the judgment was obtained had a basis for jurisdiction
in the matter that was recognized by a Canadian court for such purposes. We cannot assure you that this will be the case. It is
less certain that an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such
laws.
EXCHANGE
RATE DATA
The following table sets forth, for each period
indicated, the low and high exchange rates for Canadian dollars expressed in United States dollars, the exchange rate at the end
of such period and the average of such exchange rates for each day during such period, based on the noon rate of exchange as reported
by the Bank of Canada for the conversion of Canadian dollars into United States dollars:
| |
Year Ended December 31, |
| |
2009 | |
2010 | |
2011 | |
2012 | |
2013 |
Low | |
| 0.7692 | | |
| 0.9278 | | |
| 0.9430 | | |
| 0.9599 | | |
| 0.9348 | |
High | |
| 0.9716 | | |
| 1.0054 | | |
| 1.0583 | | |
| 1.0299 | | |
| 1.0164 | |
Period End | |
| 0.9555 | | |
| 1.0054 | | |
| 0.9833 | | |
| 1.0051 | | |
| 0.9402 | |
Average | |
| 0.8757 | | |
| 0.9709 | | |
| 1.0111 | | |
| 1.0004 | | |
| 0.9710 | |
On April 7, 2014, the noon buying rate was Cdn$1.00
= US$0.9115.
FORWARD-LOOKING
STATEMENTS
Certain statements included and incorporated by
reference in this prospectus constitute “forward-looking information”, within the meaning of applicable Canadian securities
laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform
Act of 1995 (collectively referred to herein as “forward-looking statements”). Forward-looking statements can
be identified by the use of words, such as “plans”, “expects”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intend”, “anticipates”, “objectives” or
“believes” or variations of such words and phrases or statements that certain actions, events or results “may”,
“could”, “would”, “might” or “will” be taken, occur or be achieved. These forward-looking
statements relate to, among other things, our future results, levels of activity, performance, goals, achievements, competitive
advantages, industry trends, or other future events. These forward-looking statements are based on current expectations and various
assumptions and analyses made by us in light of our experience and our perceptions of historical trends, current conditions and
expected future developments and other factors that we believe are appropriate in the circumstances. These forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from
those anticipated in our forward-looking statements.
These risks, uncertainties and factors include,
but are not limited to: our inability to execute our business plan, or to grow our business; inability to address a slow return
to economic growth, and its impact on our business, results of operations and consolidated financial condition; our limited operating
history; inability to implement our business strategy; fluctuations in our quarterly results; failure to maintain our customer
base that generates the majority of our revenues; currency fluctuations; failure to maintain sufficient insurance coverage; changes
in value of our goodwill; failure of a significant market to develop for our products; failure of hydrogen being readily available
on a cost-effective basis; changes in government policies and regulations; lack of new government policies and regulations for
the energy storage technologies; failure of uniform codes and standards for hydrogen-fuelled vehicles and related infrastructure
to develop; liability for environmental damages resulting from our research, development or manufacturing operations; failure to
compete with other developers and manufacturers of products in our industry; failure to compete with developers and manufacturers
of traditional and alternative technologies; failure to develop partnerships with original equipment manufacturers, governments,
systems integrators and other third parties; inability to obtain sufficient materials and components for our products from suppliers;
failure to manage expansion of our operations; failure to manage foreign sales and operations; failure to recruit, train and retain
key management personnel; inability to integrate acquisitions; failure to develop adequate manufacturing processes and capabilities;
failure to complete the development of commercially viable products; failure to produce cost-competitive products; failure or delay
in field testing of our products; failure to produce products free of defects or errors; inability to adapt to technological advances
or new codes and standards; failure to protect our intellectual property; our involvement in intellectual property litigation;
exposure to product liability claims; failure to meet rules regarding passive foreign investment companies; actions of our significant
and principal shareholders; failure to maintain the requirements for continued listing on the Nasdaq; dilution as a result of significant
issuances of our common shares and preferred shares; inability of U.S. investors to enforce U.S. civil liability judgments against
us; volatility of our common share price; dilution as a result of the exercise of options, warrants and performance share units;
the absence of an existing public market for the preferred shares, debt securities, subscription receipts, warrants, share purchase
contracts or units; the reduced public float and liquidity of our common shares; the effect of prevailing interest rates on the
market price of our preferred shares and debt securities; and our debt securities not being secured by any of our assets. These
risk factors and others are discussed in more detail herein under “Risk Factors,” as well as under “Risk Factors”
in our most recent annual information form, incorporated by reference herein, and under “Risks and Uncertainties” and
“Forward-looking Statements” in our management’s discussion and analysis of financial condition and results of
operations as at and for the year ended December 31, 2013, which was filed in Canada at www.sedar.com and with the SEC as Exhibit
99.2 to our report on Form 6-K on March 7, 2014, and which is also incorporated by reference herein.
These factors may cause our actual performance
and financial results in future periods to differ materially from any estimates or projections of future performance or results
expressed or implied by such forward-looking statements. Forward-looking statements do not take into account the effect that transactions
or non-recurring or other special items announced or occurring after the statements are made have on our business. For example,
they do not include the effect of business dispositions, acquisitions, other business transactions, asset writedowns or other charges
announced or occurring after forward-looking statements are made. The financial impact of such transactions and non-recurring and
other special items can be complex and necessarily depends on the facts particular to each of them.
We believe the expectations represented by our
forward-looking statements are reasonable, yet there can be no assurance that such expectations will prove to be correct. Unless
otherwise stated, the forward-looking statements contained herein are made as of the date of this prospectus and we do not undertake
any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information,
future events or otherwise unless required by applicable legislation or regulation. The forward-looking statements contained in
this prospectus are expressly qualified by this cautionary statement.
RISK
FACTORS
An investment in our securities involves risk.
You should carefully consider the risk factors described below, as well as the risk factors described under “Risk Factors”
in our most recent annual information form, incorporated by reference herein, under “Risks and Uncertainties” and “Forward-looking
Statements” in our management’s discussion and analysis of financial condition and results of operations as at and
for the year ended December 31, 2013, filed in Canada at www.sedar.com and with the SEC as Exhibit 99.2 to our report on Form 6-K
on March 7, 2014, which is also incorporated by reference herein, and the other information contained in and incorporated by reference
into this prospectus (including subsequently filed documents incorporated by reference), before deciding whether to invest in our
securities. Any of such risks could materially adversely affect our business, financial condition or results of operations.
There is no existing public market for the
preferred shares, debt securities, subscription receipts, warrants, share purchase contracts or units and a market may not develop.
There is currently no market through which the
preferred shares, debt securities, subscription receipts, warrants, share purchase contracts or units may be sold and purchasers
of preferred shares, debt securities, subscription receipts, warrants, share purchase contracts or units may not be able
to resell such preferred shares, debt securities, subscription receipts, warrants, share purchase contracts or units purchased
under this prospectus. There can be no assurance that an active trading market will develop for the preferred shares, debt securities,
subscription receipts, warrants, share purchase contracts or units after an offering or, if developed, that such market will be
sustained. This may affect the pricing of the preferred shares, debt securities, subscription receipts, warrants, share purchase
contracts or units in the secondary market, the transparency and availability of trading prices, the liquidity of the preferred
shares, debt securities, subscription receipts, warrants, share purchase contracts or units and the extent of issuer regulation.
The public offering prices of the securities may
be determined by negotiation between the Company and underwriters based on several factors and may bear no relationship to the
prices at which the securities will trade in the public market, if any, subsequent to such offering. See “Plan of Distribution”.
Prevailing interest rates will affect the
market price or value of the preferred shares and debt securities.
The market price or value of the preferred shares
and debt securities will decline as prevailing interest rates for comparable debt instruments rise, and increase as prevailing
interest rates for comparable debt instruments decline.
The debt securities will not be secured
by any assets of the Company.
Holders of secured indebtedness of the Company
would have a claim on the assets securing such indebtedness that effectively ranks prior to the claim of holders of debt securities
and would have a claim that ranks equal with the claim of holders of debt securities to the extent that such security did not satisfy
the secured indebtedness. Furthermore, although covenants given by the Company in various agreements may restrict incurring secured
indebtedness, such indebtedness may, subject to certain conditions, be incurred.
THE
COMPANY
This summary does not contain all the information
about us that may be important to you. You should read the more detailed information and financial statements and related notes
that are incorporated by reference and are considered to be part of this prospectus.
We were incorporated on June 10, 2009 under the
Canada Business Corporations Act, under the name “7188501 Canada Inc.” We changed our name to “Hydrogenics
Corporation–Corporation Hydrogenique” on October 27, 2009 in connection with a transaction involving Algonquin Power
Income Fund (the “APIF Transaction”).
Old Hydrogenics was founded in 1988 under the
name “Traduction Militech Translation Inc.” It subsequently changed its name to “Société Hydrogenique
Incorporée–Hydrogenics Corporation Incorporated”. From 1990 to August 1995, Société Hydrogenique
Incorporée–Hydrogenics Corporation Incorporated did not actively carry on business. In August 1995, we commenced our
fuel cell technology development business, and in 2000, changed our name to Hydrogenics Corporation – Corporation Hydrogenique.
Until October 27, 2009, we were a wholly-owned subsidiary of Old Hydrogenics.
We are a globally recognized developer and provider
of hydrogen generation and fuel cell products. We conduct our business through the following business units: (i) OnSite Generation,
which focuses on hydrogen generation products for renewable energy, industrial and transportation customers; and (ii) Power
Systems, which focuses on fuel cell products for original equipment manufacturers (“OEMs”), systems integrators
and end users for stationary applications, including backup power, and motive applications, such as forklift trucks. In November
2007, we announced we were exiting the fuel cell test products, design, development and manufacturing business, that was conducted
through our Test Systems business unit.
Our business units are supported by a corporate
services group providing finance, insurance, investor relations, communications, treasury, human resources, strategic planning,
compliance, and other administrative services.
Our principal executive offices are located at
220 Admiral Boulevard, Mississauga, Ontario, Canada L5T 2N6. Our telephone number is (905) 361-3660. Our agent for service in the
United States for any actions relating to our common shares is CT Corporation System, 111 Eighth Avenue, New York, New York 10011,
(212) 894-8400.
OUR
BUSINESS
We design, develop and manufacture hydrogen generation
and fuel cell products based on water electrolysis technology and proton exchange membrane (“PEM”) technology.
Our mission is to provide safe, secure, sustainable and emission free energy as a leading global provider of clean energy solutions
based on hydrogen. We maintain operations in Belgium, Canada and Germany with satellite offices in the United States and a branch
office in Russia.
Our OnSite Generation business segment is based
in Oevel, Belgium and develops products for industrial gas, hydrogen fueling and renewable energy storage markets. Our Power Systems
business segment is based in Mississauga, Canada, with a satellite facility in Gladbeck, Germany, and develops products for energy
storage, stationary and motive power applications.
OnSite Generation
Our OnSite Generation business segment is based
on water electrolysis technology which involves the decomposition of water into oxygen (O2) and hydrogen gas (H2)
by passing an electric current through a liquid electrolyte. The resultant hydrogen gas is then captured and used for industrial
gas applications, hydrogen fueling applications, and is used to store renewable and surplus energy in the form of hydrogen gas.
Our HySTAT® branded electrolyzer products are based on 60 years of hydrogen experience, meet international standards, such
as ASME, CE, Rostechnadzor and UL, and are certified ISO 9001 from design to delivery. We configure our HySTAT® products for
both indoor and outdoor applications and tailor our products to accommodate various hydrogen gas requirements.
The worldwide market for hydrogen, which includes
the merchant gas market for hydrogen, is estimated at US$5 billion annually, and is served by industrial gas companies as well
as on-site hydrogen generated by products manufactured by companies such as ours. We believe the annual market for on-site hydrogen
generation equipment is approximately US$100 million to US$200 million. We believe the size of the addressable market for on-site
hydrogen generation equipment could more than double if energy storage and electrolysis based hydrogen fueling stations gain widespread
acceptance.
Our OnSite Generation products are sold to leading
merchant gas companies, such as Air Liquide and Linde Gas and end users requiring high purity hydrogen produced on-site for industrial
applications. We also sell and service products for progressive oil and gas companies, such as Shell Hydrogen, requiring hydrogen
fueling stations for transportation applications. Recently, an increase in orders and interest for fueling stations in Europe and
elsewhere, has signaled what we believe could be a major increase in the size of this market. During the past year, we have also
witnessed an increase in interest and orders for our small, medium and large scale energy storage products, which also service
the need for ancillary electrical power services, such as grid balancing and load profiling. While this area is heavily dependent
on public funding initiatives, particularly in Europe, it continues to present compelling growth opportunities. In 2009, we began
to sell our products to leading electric power utilities to satisfy the need for renewable energy storage.
The business objectives for our OnSite Generation
group are to: (i) continue to pursue opportunities for customers to convert otherwise wasted renewable and other excess energy,
such as wind, solar or excess baseload energy, into hydrogen; (ii) further expand into traditional markets, such as Eastern Europe
(including Russia), Asia and the Middle East; (iii) grow our fueling station business; (iv) further increase the gross margins
of existing product lines by improving our procurement and manufacturing processes; (v) reduce the cost of ownership of our products
through design and technology improvement; and (vi) further increase the reliability and durability of our products to exceed the
expectations of our customers and improve the performance of our applications.
Our OnSite Generation business competes with merchant
gas companies, such as Air Liquide and Linde Gas which, in addition to being customers, operate large scale centralized hydrogen
production plants and are providers of alternative on-site hydrogen generation products using steam methane reforming technology
or other electrolysis technology. We compete on performance, reliability and cost and believe we are well positioned in situations
where there is a need for high purity hydrogen manufactured on-site.
Power Systems
Our Power Systems business segment is based on
PEM fuel cell technology, which transforms chemical energy liberated during the electrochemical reaction of hydrogen and oxygen
into electrical energy. Our HyPM® branded fuel cell products are based on our extensive track record of on-bench testing and
real-time deployments across a wide range of stationary and motive power profiles. We configure our HyPM® products
into multiple electrical power outputs ranging from 1 kilowatt to 1 megawatt with ease of integration, high reliability and operating
efficiency, delivered from a highly compact area. We also develop and deliver hydrogen generation products based on PEM water electrolysis,
which can also be used to serve the energy storage markets.
Our target markets include backup power for telecom
and data centre installations and motive power applications, such as buses, trucks and utility vehicles. The military, historically
an early technology adopter, is a specialized market for our innovative fuel cell based products. The worldwide market for data
centre backup power is estimated to be in excess of US$6 billion and the market for telecom backup power is estimated to be US$2
to US$3 billion in the United States alone, based on a complete displacement of existing products serving this market.
Our Power Systems products are sold to leading
OEMs such as CommScope, Inc. to provide backup power applications for telecom installations and vehicle and other integrators for
motive power, direct current and alternative current backup. Additionally, our products are sold for prototype field tests
intended to be direct replacements for traditional lead-acid battery packs for motive applications. We also sell our Power Systems
products to the military, aerospace and other early adopters of emerging technologies.
The business objectives for our Power Systems
group are to: (i) offer a standard fuel cell platform for many markets, thereby enabling ease of manufacturing and reduced development
spending; (ii) achieve further market penetration in the backup power and motive power markets by tailoring our HyPM® fuel
cell products to meet market specific requirements, including price, performance and features; (iii) reduce product cost; (iv)
invest in sales and market development activities in the backup power and motive power markets; (v) continue to target the military
and other early adopters of emerging technologies as a bridge to future commercial markets; and (vi) secure the requisite people
and processes to align our anticipated growth plans with our resources and capabilities.
Our Power Systems business competes with several
well-established battery and internal combustion engine companies in addition to several other fuel cell companies. We compete
on relative price/performance and design innovation. In the backup power market, we believe our HyPM® systems have an advantage
over batteries and internal combustion engines for customers seeking extended run requirements, by offering more reliable and economical
performance. In motive power markets, we believe our HyPM® products are well positioned against diesel generation and lead-acid
batteries by offering increased productivity and lower operational costs.
There are four types of fuel cells other than
PEM fuel cells that are generally considered to have possible commercial applications, including phosphoric acid fuel cells, molten
carbonate fuel cells, solid oxide fuel cells and alkaline fuel cells. Each of these fuel cell technologies differs in their component
materials and operating characteristics. While all fuel cell types may have potential environmental and efficiency advantages over
traditional power sources, we believe PEM fuel cells can be manufactured less expensively and are more efficient and more practical
in small-scale stationary and motive power applications. Further, most automotive companies have selected PEM technology for fuel
cell powered automobiles. We expect this will help establish a stronger industry around PEM technology and may result in a lower
cost, as compared to the other fuel cell technologies.
Recent
Developments
On April 4, 2014, we issued a press release announcing
that customer-driven timing of deliveries had impacted our revenue for the first quarter of 2014, and that we expected to realize
between $7.0 and $7.5 million of revenue for the three months ended March 31, 2014.
Prior
Sales
We have not issued any securities in the 12-month
period before the date of this prospectus other than: (i) 891,250 common shares issued to the public at a price of US$7.75 per
common share on May 3, 2013 pursuant to a U.S. prospectus supplement; (ii) 61,904 common shares on the exercise of options at an
issue price of Cdn$7.15; and (iii) 245,003 common shares on the exercise of 287,502 Series A and Series B warrants at an issue
price of US$3.68. We also issued 37,827 performance share units, each of which entitles the holder thereof to receive common shares
in certain circumstances.
For additional information regarding the changes
in our share capital for the last three years, please refer to Note 12 of our consolidated financial statements as at and for the
years ended December 31, 2013 and 2012, which are incorporated by reference herein.
Price
Range and Trading
TSX
The following table sets forth the high and low
sale prices (which are not necessarily the closing prices) and total trading volumes on the TSX (as reported by TMX Datalinx) for
the periods indicated for our common shares under the symbol “HYG”.
Period | |
High Price (Cdn$ per share) | |
Low Price (Cdn$ per share) | |
Total Volume |
| |
| |
| |
|
2013 | |
| | | |
| | | |
| | |
March | |
| 9.10 | | |
| 8.00 | | |
| 32,791 | |
April | |
| 9.30 | | |
| 7.65 | | |
| 57,384 | |
May | |
| 14.09 | | |
| 8.30 | | |
| 193,230 | |
June | |
| 17.05 | | |
| 12.27 | | |
| 381,055 | |
July | |
| 15.93 | | |
| 13.64 | | |
| 71,579 | |
August | |
| 14.24 | | |
| 11.00 | | |
| 76,680 | |
September | |
| 13.71 | | |
| 11.25 | | |
| 43,250 | |
October | |
| 13.52 | | |
| 11.44 | | |
| 42,113 | |
November | |
| 16.55 | | |
| 12.00 | | |
| 61,223 | |
December | |
| 20.80 | | |
| 15.08 | | |
| 105,997 | |
| |
| | | |
| | | |
| | |
2014 | |
| | | |
| | | |
| | |
January | |
| 26.70 | | |
| 19.20 | | |
| 235,177 | |
February | |
| 30.35 | | |
| 23.61 | | |
| 176,596 | |
March | |
| 39.50 | | |
| 27.29 | | |
| 787,727 | |
April 1 to 7 | |
| 31.52 | | |
| 22.90 | | |
| 100,726 | |
Nasdaq
The following table sets forth the high and low
sale prices (which are not necessarily the closing prices) and total trading volumes on the Nasdaq (as reported by Standard &
Poor’s Capital IQ) for the periods indicated for our common shares under the symbol “HYGS”.
Period | |
High Price (US$ per share) | |
Low Price (US$ per share) | |
Total Volume |
| |
| |
| |
|
2013 | |
| | | |
| | | |
| | |
March | |
| 8.89 | | |
| 7.81 | | |
| 143,844 | |
April | |
| 9.50 | | |
| 7.51 | | |
| 538,927 | |
May | |
| 13.50 | | |
| 7.99 | | |
| 2,288,747 | |
June | |
| 16.75 | | |
| 11.61 | | |
| 3,746,548 | |
July | |
| 15.50 | | |
| 13.08 | | |
| 1,490,232 | |
August | |
| 13.99 | | |
| 10.52 | | |
| 1,571,681 | |
September | |
| 13.57 | | |
| 11.00 | | |
| 1,067,956 | |
October | |
| 12.94 | | |
| 11.05 | | |
| 759,593 | |
November | |
| 15.68 | | |
| 11.75 | | |
| 707,155 | |
December | |
| 19.68 | | |
| 14.07 | | |
| 1,742,174 | |
| |
| | | |
| | | |
| | |
2014 | |
| | | |
| | | |
| | |
January | |
| 23.98 | | |
| 17.67 | | |
| 2,602,982 | |
February | |
| 27.72 | | |
| 21.28 | | |
| 2,136,653 | |
March | |
| 35.52 | | |
| 24.21 | | |
| 6,653,617 | |
April 1 to 7 | |
| 28.65 | | |
| 20.84 | | |
| 1,162,051 | |
USE
OF PROCEEDS
The securities offered by this prospectus may
be offered from time to time at the discretion of the Company in one or more series or issuances with an aggregate offering amount
not to exceed US$100 million. The net proceeds derived from the issue of the securities, or any one of them, under any prospectus
supplement will be the aggregate offering amount thereof less any commission and other issuance costs paid in connection therewith.
The net proceeds cannot be estimated as the amount thereof will depend on the number and price of the securities issued under any
prospectus supplement. We will set forth information on the use of net proceeds from the sale of securities we offer under this
prospectus in a prospectus supplement relating to the specific offering. We will not receive any proceeds from any sales of securities
by any selling securityholders.
We may, from time to time, issue debt instruments,
incur additional indebtedness and issue equity securities or warrants other than through the issue of securities pursuant to this
prospectus.
For the fiscal year ended December 31, 2013, we
had a negative cash flow from operating activities equal to US$9.197 million. We may use any portion of the net proceeds from the
issuance of any securities under this prospectus to support any negative cash flows from operating activities in future periods.
In 1998, Stuart Energy Systems Corporation (“Stuart
Energy”) entered into an agreement with Technologies Partnerships Canada, a program of Industry Canada to develop and
demonstrate hydrogen fleet fuel appliances (the “TPC Agreement”). In connection with the APIF Transaction, Stuart
Energy transferred all of its assets and liabilities, including all of its rights, obligations and liabilities under the TPC agreement,
to the Company. In January 2011, we entered into an amendment (the “Amendment”) to the TPC Agreement with the
Minister of Industry. Pursuant to the Amendment, we agreed to pay to the Minister of Industry 3% of the net proceeds of all equity
instrument financings (which would include distributions under this prospectus of common shares, preferred shares or debt securities
convertible into common shares, subscription receipts exchangeable for common shares, warrants for the purchase of common shares,
share purchase contracts with respect to common shares, or units comprised of any of the foregoing securities) completed on or
before September 30, 2017, up to an aggregate limit of Cdn$800,000 (the “Contingent Amount”). As of April 8,
2014, Cdn$312,270 of the Contingent Amount remains payable.
Capitalization
and indebtedness
The following table sets forth our capitalization
as of December 31, 2013. This table should be read in conjunction with our audited consolidated financial statements as at and
for the years ended December 31, 2013 and 2012, which are incorporated by reference herein. There have been no material changes
to our capitalization or indebtedness since December 31, 2013.
| |
As of
December 31, 2013 (US$ in thousands) |
| |
(Audited) |
Shareholders’ equity | |
| | |
Common shares | |
| 333,312 | |
Series B purchaser warrants | |
| 1,075 | |
Contributed surplus | |
| 18,449 | |
Deficit | |
| (345,351 | ) |
Accumulated other comprehensive loss | |
| (249 | ) |
Total capitalization | |
$ | 7,236 | |
Earnings
coverage ratios
The following earnings coverage ratio has been
calculated for the twelve-month period ended December 31, 2013. The following earnings coverage ratio does not give effect to any
issuance of preferred shares or debt securities pursuant to this prospectus or any prospectus supplement, since the aggregate principal
amounts and the terms of such preferred shares or debt securities are not presently known. In addition, the earnings coverage ratio
set out below does not purport to be indicative of earnings coverage ratios for any future period.
| |
12 Months Ended
December 31, 2013 |
| |
Actual |
Interest requirements (in thousands) | |
| US$426 | |
Earnings (loss) before interest expense and taxes (in thousands) | |
| (US$8,493 | ) |
Earnings Coverage | |
| (19.94 | ) |
Due to losses in this period, our earnings coverage
ratio is less than one-to-one. In order to achieve an earnings coverage ratio of one-to-one for the 12 months ended December 31,
2013, the Company would need to have earned an additional US$8.919 million.
DESCRIPTION
OF common shares and PREFERRED SHARES
The following briefly summarizes the provisions
of our articles of incorporation, including a description of our share capital. The following description may not be complete and
is subject to, and qualified in its entirety by reference to, the terms and provisions of our articles of incorporation.
Our authorized share capital consists of an unlimited
number of common shares and an unlimited number of preferred shares issuable in series. As at December 31, 2013, there were 9,017,617
common shares and no preferred shares issued and outstanding. As at April 8, 2014, there were 9,088,697 common shares and no
preferred shares issued and outstanding.
Common Shares
Dividend
Rights
Holders of common shares are entitled, subject
to the rights, privileges, restrictions and conditions attaching to any other class of shares, to receive dividends as and when
declared by our Board of Directors. We have never declared or paid any cash dividends on our common shares. We currently intend
to retain any future earnings to fund the development and growth of our business and we do not anticipate paying any cash dividends
in the foreseeable future. If dividends are declared or paid, our transfer agent, CST Trust Company, would be the paying agent
for any distributions.
Voting
Rights
Holders of common shares are entitled to receive
notice of and to attend all meetings of our shareholders and to vote at such meetings, except meetings at which only holders of
a specific series of shares are entitled to vote. Each common share carries one vote on all matters to be voted on by our shareholders.
Preemptive,
Subscription, Redemption and Conversion Rights
Common shares do not carry pre-emptive rights
or rights of conversion into any other securities. However, in the event that we issue additional equity securities or securities
convertible into equity securities for cash consideration, General Motors has been granted the right to participate in such offering
on a pro rata basis based on the fully diluted number of common shares that it holds. General Motors’ pre-emptive
right is subject to certain limited exceptions, including the issuance of common shares in connection with acquisitions. General
Motors’ participation right terminates on the date that the corporate alliance agreement between the Company and General
Motors dated October 16, 2001 is terminated.
We have also granted similar participation
rights to Enbridge Inc. (“Enbridge”). In the event that we issue additional equity securities or securities
convertible into equity securities for cash consideration, Enbridge has been granted the right to participate in such offering
on a pro rata basis based on the fully diluted number of common shares that it holds. Enbridge’s participation right
is subject to certain limited exceptions, including the issuance of common shares in connection with acquisitions. Enbridge’s
participation right terminates on the earlier of (i) the date Enbridge ceases to be the beneficial owner of more than 5% of our
outstanding common shares, (ii) the date that the joint development agreement between the Company and Enbridge dated April 20,
2012 is terminated, or (iii) April 20, 2014.
In addition, we have granted General Motors a
pre-emptive right whereby so long as General Motors holds at least 10% of our outstanding common shares, in the event that any
of our founders, Pierre Rivard, Joseph Cargnelli or Boyd Taylor, wish to transfer (i) all or substantially all of their common
shares to any person, or (ii) any of their common shares to a person actively competing with General Motors in the automotive or
fuel cell industry, he must first offer the common shares to General Motors. General Motors currently owns less than 10% of our
outstanding common shares, and therefore may not exercise this right.
Liquidation
Rights
Upon our liquidation, dissolution or winding up,
whether voluntary or involuntary, the holders of the common shares are entitled, subject to the rights, privileges, restrictions
and conditions attaching to any other class of shares, to share ratably in all of our assets remaining after payment of all liabilities.
Preferred Shares
As you read this section, please remember that
the specific terms of your series of preferred shares as described in your prospectus supplement will supplement and, if applicable,
may modify or replace the general terms described in this section. If there are differences between your prospectus supplement
and this prospectus, your prospectus supplement will govern. Thus, the statements we make in this section may not apply to your
series of preferred shares.
Reference to a series of preferred shares means
all of the preferred shares issued as part of the same series and having the attributes set out in our articles of incorporation.
Reference to your prospectus supplement means the prospectus supplement describing the specific terms of the preferred shares you
purchase. The terms in your prospectus supplement will have the meanings described in this prospectus, unless otherwise specified.
Under our articles of incorporation, our Board
of Directors is authorized, subject to Canadian law, without shareholder approval, from time to time to issue an unlimited number
of preferred shares in one or more series. Our Board of Directors can fix the designations, powers, preferences, privileges and
relative participating, optional or special rights of any preferred shares including any qualifications, limitations or restrictions.
Preferred shares are entitled to priority over our common shares as to dividend rights, conversion rights, voting rights, redemption
and liquidation preferences. Preferred shares may be convertible into shares of any other series or class of shares if our Board
of Directors so determines. Our Board of Directors may fix the terms of the series of preferred shares it designates subject to
the issue of a certificate of amendment setting forth the designation, rights, privileges, restrictions and conditions attaching
to the preferred shares of the series.
The prospectus supplement relating to the particular
series of preferred shares will contain a description of the specific terms of that series as fixed by our Board of Directors,
including, as applicable;
| · | the offering price at which we will issue the preferred shares; |
| · | the title and designation of number of shares of the series of preferred shares; |
| · | the dividend rate or method of calculation, the payment dates for dividends and the place or places
where the dividends will be paid, whether dividends will be cumulative or non-cumulative, and, if cumulative, the dates from which
dividends will begin to accumulate; |
| · | any conversion or exchange rights; |
| · | whether the preferred shares will be subject to redemption and the redemption price and other terms
and conditions relative to the redemption rights; |
| · | any sinking fund provisions; |
| · | any other rights, preferences, privileges, limitations and restrictions that are not inconsistent
with the terms of our articles of incorporation. |
The preferred shares of each series shall rank
on a parity with the preferred shares of every other series with respect to the payment of dividends and the distribution of assets
in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, and will be entitled
to a preference over our common shares. If any amount of cumulative dividends, whether or not declared, or declared non-cumulative
dividends or amount payable on any such distribution of assets constituting a return of capital in respect of the preferred shares
of any series is not paid in full, the preferred shares of such series shall participate rateably with the preferred shares of
every other series in respect of all such dividends and amounts.
DESCRIPTION
OF DEBT SECURITIES
We may issue debt securities, including convertible
debt securities, from time to time in one or more series. The specific terms relating to any of our debt securities that we offer
will be described in a prospectus supplement. You should read the applicable prospectus supplement for the terms of the debt securities
offered. As required by U.S. federal law and in conformity with the applicable laws of Canada, for all bonds and notes of companies
that are publicly offered, the debt securities will be governed by a document called an “indenture.” An indenture is
a contract between a financial institution, acting on your behalf as trustee of the debt securities offered, and us. The trustee
has two main roles. First, subject to some limitations on the extent to which the trustee can act on your behalf, the trustee can
enforce your rights against us if we default on our obligations under the indenture. Second, the trustee performs certain administrative
duties for us. The specific terms relating to any series of our debt securities that we offer will be described in a prospectus
supplement. You should read the applicable prospectus supplement for the terms of the series of debt securities offered. The terms
of the debt securities described in such prospectus supplement will be set forth in the indenture and in one or more resolutions
of our Board of Directors, or pursuant to authority granted by one or more resolutions of our Board of Directors, or established
pursuant to one or more supplemental indentures and may include the following, as applicable to the series of debt securities offered
thereby:
| · | the title of the debt securities; |
| · | any limit upon the aggregate principal amount of the debt securities that may be authenticated
and delivered under the indenture; |
| · | the extent and manner, if any, to which payment on or in respect of the debt securities will be
senior or will be subordinated to the prior payment or other liabilities or obligations of the Company; |
| · | the percentage or percentages of principal amount at which the debt securities will be issued; |
| · | the date or dates on which the principal of the debt securities is payable; |
| · | the rate or rates at which the debt securities will bear interest, if any, the date or dates from
which any such interest will accrue, the interest payment dates on which any such interest will be payable, the regular record
dates for any interest payable on the debt securities which are in registered form and the conventions for calculating interest
if other than on the basis of a 360-day year of twelve 30 day months, if any; |
| · | the place or places, if any, other than or in addition to New York, New York, where the principal
of (and premium, if any) and any interest on debt securities will be payable, any debt securities may be surrendered for registration
of transfer, debt securities may be surrendered for exchange and the place or places where notices or demands to or upon us in
respect of the debt securities may be served; |
| · | any mandatory or optional redemption or sinking fund provisions, including the period or periods
within which, the price or prices at which and the terms and conditions upon which the debt securities may be redeemed or purchased
at the Company’s option or otherwise; |
| · | the denominations in which any of the debt securities will be issuable if other than denominations
of US$1,000 and any multiple thereof; |
| · | if other than the Company or the trustee, the identity of each registrar and/or paying agent; |
| · | if other than the principal amount, the portion of the principal amount of debt securities that
will be payable upon declaration of acceleration; |
| · | if the debt securities may be converted into or exercised or exchanged for common shares or preferred
shares or other securities of the Company or debt or equity securities of one or more third parties, the terms on which conversion,
exercise or exchange may occur, including whether conversion, exercise or exchange is mandatory, at the option of the holder or
at the Company’s option, the period during which conversion, exercise or exchange may occur, the initial conversion, exercise
or exchange price or rate and the circumstances or manner in which the amount of common shares or preferred shares or other securities
issuable upon conversion, exercise or exchange may be adjusted; |
| · | any subordination provisions applicable to the debt securities; |
| · | the issue price at which the debt securities will originally be issued, expressed as a percentage
of the principal amount, and the original issue date; |
| · | if the debt security is also an original issue discount security, the yield to maturity; |
| · | if other than U.S. dollars, the foreign currency or the units based on or relating to foreign currencies
in which the debt securities are denominated and/or in which the payment of the principal of and any premium and interest on the
debt securities will or may be payable; |
| · | any index, formula or other method pursuant to which the amount of payments of principal of and
any premium and interest on the debt securities will or may be determined; |
| · | whether the principal of, and premium, if any, and interest, if any, on the debt securities are
to be payable, at our election or at the election of a holder, in a currency other than that in which such debt securities are
denominated or stated to be payable, the period or periods within which, and the terms and conditions upon which, such election
may be made, and the time and manner of determining the exchange rate between the currency in which such debt securities are denominated
or stated to be payable and the currency in which such debt securities are to be so payable; |
| · | the designation of the initial exchange rate agent, if any; |
| · | the defeasance provisions of the indenture that will be applicable to the debt securities, and
any provisions limiting the applicability of, in modification of, in addition to or in lieu of such provisions; |
| · | provisions, if any, granting special rights to the holders of debt securities upon the occurrence
of such events as may be specified; |
| · | any deletions from, modifications of or additions to the events of default or covenants with respect
to debt securities, whether or not such events of default or covenants are consistent with the events of default or covenants in
the indenture; |
| · | whether the debt securities will be issuable in registered form or bearer form or both, and, if
issuable in bearer form, the restrictions as to the offer, sale and delivery of the debt securities in bearer form and as to exchanges
between registered and bearer form; |
| · | whether the debt securities will be issuable in the form of one or more registered global securities
and if so the identity of the depository for such registered global securities; |
| · | the date as of which any bearer securities and any temporary global security representing outstanding
securities shall be dated if other than the date of original issuance of the first security to be issued; |
| · | the person to whom any interest on any security will be payable, if other than the person in whose
name that security is registered at the close of business on the record date for such interest; |
| · | temporary security of such series, only upon receipt of certain certificates or other documents
or satisfaction of other conditions, the form and/or terms of such certificates, documents or conditions; |
| · | if the debt securities are to be issued upon the exercise of warrants, the time, manner and place
for such securities to be authenticated and delivered; |
| · | whether, under what circumstances and the currency in which the Company will pay additional amounts
(on account of any requirement to withhold or deduct taxes) on the debt securities to any holder; |
| · | the form of the face and reverse of the debt securities; |
| · | the CUSIP numbers for the debt securities, if any; and |
| · | any other terms, conditions, rights and preferences (or limitations on such rights and preferences)
on the debt securities. |
Unless we indicate differently in the applicable
prospectus supplement, the indenture pursuant to which the debt securities are issued will not contain any provisions that give
you protection in the event we issue a large amount of debt, or in the event that we are acquired by another entity.
If the Company chooses to issue under this prospectus
debt securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference
to LIBOR, the Company has undertaken to deliver to the Ontario Securities Commission a copy of the draft prospectus supplement
or pricing supplement for such debt securities and accordingly, the prospectus supplement or pricing supplement for such debt securities
may contain additional disclosure of the use of LIBOR as it relates to such debt securities. The Company has not previously issued
any debt securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference
to LIBOR.
DESCRIPTION
OF SUBSCRIPTION RECEIPTS
The following description of the terms of the
subscription receipts sets forth certain general terms and provisions of the subscription receipts to which any prospectus supplement
may relate. We may issue subscription receipts that may be exchanged by the holders thereof for debt securities, preferred shares
or common shares upon the satisfaction of certain conditions. The particular terms and provisions of the subscription receipts
offered pursuant to an accompanying prospectus supplement, and the extent to which the general terms described below apply to those
subscription receipts, will be described in such prospectus supplement.
Subscription receipts may be offered separately
or together with debt securities, preferred shares or common shares, as the case may be. The subscription receipts will be issued
under a subscription receipt agreement. Under the subscription receipt agreement, a purchaser of subscription receipts will have
a contractual right of rescission following the issuance of debt securities, preferred shares or common shares, as the case may
be, to such purchaser, entitling the purchaser to receive the amount paid for the subscription receipts upon surrender of the debt
securities, preferred shares or common shares, as the case may be, if this prospectus, the relevant prospectus supplement, and
any amendment thereto, contains a misrepresentation, provided such remedy for rescission is exercised within 180 days of the date
the subscription receipts are issued.
Any prospectus supplement for subscription receipts
supplementing this prospectus will contain the terms and conditions and other information with respect to the subscription receipts
being offered thereby, including:
| · | the number of subscription receipts; |
| · | the price at which the subscription receipts will be offered and whether the price is payable in
instalments; |
| · | any conditions to the exchange of subscription receipts into debt securities, preferred shares
or common shares, as the case may be, and the consequences of such conditions not being satisfied; |
| · | the procedures for the exchange of the subscription receipts into debt securities, preferred shares
or common shares, as the case may be; |
| · | the number of debt securities, preferred shares or common shares, as the case may be, that may
be exchanged upon exercise of each subscription receipt; |
| · | the designation and terms of any other securities with which the subscription receipts will be
offered, if any, and the number of subscription receipts that will be offered with each security; |
| · | the dates or periods during which the subscription receipts may be exchanged into debt securities,
preferred shares or common shares; |
| · | whether such subscription receipts will be listed on any securities exchange; |
| · | any other rights, privileges, restrictions and conditions attaching to the subscription receipts;
and |
| · | any other specific terms of such subscription receipts. |
Subscription receipt certificates will be exchangeable
for new subscription receipt certificates of different denominations at the office indicated in the prospectus supplement. Prior
to the exchange of their subscription receipts, holders of subscription receipts will not have any of the rights of holders of
the securities subject to the subscription receipts. The preceding description and any description of subscription receipts in
the applicable prospectus supplement does not purport to be complete and is subject to and is qualified in its entirety by reference
to the subscription receipt agreement.
If the Company chooses to issue under this prospectus
subscription receipts that may be exchanged for debt securities in respect of which the payment of principal and/or interest may
be determined, in whole or in part, by reference to LIBOR, the Company has undertaken to deliver to the Ontario Securities Commission
a copy of the draft prospectus supplement for such subscription receipts and accordingly, the prospectus supplement for such subscription
receipts may contain additional disclosure of the use of LIBOR as it relates to the debt securities underlying such subscription
receipts. The Company has not previously issued any debt securities or subscription receipts that may be exchanged for debt securities
in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to LIBOR.
DESCRIPTION
OF WARRANTS
The following description of the terms of the
warrants sets forth certain general terms and provisions of the warrants to which any prospectus supplement may relate. We may
issue warrants for the purchase of common shares, preferred shares or debt securities. Warrants may be issued independently or
together with common shares, preferred shares or debt securities offered by any prospectus supplement and may be attached to, or
separate from, any such offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered
into between us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent in connection with
the warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners
of warrants. The following summary of certain provisions of the warrants does not purport to be complete and is subject to, and
qualified in its entirety by, reference to the applicable warrant agreement. The specific terms of the warrants, and the extent
to which the general terms described in this section apply to those warrants, will be set forth in the applicable prospectus supplement.
Debt Warrants
The prospectus supplement relating to a particular
issue of debt warrants will describe the terms of such debt warrants, including the following:
| · | the title of such debt warrants; |
| · | the offering price for such debt warrants, if any; |
| · | the aggregate number of such debt warrants; |
| · | the designation and terms of the debt securities purchasable upon exercise of such debt warrants; |
| · | if applicable, the designation and terms of the debt securities with which such debt warrants are
issued and the number of such debt warrants issued with each such debt security; |
| · | if applicable, the date from and after which such debt warrants and any debt securities issued
therewith will be separately transferable; |
| · | the principal amount of debt securities purchasable upon exercise of a debt warrant and the price
at which such principal amount of debt securities may be purchased upon exercise (which price may be payable in cash, securities,
or other property); |
| · | the date on which the right to exercise such debt warrants shall commence and the date on which
such right shall expire; |
| · | if applicable, the minimum or maximum amount of such debt warrants that may be exercised at any
one time; |
| · | whether the debt warrants represented by the debt warrant certificates or debt securities that
may be issued upon exercise of the debt warrants will be issued in registered or bearer form; |
| · | information with respect to book-entry procedures, if any; |
| · | the currency or currency units in which the offering price, if any, and the exercise price are
payable; |
| · | if applicable, a discussion of principal United States and Canadian federal income tax considerations; |
| · | the anti-dilution or adjustment provisions of such debt warrants, if any; |
| · | the redemption or call provisions, if any, applicable to such debt warrants; and |
| · | any additional terms of such debt warrants, including terms, procedures, and limitations relating
to the exchange and exercise of such debt warrants. |
If the Company chooses to issue under this prospectus
warrants for the purchase of debt securities in respect of which the payment of principal and/or interest may be determined, in
whole or in part, by reference to LIBOR, the Company has undertaken to deliver to the Ontario Securities Commission a copy of the
draft prospectus supplement for such warrants and accordingly, the prospectus supplement for such warrants may contain additional
disclosure of the use of LIBOR as it relates to the debt securities purchasable upon exercise of such warrants. The Company has
not previously issued any debt securities or warrants for the purchase of debt securities in respect of which the payment of principal
and/or interest may be determined, in whole or in part, by reference to LIBOR.
Share Warrants
The prospectus supplement relating to any particular
issue of common share warrants or preferred share warrants will describe the terms of such warrants, including the following:
| · | the title of such warrants; |
| · | the offering price for such warrants, if any; |
| · | the aggregate number of such warrants; |
| · | the designation and terms of the common shares or series of preferred shares purchasable upon exercise
of such warrants; |
| · | if applicable, the designation and terms of the offered securities with which such warrants are
issued and the number of such warrants issued with each such offered security; |
| · | if applicable, the date from and after which such warrants and any offered securities issued therewith
will be separately transferable; |
| · | the number of common shares or preferred shares purchasable upon exercise of a warrant and the
price at which such shares may be purchased upon exercise; |
| · | the date on which the right to exercise such warrants shall commence and the date on which such
right shall expire; |
| · | if applicable, the minimum or maximum amount of such warrants that may be exercised at any one
time; |
| · | the currency or currency units in which the offering price, if any, and the exercise price are
payable; |
| · | if applicable, a discussion of principal United States and Canadian federal income tax considerations; |
| · | the anti-dilution provisions of such warrants, if any; |
| · | the redemption or call provisions, if any, applicable to such warrants; and |
| · | any additional terms of such warrants, including terms, procedures and limitations relating to
the exchange and exercise of such warrants. |
Exercise of Warrants
A warrant will entitle the holder to purchase
for cash a number or an amount of securities at an exercise price that will be stated in, or that will be determinable as described
in, the applicable prospectus supplement.
Warrants may be exercised at any time up to the
close of business on the expiration date set forth in the applicable prospectus supplement. After the close of business on the
expiration date, unexercised warrants will become void.
Warrants may be exercised as set forth in the
applicable prospectus supplement. Upon receipt of payment and the warrant certificate properly completed and duly executed at the
corporate trust office of the warrant agent or any other office indicated in the prospectus supplement, we will, as soon as practicable,
forward the securities purchasable upon such exercise. If less than all of the warrants represented by such warrant certificate
are exercised, a new warrant certificate will be issued for the remaining warrants.
Issued Warrants
The Company previously issued Series A and Series
B warrants of the Company (collectively, the “Purchaser Warrants”) to Alpha Capital Anstalt and Iroquois Master
Fund Ltd. on January 14, 2010. As of the date of this prospectus, all of the Purchaser Warrants have been exercised. Therefore,
as of the date of this prospectus, the Company does not have any outstanding warrants.
DESCRIPTION
OF SHARE PURCHASE CONTRACTS
We may issue share purchase contracts, representing
contracts obligating holders to purchase from or sell to us, and obligating us to purchase from or sell to the holders, a specified
number of our common shares or preferred shares, as applicable, at a future date or dates. The price per common share or preferred
share, as applicable, may be fixed at the time the share purchase contracts are issued or may be determined by reference to a specific
formula contained in the share purchase contracts. We may issue share purchase contracts in accordance with applicable laws and
in such amounts and in as many distinct series as we wish.
The applicable prospectus supplement may contain,
where applicable, the following information about the share purchase contracts issued under it:
| · | whether the share purchase contracts obligate the holder to purchase or sell, or both purchase
and sell, our common shares or preferred shares, as applicable, and the nature and amount of each of those securities, or the method
of determining those amounts; |
| · | whether the share purchase contracts are to be prepaid or not; |
| · | whether the share purchase contracts are to be settled by delivery, or by reference or linkage
to the value or performance of our common shares or preferred shares; |
| · | any acceleration, cancellation, termination or other provisions relating to the settlement of the
share purchase contracts; and |
| · | whether the share purchase contracts will be issued in fully registered or global form. |
The applicable prospectus supplement will describe
the terms of any share purchase contracts. The preceding description and any description of share purchase contracts in the applicable
prospectus supplement does not purport to be complete and is subject to and is qualified in its entirety by reference to the share
purchase contract agreement and, if applicable, collateral arrangements and depository arrangements relating to such share purchase
contracts.
DESCRIPTION
OF UNITS
The following description of the terms of the
units sets forth certain general terms and provisions of the units to which any prospectus supplement may relate. We may issue
units comprised of one or more of the other securities described in this prospectus in any combination. Each unit will be issued
so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement may describe:
| · | the designation and terms of the units and of the securities comprising the units, including whether
and under what circumstances those securities may be held or transferred separately; |
| · | any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the
securities comprising the units; and |
| · | whether the units will be issued in fully registered or global form. |
The applicable prospectus supplement will describe
the terms of any units. The preceding description and any description of units in the applicable prospectus supplement does not
purport to be complete and is subject to and is qualified in its entirety by reference to the unit agreement and, if applicable,
collateral arrangements and depositary arrangements relating to such units.
If the Company chooses to issue under this prospectus
units comprised of debt securities in respect of which the payment of principal and/or interest may be determined, in whole or
in part, by reference to LIBOR, the Company has undertaken to deliver to the Ontario Securities Commission a copy of the draft
prospectus supplement for such units and accordingly, the prospectus supplement for such units may contain additional disclosure
of the use of LIBOR as it relates to the debt securities comprising such units. The Company has not previously issued any debt
securities or units comprised of debt securities in respect of which the payment of principal and/or interest may be determined,
in whole or in part, by reference to LIBOR.
PLAN
OF DISTRIBUTION
We may issue the securities offered by this prospectus
for cash or other consideration:
| · | to or through underwriters, dealers, placement agents or other intermediaries, or |
| · | directly to one or more purchasers. |
The prospectus supplement with respect to the
securities being offered will set forth the terms of the offering of the securities, including:
| · | the name or names of any underwriters, dealers or other placement agents, |
| · | the purchase price of, and form of consideration for, the securities and the proceeds, if any,
to us from such sale or exchange, |
| · | any delayed delivery arrangements, |
| · | any underwriting discounts and other items constituting underwriters’ compensation, |
| · | any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges
on which the securities may be listed. |
The distribution of securities may be effected
from time to time in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at prices to be negotiated with purchasers, which prices
may vary as between purchasers and during the period of distribution of the securities.
Only underwriters named in the prospectus supplement
are deemed to be underwriters in connection with the securities offered by that prospectus supplement.
If underwriters are used in the sale, the securities
will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations
of the underwriters to purchase such securities will be subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the securities of the series offered by the prospectus supplement if any of such securities are purchased. Any
public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
The securities may also be sold directly by us
at such prices and upon such terms as agreed to by us and the purchaser or through agents designated from time to time. Any agent
involved in the offering and sale of the securities in respect of which this prospectus is delivered will be named, and any commissions
payable to such agent will be set forth, in the prospectus supplement. Unless otherwise indicated in the prospectus supplement,
any agent would be acting on a best efforts basis for the period of its appointment.
We may agree to pay the underwriters, dealers
or agents a commission for various services relating to the issue and sale of any securities offered hereby. Any such commission
will be paid out of our general corporate funds.
Under agreements which may be entered into by
us, underwriters, dealers and agents who participate in the distribution of securities may be entitled to indemnification by us
against certain liabilities, including liabilities under the U.S. Securities Act of 1933 and Canadian provincial securities legislation,
or to contributions with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof.
The underwriters, dealers and agents with whom we enter into agreements may be customers of, engage in transactions with or perform
services for us in the ordinary course of business.
Each series of preferred shares, debt securities,
subscription receipts, warrants, share purchase contracts and units will be a new issue of securities with no established trading
market. Unless otherwise specified in a prospectus supplement relating to a series of preferred shares, debt securities, subscription
receipts, warrants, share purchase contracts or units, preferred shares, debt securities, subscription receipts, warrants, share
purchase contracts and units offered hereby will not be listed on any securities or stock exchange or on any automated dealer quotation
system. Certain broker-dealers may make a market in our preferred shares, debt securities, subscription receipts, warrants, share
purchase contracts or units but will not be obligated to do so and may discontinue any market-making activities at any time without
notice. No assurance can be given that any broker-dealer will make a market in the preferred shares, debt securities, subscription
receipts, warrants, share purchase contracts or units of any series or as to the liquidity of the trading market, if any, for the
preferred shares, debt securities, subscription receipts, warrants, share purchase contracts or units of any series.
In connection with any offering of securities
(excluding at-the-market distributions of equity securities), the underwriters may over-allot or effect transactions which stabilize
or maintain the market price of the securities offered at a level above that which might otherwise prevail in the open market.
Such transactions, if commenced, may be discontinued at any time. No underwriter or dealer involved in any at-the-market distribution
of equity securities, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with
such an underwriter or dealer has over-allotted, or will over-allot, securities in connection with the distribution or effect any
other transactions that are intended to stabilize or maintain the market price of the securities.
Without limiting the generality of the foregoing,
we also may issue some or all of the securities offered by this prospectus in exchange for property, including securities or assets
of ours or of other companies which we may acquire in the future.
A selling securityholder may offer securities
using any of the methods described above through underwriters, dealers or other placement agents or in direct sales. The applicable
prospectus supplement will describe the selling securityholder’s method of distribution, will name any underwriter, dealer
or other placement agent of the selling securityholder and will describe the compensation to be paid to any of these parties. See
“Selling Securityholders” below.
selling
securityholders
Securities may be sold under this prospectus by
way of secondary offering by or for the account of our securityholders who may include certain directors, executive officers, employees
or certain other holders of our securities. The prospectus supplement for or including any offering of securities by selling securityholders
will include the following information:
| · | the names of the selling securityholders; |
| · | the number of securities owned by each of the selling securityholders; |
| · | the number of securities being distributed for the accounts of the selling securityholders; |
| · | the number of the securities of the Company of any class to be owned by the selling securityholders
after the distribution and the percentage that number represents of the total number of securities of that class outstanding; |
| · | whether the securities are owned by the selling securityholder both of record and beneficially,
of record only, or beneficially only; and |
| · | if the selling securityholder acquired any securities in the 24 months preceding the date of the
prospectus supplement, the date the selling securityholder acquired the securities, and if the selling securityholder acquired
any securities in the 12 months preceding the date of the prospectus supplement, the cost thereof to the securityholder in the
aggregate and on an average per security basis. |
CERTAIN
INCOME TAX CONSIDERATIONS
The applicable prospectus supplement may describe
the principal Canadian federal income tax considerations generally applicable to investors described therein of purchasing, holding
and disposing of securities, including, in the case of an investor who is not a resident of Canada, Canadian non-resident withholding
tax considerations.
The applicable prospectus supplement may also
describe certain U.S. federal income tax considerations generally applicable to the purchase, holding and disposition of the securities
by an investor who is a United States person, including, to the extent applicable, certain U.S. federal income tax rules pertaining
to capital gains and ordinary income treatment, original issue discount, whether or not we will be considered a passive foreign
investment company (and if so, the tax consequences to a United States shareholder), backup withholding and the foreign tax credit,
and certain U.S. federal income tax consequences relating to securities payable in a currency other than U.S. dollars or containing
early redemption provisions or other special terms.
DOCUMENTS
INCORPORATED BY REFERENCE
The following documents filed by us with the securities
commission or similar authority in each of the provinces of Canada and filed with or furnished to the SEC under the U.S. Securities
Exchange Act of 1934, as amended, are specifically incorporated by reference in this prospectus:
| 1. | our annual information form for the year ended December 31, 2013; |
| 2. | our audited consolidated financial statements and results of operations of our company as at and
for the years ended December 31, 2013 and December 31, 2012, together with the notes thereto and the independent auditor’s
report thereon; and |
| 3. | our management’s discussion and analysis of financial condition and results of operations
as at and for the year ended December 31, 2013; and |
| 4. | our management proxy circular dated April 1, 2013 in connection with our annual meeting of shareholders
held on May 8, 2013. |
Any documents of the type described in section
11.1 of Form 44-101F1 – Short Form Prospectus filed by us and any template version of marketing materials (each as
defined in National Instrument 41-101 – General Prospectus Requirements) filed by us with the securities regulatory
authorities in Canada after the date of this prospectus and prior to the termination of any offering of securities hereunder shall
be deemed to be incorporated by reference into this prospectus. In addition, any report filed with the SEC by us pursuant to section
13(a), 13(c), 14 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, or submitted by us to the SEC pursuant to Rule
12g3-2(b) under the U.S. Securities Exchange Act of 1934, as amended, after the date of this prospectus shall be deemed to be incorporated
by reference into this prospectus and the registration statement of which this prospectus forms a part, provided that any reports
on Form 6-K shall be so deemed to be incorporated by reference only if and to the extent expressly provided in such Form 6-K.
Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this prospectus
to the extent that a statement contained herein, or in any other subsequently filed document which also is or is deemed to be incorporated
by reference herein, modifies or supersedes that statement. The modifying or superseding statement need not state that it has modified
or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The
making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material
fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which
it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a
part of this prospectus.
Upon a new annual information form and new annual
financial statements being filed with and, accepted by the applicable securities regulatory authorities during the currency of
this prospectus, the previous annual information form, the previous annual financial statements and all interim financial statements,
material change reports and information circulars filed prior to the commencement of the then current fiscal year will be deemed
no longer to be incorporated into this prospectus for purposes of future offers and sales of securities hereunder.
A prospectus supplement containing the specific
terms of an offering of our securities will be delivered to purchasers of such securities together with this prospectus and will
be deemed to be incorporated into this prospectus as of the date of such prospectus supplement but only for purposes of the offering
of securities covered by that prospectus supplement.
When we update our disclosure of interest coverage
ratios by a prospectus supplement, the prospectus supplement filed with applicable securities regulatory authorities that contains
the most recent updated disclosure of interest coverage ratios and any prospectus supplement supplying any additional or updated
information we may elect to include (provided that such information does not describe a material change that has not already been
the subject of a material change report or a prospectus amendment) will be delivered to purchasers of securities together with
this prospectus and will be deemed to be incorporated into this prospectus as of the date of the prospectus supplement.
Information has been incorporated by reference
in this prospectus from documents filed with securities commissions or similar authorities in Canada and the SEC. Copies of
the documents incorporated herein by reference may be obtained on request without charge from Robert Motz, Chief Financial Officer
and Corporate Secretary, at 220 Admiral Boulevard, Mississauga, Ontario, Canada L5T 2N6 (Telephone: (905) 361-3638). Copies of
documents that we have filed with the securities regulatory authorities in Canada may be obtained at the Canadian Securities Administrators’
website at www.sedar.com.
We are subject to the informational requirements
of the U.S. Securities Exchange Act of 1934, as amended, and in accordance therewith file or furnish reports and other information
with or to the SEC. Our recent SEC filings may be obtained over the Internet at the SEC’s website at www.sec.gov. You may
also read and copy any document we file or furnish with or to the SEC at the public reference facilities maintained by the SEC
at 100 F Street, N.E., Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on the operations of the public
reference facilities and copying charges.
LEGAL
MATTERS
Certain legal matters relating to the securities
offered by this short form base shelf prospectus will be passed upon on our behalf by Torys LLP. As of the date hereof, the
lawyers of Torys LLP, directly or indirectly, in aggregate, own less than one percent of our outstanding common shares.
auditors,
transfer agents and registrars
Our auditors are PricewaterhouseCoopers LLP, Chartered
Accountants, PwC Tower, Suite 2600, 18 York Street, Toronto, Ontario, Canada M5J 0B2. PricewaterhouseCoopers LLC is independent
of us within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.
Our transfer agent and registrar in Canada is
CST Trust Company at its principal office in Toronto, Ontario, Canada and the co-transfer agent and co-registrar for our common
shares in the United States is Computershare Investor Services LLC at its offices in New York, New York.
AGENT
FOR SERVICE OF PROCESS
Henry J. Gnacke, a director of the Company, resides
outside of Canada and has appointed the following agent for service of process:
|
Name and Address of Agent |
Henry J. Gnacke |
Hydrogenics Corporation |
|
220 Admiral Boulevard |
|
Mississauga, Ontario |
|
L5T 2N6 |
Purchasers are advised that it may not be possible
for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise
organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service
of process.
STATUTORY
and contractual RIGHTS OF WITHDRAWAL AND RESCISSION
Securities legislation in certain of the provinces
of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised
within two business days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces, the securities
legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages
if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the remedies
for rescission, revisions of the price or damages are exercised by the purchaser within the time limit prescribed by the securities
legislation of the purchaser’s province. The purchaser should refer to any applicable provisions of the securities legislation
of the purchaser’s province for the particulars of these rights or consult with a legal adviser. Rights and remedies also
may be available to purchasers under U.S. law; purchasers may wish to consult with a U.S. legal adviser for particulars of these
rights.
In an offering of preferred shares, warrants,
subscription receipts, share purchase contracts, or units comprised of one or more of the foregoing which are convertible, exchangeable
or exercisable into other securities of the Company (collectively, “Convertible Securities”), investors are
cautioned that the statutory right of action for damages for a misrepresentation contained in the prospectus is limited, in certain
provincial securities legislation, to the price at which the Convertible Securities are offered to the public under the prospectus
offering. This means that, under the securities legislation of certain provinces, if the purchaser pays additional amounts upon
conversion of the security, those amounts may not be recoverable under the statutory right of action for damages that applies in
those provinces. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s
province for the particulars of this right of action for damages or consult with a legal adviser. By virtue of their purchase of
Convertible Securities, original purchasers will have a contractual right of rescission against the Company in respect of the conversion,
exchange or exercise of such Convertible Securities. The contractual right of rescission will entitle such original purchasers
to receive the amount paid upon conversion, exchange or exercise, upon surrender of the securities issued to such purchaser upon
conversion of such Convertible Securities, in the event that this prospectus, as supplemented by an applicable prospectus supplement
relating to such Convertible Securities, as amended, contains a misrepresentation, provided that the right of rescission is exercised
within 180 days of the date of the purchase of the Convertible Securities. This contractual right of rescission will be consistent
with the statutory right of rescission described under section 130 of the Securities Act (Ontario), and is in addition to
any other right or remedy available to original purchasers under section 130 the Securities Act (Ontario) or otherwise at
law. The purchaser should refer to any applicable provisions of the securities legislation of the province in which the purchaser
resides for the particulars of these rights, or consult with a legal advisor.
CERTIFICATE
OF THE COMPANY
Date: April 8, 2014
This short form prospectus, together with the
documents incorporated in the prospectus by reference, will, as of the date of the last supplement to this prospectus relating
to the securities offered by this prospectus and the prospectus supplement(s), constitute full, true and plain disclosure of all
material facts relating to the securities offered by this prospectus and the prospectus supplement(s) as required by the securities
legislation of each of the provinces of Canada, except Québec.
(Signed) Daryl Wilson
Chief Executive Officer |
(Signed) Robert Motz
Chief Financial Officer |
On behalf of the Board of Directors
(Signed) Douglas Alexander
Director |
(Signed) Donald Lowry
Director |
$$16,499,990
HYDROGENICS CORPORATION
_________
PROSPECTUS SUPPLEMENT
_________
Craig-Hallum Capital
Group
Sole Book-Running Manager
Roth Capital Partners
Co-Manager
The date of this prospectus supplement is December 11,
2015
Hydrogenics (NASDAQ:HYGS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hydrogenics (NASDAQ:HYGS)
Historical Stock Chart
From Apr 2023 to Apr 2024