As filed with the Securities and Exchange
Commission September 23, 2016
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Registration No. 333-_______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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Skyline
Medical Inc.
(Exact name of registrant as specified
in its charter)
Delaware
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3842
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33-1007393
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(State or jurisdiction
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(Primary Standard Industrial
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(I.R.S. Employer
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of incorporation or organization)
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Classification Code Number)
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Identification No.)
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2915 Commers Drive, Suite 900
Eagan, Minnesota 55121
(651) 389-4800
(Address and telephone number of registrant’s
principal executive offices and principal place of business)
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Bob Myers
Chief Financial Officer
Skyline Medical Inc.
2915 Commers Drive, Suite 900
Eagan, Minnesota 55121
(651) 389-4800
(Name, address and telephone
number of agent for service)
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Copy to:
Martin R. Rosenbaum, Esq.
Maslon LLP
3300 Wells Fargo Center
90 South 7th Street
Minneapolis, Minnesota 55402
Telephone: (612) 672-8200
Facsimile: (612) 672-8397
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Approximate date of commencement of proposed
sale to the public: From time to time on or after the effective date of this Registration Statement.
If the only securities being registered on
this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest reinvestment plans, check the following box: ☒
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement
pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If this Form is a post-effective amendment
to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes
of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one)
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Large accelerated filer
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Accelerated
filer ☐
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Non-accelerated filer
☐
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Smaller reporting
company ☒
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(Do not check if a smaller reporting company.)
CALCULATION OF REGISTRATION FEE
Title Of Each Class Of
Securities To Be Registered
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Proposed Maximum
Aggregate
Offering Price (1)(2)(3)
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Amount Of
Registration Fee (1)(4)
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Common stock, par value $.01 per share
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—
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—
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Preferred stock
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—
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—
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Warrants
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—
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—
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Debt Securities
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—
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—
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Units
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—
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—
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Total
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$20,000,000
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$2,014
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(1)
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Not specified as to each class of securities to be registered pursuant to General Instruction II.D
of a Registration Statement on Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”). The registrant
is hereby registering such indeterminate number or amount, as the case may be, of the securities of each identified class as may
from time to time be offered at indeterminate prices, with a total aggregate principal amount or initial purchase price not to
exceed $20.0 million. Securities registered hereby may be offered for U.S. dollars or the equivalent thereof in foreign currencies.
Securities registered hereby may be sold separately or in combination with other securities registered hereby.
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(2)
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The securities being registered hereby may be convertible into or exchangeable or exercisable for other securities of any identified
class. In addition to the securities that may be issued directly under this registration statement, there is being registered hereunder
such indeterminate aggregate number or amount, as the case may be, of the securities of each identified class as may from time
to time be issued upon the conversion, exchange, settlement or exercise of other securities offered hereby. Separate consideration
may or may not be received for securities that are issued upon the conversion or exercise of, or in exchange for, other securities
or that are issued in units.
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(3)
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Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act, and exclusive
of accrued interest, distributions and dividends, if any. The proposed maximum offering price will be determined from time to time
in connection with the issuance of the securities registered hereunder.
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(4)
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Calculated pursuant to Rule 457(o) under the Securities Act.
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The Registrant
hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete
and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission
is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in
any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION
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DATED September 23,
2016
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$20,000,000
Skyline Medical Inc.
Common Stock
Preferred Stock
Warrants to Purchase Common Stock or Preferred Stock
Debt Securities
Units
We may offer from time to time securities
described in this prospectus separately or together in any combination. We may offer and sell such securities in one or more offerings
with a total aggregate principal amount or initial purchase price not to exceed $20.0 million. These securities may be convertible
into or exchangeable for our other securities. This prospectus provides a general description of these securities. We will provide
you with specific information about the offering and terms of these securities in supplements to this prospectus. The prospectus
supplement may also add to, update, supplement or clarify information contained in this prospectus. This prospectus may not be
used to offer or sell securities unless accompanied by a prospectus supplement.
You should carefully read this prospectus
and any applicable prospectus supplement, together with any documents incorporated by reference, before you invest in our common
stock.
We may offer and sell these securities
on a continuous or delayed basis, at prices and on terms to be determined at the time of any particular offering, directly to purchasers,
through agents, dealers or underwriters as designated from time to time, or through a combination of these methods. See “Plan
of Distribution.” The prospectus supplement for each offering will describe in detail the plan of distribution for that offering
and will set forth the names of underwriters, dealers or agents, if any, involved in the offering and any applicable discounts
or commissions payable to them. Net proceeds from the sale of the securities also will be set forth in the applicable prospectus
supplement.
Unless otherwise stated in a prospectus
supplement, none of these securities will be listed on any securities exchange. Our common stock is listed on The NASDAQ Capital
Market under the symbol “SKLN.” The last reported per share price for our common stock was $0.178, as quoted on The
NASDAQ Capital Market on September 19, 2016. As of September 19, 2016, the aggregate market value of our outstanding common stock
held by our non-affiliates, as calculated pursuant to the rules of the Securities and Exchange Commission, was $15,035,924.15.
Pursuant to General Instruction I.B.6 of Form S-3 (“Instruction I.B.6”), in no event will we sell securities in a public
primary offering with a value exceeding more than one-third of our “public float” (the market value of our common stock
held by our non-affiliates) in any 12-month period so long as our public float remains below $75,000,000. We have not sold any
of our common stock or securities convertible into our common stock during the 12 calendar months prior to and including the date
of this prospectus pursuant to Instruction I.B.6.
Investing in our securities involves
risk a high degree of risk. See “Risk Factors” beginning on page 6 of this prospectus. You should carefully read
and consider the risk factors described in the applicable prospectus supplement and in the documents we incorporate by reference
before you invest in our securities.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy
of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2016.
Table of Contents
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Page
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About this Prospectus
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i
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The Company
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1
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Risk Factors
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6
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Note Regarding Forward Looking Statements
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7
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Ratio of Earnings to Fixed Charges
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8
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Use of Proceeds
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9
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Description of Capital Stock
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10
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Description of Warrants
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15
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Description of Debt Securities
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16
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Description of Units
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23
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Plan of Distribution
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24
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Legal Matters
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26
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Experts
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26
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Where You Can Find More Information
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26
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Important Information Incorporated by Reference
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26
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ABOUT THIS PROSPECTUS
This prospectus is
part of a “shelf” registration statement on Form S-3 that we filed with the Securities and Exchange Commission,
referred to as the “SEC,” under the Securities Act of 1933, as amended, referred to as the “Securities Act.”
Under this shelf registration statement, we are registering the securities described in this prospectus with a total aggregate
principal amount or initial purchase price not to exceed $20.0 million. We may, from time to time, offer and sell such securities,
or any combination of such securities, in one or more offerings.
This prospectus provides
you with a general description of the securities we may offer. Each time we offer or sell securities, we will provide you with
a prospectus supplement containing specific information about the terms of that offering. The prospectus supplement may also add
to, update, supplement or clarify information contained or incorporated by reference, as applicable, in this prospectus. If there
is any inconsistency between the information in this prospectus and the information in the prospectus supplement, you should rely
on the information in the prospectus supplement. This prospectus does not contain all of the information set forth in the registration
statement and the exhibits to the registration statement. For further information concerning us and the securities, you should
read the entire registration statement and the additional information described under “Documents Incorporated by Reference”
below
Unless the context
requires otherwise or unless otherwise indicated, all references to “Skyline Medical,” “Company,” “we,”
“our,” or “us” refer collectively to Skyline Medical Inc.
You should rely
only on the information contained or incorporated by reference, as applicable, in this prospectus, any prospectus supplement, or
other offering materials related to an offering of securities described in this prospectus. We have not authorized anyone to provide
you with different or additional information. If anyone provides you with different or additional information, you should not rely
on it.
You should not assume
that the information contained or incorporated by reference, as applicable, in this prospectus, any prospectus supplement, or other
offering materials related to an offering of securities described in this prospectus is accurate as of any date other than the
date of that document. Neither the delivery of this prospectus, any prospectus supplement or other offering materials related to
an offering of securities described in this prospectus, nor any distribution of securities pursuant to this prospectus, any such
prospectus supplement, or other offering materials shall, under any circumstances, create any implication that there has been no
change in the information set forth or incorporated by reference, as applicable, in this prospectus, any such prospectus supplement
or other offering materials since the date of each such document. Our business, financial condition, results of operations and
prospects may have changed since those dates.
This prospectus
does not constitute, and any prospectus supplement or other offering materials related to an offering of securities described in
this prospectus will not constitute, an offer to sell, or a solicitation of an offer to purchase, the offered securities in any
jurisdiction to or from any person to whom or from whom it is unlawful to make such offer or solicitation in such jurisdiction.
THE COMPANY
This summary contains basic information
about us. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under
“Risk Factors.” Some of the statements contained in this prospectus, including statements under this summary and “Risk
Factors” are forward-looking statements and may involve a number of risks and uncertainties. We note that our actual results
and future events may differ significantly based upon a number of factors. You should not put undue reliance on the forward-looking
statements in this document, which speak only as of the date on the cover of this prospectus. References to “we,” “our,”
“us,” the “Company,” or “Skyline” refer to Skyline Medical Inc., a Delaware corporation.
Business Overview
Skyline Medical Inc. is a medical device
company manufacturing an environmentally conscientious system for the collection and disposal of infectious fluids that result
from surgical procedures and post-operative care. We own patent rights to our products, which consist of the STREAMWAY®FMS
and distribute our products to medical facilities where bodily and irrigation fluids produced during surgical procedures must be
contained, measured, documented, and disposed. Our products minimize the exposure potential to the healthcare workers who handle
such fluids. Our goal is to create products that dramatically reduce staff exposure without significant changes to established
operative procedures, historically a major stumbling block to innovation and product introduction. In addition to simplifying the
handling of these fluids, we believe our technologies provide cost savings to facilities over the aggregate costs incurred today
using the traditional canister method of collection, neutralization, and disposal. We sell our products through an experienced
in-house sales force. The Company has one regional manager currently on staff. We also intend to utilize independent distributors
in the United States and Europe, initially, and eventually to other areas of the world.
The STREAMWAY FMS is a wall mounted fully
automated system that disposes of an unlimited amount of suctioned fluid providing uninterrupted performance for surgeons while
virtually eliminating healthcare workers exposure to potentially infectious fluids found in the surgical environment. The system
also provides an innovative way to dispose of ascetic fluid with no evac bottles, suction canisters, transport or risk of exposure.
The Company also manufactures and sells two disposable products required for system operation: a bifurcated single procedure filter
with tissue trap and a single use bottle of cleaning solution. Both items are used on a single procedure basis and must be discarded
after use.
Skyline’s virtually hands free direct-to-drain
technology (a) significantly reduce the risk of healthcare worker exposure to these infectious fluids by replacing canisters, (b)
further reduces the risk of worker exposure when compared to powered canister technology that requires transport to and from the
operating room, (c) reduce the cost per procedure for handling these fluids, and (d) enhance the surgical team’s ability
to collect data to accurately assess the patient’s status during and after procedures.
Skyline believes that the STREAMWAY FMS
is unique to the industry in that it allows for continuous suction to the surgical field and provides unlimited capacity to the
user so no surgical procedure will ever have to be interrupted to change canisters. It is wall mounted and takes up no valuable
operating room space. The FMS can replace the manual process of collecting fluids in canisters and transporting and dumping in
sinks outside of the operating room that is still being used by many hospitals and surgical centers.
Skyline believes its products provide substantial
cost savings and improvements in safety in facilities that still use manual processes. In cases where healthcare organizations
re-use canisters, the FMS cleaning process eliminates the need for cleaning of canisters for re-use. The FMS reduces the safety
issues facing operating room nurses, the cost of the handling process, and the amount of infectious waste generated when the traditional
method of disposing of canisters is used. The FMS is fully automated, does not require transport to and from the operating room
and eliminates any canister that requires emptying. It is positioned to penetrate its market segment due to its virtually hands
free operation, simple design, ease of use, continuous suction, continuous flow, unlimited capacity and efficiency in removal of
infectious waste with minimal exposure of operating room personnel to potentially infectious material.
Market—
Infectious and Bio-hazardous Waste Management
There has long been recognition of the
collective potential for ill effects to healthcare workers from exposure to infectious/bio-hazardous materials federal and state
regulatory agencies have issued mandatory guidelines for the control of such materials, and in particular, bloodborne pathogens.
The medical device industry has responded to this need by developing various products and technologies to limit exposure or to
alert workers to potential exposure. The presence of infectious materials is most prevalent in the surgical suite and post-operative
care units where often, large amounts of bodily fluids, including blood, bodily and irrigation fluids are continuously removed
from the patient during the surgical procedure. Surgical teams and post-operative care personnel may be exposed to these potentially
serious hazards during the procedure via direct contact of blood materials or more indirectly via splash and spray. According to
the Occupational Safety and Health Administration (“OSHA”), workers in many different occupations are at risk of exposure
to bloodborne pathogens, including Hepatitis B and C, and HIV/AIDS. First aid team members, housekeeping personnel, nurses and
other healthcare providers are examples of workers who may be at risk of exposure.
According to the American Hospital Association’s
(AHA) Hospital Statistics, 2013 edition, America’s hospitals performed approximately 86 million surgeries. This number does
not include the many procedures performed at surgery centers across the country. The majority of these procedures produce potentially
infectious materials that must be disposed with the lowest possible risk of cross-contamination to healthcare workers. Current
standards of care allow for these fluids to be retained in canisters, located in the operating room where they can be monitored
throughout the surgical procedure. Once the procedure is complete, these canisters and their contents are disposed using a variety
of methods, all of which include manual handling and result in a heightened risk to healthcare workers for exposure to their contents.
We expect the hospital surgery market to
continue to increase due to population growth, the aging of the population, expansion of surgical procedures to new areas, for
example, use of the endoscope, which requires more fluid management, and new medical technology.
There are currently approximately 40,000
operating rooms and surgical centers in the U.S. (AHA,
Hospital Statistics,
2008). The hospital market has typically been
somewhat independent of the U.S. economy; therefore, we believe that our targeted market is not cyclical, and the demand for our
products will not be heavily dependent on the state of the economy. We benefit by having our products address both the procedure
market of nearly 51.6 million inpatient procedures (CDC, National Hospital Discharge Survey: 2010 table) as well as the hospital
operating room market (approximately 40,000 operating rooms).
Current Techniques of Collecting Infectious Fluids
Typically, during the course of the procedure,
fluids are continuously removed from the surgical site via wall suction and tubing and collected in large canisters (1,500 –
3,000 milliliters (ml) capacity or 1.5–3.0 liters) adjacent to the surgical table. These canisters, made of glass or high
impact plastic, have graduated markers on them allowing the surgical team to make estimates of fluid loss in the patient both intra-operatively
as well as for post-operative documentation. Fluid contents are retained in the canisters until the procedure is completed or until
the canister is full and needs to be removed. During the procedure the surgical team routinely monitors fluid loss using the measurement
calibrations on the canister and by comparing these fluid volumes to quantities of saline fluid introduced to provide irrigation
of tissue for enhanced visualization and to prevent drying of exposed tissues. After the procedure is completed the fluids contained
in the canisters are measured and a calculation of total blood loss is determined. This is done to ensure that no excess fluids
of any type remain within the body cavity or that no excessive blood loss has occurred, both circumstances that may place the patient
at an increased risk post-operatively.
Once total blood loss has been calculated,
the healthcare personnel must dispose of the fluids. This is typically done by manually transporting the fluids from
the operating room to a waste station and directly pouring the material into a sink that drains to the sanitary sewer where it
is subsequently treated by the local waste management facility, a process that exposes the healthcare worker to the most risk for
direct contact or splash exposure. Once emptied these canisters are placed in large, red pigmented, trash bags and disposed
of as infectious waste – a process commonly referred to as “red-bagging.”
Alternatively, the canisters may be opened
in the operating room and a gel-forming powder is poured into the canister, rendering the material gelatinous. These gelled canisters
are then red-bagged in their entirety and removed to a bio-hazardous/infectious holding area for disposal. In larger facilities
the canisters, whether pre-treated with gel or not, are often removed to large carts and transported to a separate special handling
area where they are processed and prepared for disposal. Material that has been red-bagged is disposed of separately, and more
expensively, from other medical and non-medical waste by companies specializing in that method of disposal.
Although all of these protection and disposal
techniques are helpful, they represent a piecemeal approach to the problem of safely disposing of infectious fluids and fall short
of providing adequate protection for the surgical team and other workers exposed to infectious waste. A major spill
of fluid from a canister, whether by direct contact as a result of leakage or breakage, splash associated with the opening of the
canister lid to add gel, while pouring liquid contents into a hopper, or during the disposal process, is cause for concern of acute
exposure to human blood components–one of the most serious risks any healthcare worker faces in the performance of his or
her job. Once a spill occurs, the entire area must be cleaned and disinfected and the exposed worker faces a potential
of infection from bloodborne pathogens. These pathogens include, but are not limited to, Hepatitis B and C, HIV/AIDS,
HPV, and other infectious agents. Given the current legal liability environment the hospital, unable to identify at-risk
patients due to concerns over patient rights and confidentiality, must treat every exposure incident as a potentially infectious
incident and treat the exposed employee according to a specific protocol that is both costly to the facility and stressful to the
affected employee and his or her co-workers. In cases of possible exposure to communicable disease, the employee could
be placed on paid administrative leave, frequently involving worker’s compensation, and additional workers must be assigned
to cover the affected employee’s responsibilities. The facility bears the cost of both the loss of the affected
worker and the replacement healthcare worker in addition to any ongoing health screening and testing of the affected worker to
confirm if any disease has been contracted from the exposure incident. Canisters are the most prevalent means of collecting
and disposing of infectious fluids in hospitals today. Traditional, non-powered canisters and related suction and fluid
disposable products are exempt and do not require FDA clearance.
Products
The STREAMWAY Fluid Management System
(“FMS”)
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The STREAMWAY FMS suctions surgical waste fluid from the patient using standard surgical tubing.
The surgical waste fluid passes through our proprietary disposable filters and into the STREAMWAY FMS. The STREAMWAY FMS maintains
continuous suction to the surgical field at all times. A simple, easy to use Human Interface Display screen guides the user through
the set up process, ensuring that a safe vacuum level is identified and set by the user for each procedure and additionally guides
them through the cleaning process.
In contrast to competitive products, the
wall-mounted FMS does not take up any operating room floor space and it does not require the use of any external canisters or handling
by operating room personnel. It does require a dedicated system in each operating room where it is to be used. The
FMS is the only known direct-to-drain system that is wall-mounted and designed to collect, measure and dispose of, surgical waste.
Other systems on the market are portable, meaning that they are rolled to the bedside for the surgical case and then rolled to
a cleaning area, after the surgery is complete, and use canisters, which still require processing or require a secondary device
(such as a docking station) to dispose of the fluid in the sanitary sewer after it has been collected. They are essentially
powered canisters.
The FMS system may be installed on or in
the wall during new construction or renovation or installed in a current operating room by connecting the device to the hospital’s
existing sanitary sewer drain and wall suction systems. With new construction or renovation, the system will be placed in the wall
and the incremental costs are minimal, limited to connectors to the hospital drain and suction systems (which systems are already
required in an operating room), the construction of a frame to hold the FMS in position, and minimal labor.
The Disposable Kit—
The disposable
kit is an integral, critical component of the FMS and our total value proposition to the customer. It consists of a
proprietary, pre-measured amount of cleaning solution in a plastic bottle that attaches to the FMS. The disposal cleaning
kit also includes an in-line filter with single or multiple suction ports. The proprietary cleaning solution placed
in the specially designed holder is attached and recommended to be used following each surgical procedure. Due to the
nature of the fluids and particles removed during surgical procedures, the FMS is recommended to be cleaned following each use.
The disposables have the “razor blade business model” characteristic with an ongoing stream of revenue for every FMS
unit installed, and revenues from the sale of the kits are expected to be significantly higher over time than the revenues from
the sales of the unit. Our disposable, dual use filter is designed specifically for use only on our FMS. The filter
is used only once per procedure followed by immediate disposal. Our operation instructions and warranty require that our filter
is used for every procedure. There are no known off the shelf filters that will fit our FMS. We have developed a more effective
and cost efficient filter, with intent to patent. We have exclusive distribution rights to the disposable fluid and facilitate
the use of only our fluid for cleaning following procedures by incorporating a special adapter to connect the fluid to the connector
on the FMS system. We will also tie the fluid usage, which we will keep track of with the FMS software, to the product
warranty.
Corporate Strategy—
Our strategy
is focused on expansion within our core product and market segments, while utilizing a progressive approach to manufacturing and
marketing to ensure maximum flexibility and profitability.
Our strategy is to:
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Develop a complete line of wall-mounted fluid evacuation systems for use in hospital operating rooms, radiological rooms and free standing surgery centers as well as clinics and physicians’ offices.
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Provide products that greatly reduce healthcare worker and patient exposure to harmful materials present in infectious fluids and that contribute to an adverse working environment.
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Utilize existing medical products, independent distributors and manufacturer’s representatives to achieve the desired market penetration.
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Continue to utilize operating room consultants, builders and architects as referrals to hospitals and day surgery centers.
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Other strategies may also include:
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Employing a lean operating structure, while utilizing the latest trends and technologies in manufacturing and marketing, to achieve both market share growth and projected profitability.
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Providing a leasing program and/or “pay per use” program as alternatives to purchasing.
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Providing service contracts to establish an additional revenue stream.
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Utilizing the manufacturing experience of our management team to develop sources of supply and manufacturing to reduce costs while still obtaining excellent quality. While cost is not a major consideration in the roll-out of leading edge products, we believe that being a low-cost provider will be important long term.
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Offering an innovative warranty program that is contingent on the exclusive use of our disposable kit to enhance the success of our after-market disposable products.
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Risks
We are subject to a number of risks.
You should read the “Risk Factors” section of this prospectus beginning on page 6 for a discussion of factors to
consider carefully before deciding to invest in shares of our common stock.
Corporate Information
The Company was originally incorporated
on April 23, 2002 in Minnesota as BioDrain Medical, Inc. Effective August 6, 2013, the Company changed its name to Skyline Medical
Inc. Pursuant to an Agreement and Plan of Merger effective December 16, 2013, the Company merged with and into a Delaware corporation
with the same name that was its wholly-owned subsidiary, with such Delaware corporation as the surviving corporation of the merger.
Our address is 2915
Commers Drive, Suite 900, Eagan, Minnesota 55121. Our telephone number is (651) 389-4800, and our website address is
www.skylinemedical.com
.
Recent Developments
On August 30, 2016, the Company entered
into a letter of intent to form a joint venture with Electronic On-Ramp, Inc. (“EOR”). EOR’s partner contracts
with government agencies are expected to provide the Company with access to bid on procurement contracts for up to $550 million
or more in federal funds budgeted for health, security, life safety systems support, humanitarian assistance and disaster preparedness.
At a special meeting of stockholders held
on September 15, 2016, the Company’s stockholders approved (i) an amendment to the Company’s certificate of incorporation
to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000 and (ii) an amendment to the Company’s
certificate of incorporation to effect a reverse stock split of the outstanding shares of its common stock at a ratio of not less
than one-for-two (1:2) and not more than one-for-twenty-five (1:25), with the exact ratio to be set at a whole number within this
range as determined by the Company’s Board of Directors.
On September 16, 2016, the Company filed
a Certificate of Amendment to its Certificate of Incorporation of to effect the increase the authorized capital stock from 100,000,000
shares to 200,000,000 shares of common stock, which was approved by the Company’s stockholders as described above.
On September 20, 2016, the Company entered
into a partnership and exclusive reseller agreement with GLG Pharma (“GLG”). Under the terms of the agreement, GLG
intends to develop rapid diagnostic tests that utilize fluid and tissue collected by the STREAMWAY System during procedures. The
Company will issue an aggregate of 10,000,000 shares common stock to GLG in four separate tranches of 2,500,000 shares of common
stock in each tranche. The shares reserved in each tranche will be released after the achievement of certain development milestones
designated in the agreement. In addition, the Company will pay a royalty to GLG on the sale of individual tests.
RISK FACTORS
An investment in our
securities involves a number of risks. Before deciding to invest in our securities, you should carefully consider the
risks described below and discussed under the section captioned “Risk Factors” contained in our Annual Report on Form
10-K for the year ended December 31, 2015 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which are
incorporated by reference in this prospectus, together with the other information in this prospectus, the information and documents
incorporated by reference herein, and in any prospectus supplement or free writing prospectus that we have authorized for use in
connection with an offering. If any of these risks actually occurs, our business, financial condition, results of operations or
cash flow could be harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part
of your investment. The risks described below and in the documents referenced above are not the only ones that we face. Additional
risks not presently known to us or that we currently deem immaterial may also affect our business.
Our common stock is subject to possible
delisting from The NASDAQ Capital Market.
We received a notice
from The Nasdaq Stock Market LLC (“Nasdaq”) on April 13, 2016, informing the Company that because the closing bid price
for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company does not comply
with the minimum closing bid price requirement for continued listing on The Nasdaq Capital Market. We also received a notice from
Nasdaq on August 18, 2016, informing the Company that due to the Company’s failure to maintain a minimum of $2,500,000 in
stockholders’ equity (or meet alternative tests for its market value of listed securities or net income from continuing operations)
the Company does not comply with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital
Market.
Nasdaq has broad authority
to determine compliance and continued listing. We cannot assure you that we will be able to satisfy requirements described above
or, even if we do, that we will remain in compliance with all of Nasdaq’s continued listing requirements in the future. In
the event our common stock is delisted from the NASDAQ Capital Market and we are also unable to maintain a listing on another alternative
exchange, trading in our common stock could thereafter be conducted in FINRA’s OTC Bulletin Board or in the over-the-counter
markets in the so-called pink sheets. In such event, the liquidity of our common stock would likely be impaired, not only in the
number of shares which could be bought and sold, but also through delays in the timing of the transactions, and there would likely
be a reduction in our coverage by security analysts and the news media, thereby resulting in lower prices for our common stock
than might otherwise prevail.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements made in this prospectus
are “forward-looking statements” that indicate certain risks and uncertainties related to the Company, many of which
are beyond the Company’s control. The Company’s actual results could differ materially and adversely from those anticipated
in such forward-looking statements as a result of certain factors, including those set forth below and elsewhere in this report.
Important factors that may cause actual results to differ from projections include:
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Inability to raise sufficient additional capital to operate our business;
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Unexpected costs and operating deficits, and lower than expected sales and revenues, if any;
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Adverse economic conditions;
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Adverse results of any legal proceedings;
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The volatility of our operating results and financial condition;
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Inability to attract or retain qualified senior management personnel, including sales and marketing personnel; and
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Other specific risks that may be alluded to in this report.
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All statements other than statements of
historical facts, included in this report regarding the Company’s growth strategy, future operations, financial position,
estimated revenue or losses, projected costs, prospects and plans and objectives of management are forward-looking statements.
When used in this report, the words “will”, “may”, “believe”, “anticipate”, “intend”,
“estimate”, “expect”, “project”, “plan” and similar expressions are intended to
identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking
statements speak only as of the date of this report. The Company does not undertake any obligation to update any forward-looking
statements or other information contained herein. Potential investors should not place undue reliance on these forward-looking
statements. Although Skyline believes that its plans, intentions and expectations reflected in or suggested by the forward-looking
statements in this report are reasonable the Company cannot assure potential investors that these plans, intentions or expectations
will be achieved. The Company discloses important factors that could cause the Company’s actual results to differ materially
from its expectations in the “Risk Factors” section and elsewhere our Annual Report on Form 10-K for the year ended
December 31, 2015. These cautionary statements qualify all forward-looking statements attributable to the Company or persons acting
on its behalf.
Information regarding market and industry
statistics contained in this report is included based on information available to the Company that it believes is accurate. It
is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis.
The Company has not reviewed or included data from all sources, and the Company cannot assure potential investors of the accuracy
or completeness of the data included in this report. Forecasts and other forward-looking information obtained from these sources
are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue
and market acceptance of products and services. The Company has no obligation to update forward-looking information to reflect
actual results or changes in assumptions or other factors that could affect those statements.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio
of our earnings to our fixed charges for the periods indicated:
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Six
Months
Ended
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Fiscal Year Ended
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June
30,
2016
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December 31,
2015
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December 31,
2014
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December 31,
2013
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December 31,
2012
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December
31,
2011
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Ratio of Earnings to Fixed Charges
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N/A
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N/A
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N/A
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N/A
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N/A
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N/A
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Our earnings were insufficient to cover fixed charges for the six months ended June 30, 2016 and each
of the years ended December 31, 2015, 2014, 2013, 2012 and 2011. Accordingly, we are unable to disclose a ratio of earnings to
fixed charges for such periods. The dollar amount of the deficiency in earnings available for fixed charges for the six months
ended June 30, 2016 was $4,737,650 and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 was approximately $4,790,530,
$6,833,568, $9,406,304, $7,422,155 and $4,486,878, respectively.
USE OF PROCEEDS
Unless otherwise indicated in the prospectus
supplement, we intend to use the net proceeds from the sale of securities offered by the prospectus for general corporate purposes
and working capital requirements. We may also use a portion of the net proceeds to:
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license or acquire intellectual property or technologies to incorporate into our products,
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make capital expenditures, or
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fund possible investments in and acquisitions of complementary businesses, partnerships, minority investments.
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We have not determined the amounts we plan
to spend on the areas listed above or the timing of these expenditures. As a result, our management will have broad discretion
to allocate the net proceeds of the offerings. We have no current plans, commitments or agreements with respect to any acquisition
as of the date of this prospectus.
DESCRIPTION OF CAPITAL STOCK
The following description summarizes the
material terms of our capital stock. This summary is, however, subject to the provisions of our certificate of incorporation and
bylaws. For greater detail about our capital stock, please refer to our certificate of incorporation and bylaws.
General
We are authorized to issue 200,000,000
shares of common stock, par value $0.01 per share, and 20,000,000 shares of preferred stock, of which 2,300,000 shares are authorized
as Series B Convertible Preferred Stock, par value $0.01 per share.
Common Stock
As of September 19, 2016, we had 84,471,484
shares of common stock issued and outstanding and held by approximately 142 stockholders of record.
The holders of common stock are entitled
to one vote per share on all matters to be voted upon by the stockholders, provided that no proxy shall be voted if executed more
than three years prior to the date of the stockholders’ meeting except if such proxy provides for a longer period. Holders
of our common stock do not have cumulative voting rights.
The holders of common stock are entitled
to receive ratably any dividends that may be declared from time to time by our board of directors out of funds legally available
for that purpose. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities. The common stock has no preemptive or conversion rights or other
subscription rights and there are no redemption provisions applicable to our common stock. All outstanding shares of common stock
are fully paid and non-assessable, and the shares of common stock offered hereby will be fully paid and not liable for further
call or assessment.
Except for directors, who are elected by
receiving the highest number of affirmative votes of the shares entitled to be voted for them, or as otherwise required by Delaware
law, and subject to the rights of the holders of preferred stock then outstanding (if any), all stockholder action is taken by
the vote of a majority of the issued and outstanding shares of common stock present at a meeting of stockholders at which a quorum
consisting of a majority of the issued and outstanding shares of common stock is present in person or proxy. In the absence of
a quorum for the transaction of business, any meeting may be adjourned from time to time. The stockholders present at a duly called
or held meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum. Our Chairman of the Board or, in his absence, any other director designated from time to time by the board of directors,
shall preside at all meetings of stockholders.
Preferred Stock
Our Board of Directors has the authority,
without action by our stockholders, to designate and issue up to 20,000,000 shares of preferred stock in one or more series or
classes and to designate the rights, preferences and privileges of each series or class, which may be greater than the rights of
our common stock. The Board’s authority to issue preferred stock without stockholder approval could make it more difficult
for a third party to acquire control of our company, and could discourage such attempt.
Series B Convertible Preferred Stock Outstanding
In connection with an offering of units
that closed on August 31, 2015, we issued as part of the units 1,895,010 shares of Series B Convertible Preferred Stock pursuant
to a Certificate of Designation approved by our Board.
The Series B Convertible Preferred Stock
separated from the other securities included within the units as of February 29, 2016 and are currently convertible. Only 79,246
shares of Series B Convertible Preferred Stock remain outstanding as of September 19, 2016.
Each share of Series B Convertible Preferred
Stock is convertible into one share of common stock. The number of shares of common stock issuable upon conversion of the Series
B Convertible Preferred Stock is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations
or similar events affecting our common stock.
Upon the occurrence of a “Fundamental
Transaction”, each share of Series B Convertible Preferred Stock shall be automatically converted into one share of common
stock of the Company, subject to the beneficial ownership limitation discussed in the next paragraph. A “Fundamental Transaction”
means that (i) the Company shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or
into (whether or not the Company is the surviving corporation) any other person unless the shareholders of the Company immediately
prior to such consolidation or merger continue to hold more than 50% of the outstanding shares of voting stock after such consolidation
or merger, or (2)sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of the properties
and assets of the Company and its subsidiaries, taken as a whole, to any other person, or (3) allow any other person to make a
purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of
the Company (not including any shares of voting stock of the Company held by the person or persons making or party to, or associated
or affiliated with the persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share
purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other person whereby such other person acquires more than 50% of the outstanding shares of voting
stock of the Company (not including any shares of voting stock of the Company held by the other person or other persons making
or party to, or associated or affiliated with the other persons making or party to, such stock or share purchase agreement or other
business combination), or (ii) any “person” or “group” (as these terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act and the rules and regulations promulgated thereunder), other than a Permitted Holder, is or
shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50%
of the aggregate ordinary voting power represented by issued and outstanding voting stock of the Company. The term Permitted Holders
means Josh Kornberg, Atlantic Partners Alliance and SOK Partners, LLC and each of their respective affiliates.
The Series B Convertible Preferred Stock
is not be convertible by the holder of such preferred stock to the extent (and only to the extent) that the holder or any of its
affiliates would beneficially own in excess of 4.99% of the common stock of the Company. For purposes of the limitation described
in this paragraph, beneficial ownership and all determinations and calculations are determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder.
The Series B Convertible Preferred Stock
has no voting rights, except that the holders of shares of a majority of the Series B Convertible Preferred Stock will be required
to effect or validate any amendment, alteration or repeal of any of the provisions of the Certificate of Designation that materially
adversely affects the powers, preferences or special rights of the Series B Convertible Preferred Stock, whether by merger or consolidation
or otherwise;
provided
,
however
, that (i) in the event of an amendment to terms of the Series B Convertible Preferred
Stock, including by merger or consolidation, so long as the Series B Convertible Preferred Stock remains outstanding with the terms
thereof materially unchanged, or the Series B Convertible Preferred Stock is converted into, preference securities of the surviving
entity, or its ultimate parent, with such powers, preferences or special rights that are, in the good faith determination of the
Board of the Company, taken as a whole, not materially less favorable to the holders of the Series B Convertible Preferred Stock
than the powers, preferences or special rights of the Series B Convertible Preferred Stock in effect prior to such amendment or
the occurrence of such event, taken as a whole, then such amendment or the occurrence of such event will not be deemed to materially
and adversely affect such powers, preferences or special rights of the Series B Convertible Preferred Stock and (ii) the authorization,
establishment or issuance by the Corporation of any other series of preferred stock with powers, preferences or special rights
that are senior to or on a parity with the Series B Preferred Stock, including, but not limited to, powers, preferences or special
rights with respect to dividends, distributions or liquidation preferences, shall not be deemed to materially and adversely affect
the power, preferences or special rights of the Series B Preferred Stock, and in the case of either clause (i) or (ii), the holders
shall not have any voting rights with respect thereto,
and provided further that,
(iii) prior to the date that is the six
month anniversary of the Issuance Date, no amendment, alteration or repeal of any of the provisions of this Certificate of Designation
shall be made that affects the powers, preferences or special rights of the Series B Preferred Stock in any manner, whether by
merger or consolidation or otherwise. An amendment to the terms of the Series B Convertible Preferred Stock only requires the vote
of the holders of Series B Convertible Preferred Stock.
With respect to payment of dividends and
distribution of assets upon liquidation or dissolution or winding up of the Company, the Series B Convertible Preferred Stock shall
rank equal to the common stock of the Company. No sinking fund has been established for the retirement or redemption of the Series
B Convertible Preferred Stock. As such, the Series B Convertible Preferred Stock is not subject to any restriction on the repurchase
or redemption of shares by the Company due to an arrearage in the payment of dividends or sinking fund installments.
The Series B Convertible Preferred Stock
also has no liquidation rights or preemption rights, and there are no special classifications of our Board related to the Series
B Convertible Preferred Stock.
The shares of common stock issuable upon
conversion of the Series B Convertible Preferred Stock have been duly authorized, validly issued and fully paid and are non-assessable.
We have authorized and reserved at least that number of shares of common stock equal to the number of shares of common stock issuable
upon conversion of all outstanding Series B Convertible Preferred Stock.
THE HOLDER OF SERIES B CONVERTIBLE PREFERRED STOCK DO NOT
POSSESS ANY RIGHTS AS A STOCKHOLDER UNDER THE SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK UNTIL THE HOLDER CONVERTS THE SHARES
OF SERIES B CONVERTIBLE PREFERRED STOCK.
There is no established public trading
market for our Series B Convertible Preferred Stock, and we do not expect a market to develop. We do not intend to apply to list
Series B Convertible Preferred Stock on any securities exchange. Without an active market, the liquidity of the Series B Convertible
Preferred Stock will be limited.
One of More New Series of Preferred Stock
The following description
of preferred stock and the description of the terms of any particular series of preferred stock that we choose to issue hereunder
and that will be set forth in the related prospectus supplement are not complete. These descriptions are qualified in their entirety
by reference to the certificate of designation relating to that series. The rights, preferences, privileges and restrictions of
the preferred stock of each series will be fixed by the certificate of designation relating to that series.
The board of directors
has the authority, without stockholder approval, subject to limitations prescribed by law, to provide for the issuance of the shares
of preferred stock in one or more series, and by filing a certificate pursuant to the applicable law of the State of Delaware,
to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each series and the qualifications, limitations or restrictions, including, but not limited to, the
following:
• the
number of shares constituting that series;
• dividend
rights and rates;
• voting
rights;
• conversion
terms;
• rights
and terms of redemption (including sinking fund provisions); and
• rights
of the series in the event of liquidation, dissolution or winding up.
All shares of preferred
stock offered hereby will, when issued, be fully paid and nonassessable and will not have any preemptive or similar rights. Our
board of directors could authorize the issuance of shares of preferred stock with terms and conditions that could have the effect
of discouraging a takeover or other transaction that might involve a premium price for holders of the shares or which holders might
believe to be in their best interests.
We will set forth in
a prospectus supplement relating to the series of preferred stock being offered the following items:
•
the
title and stated value of the preferred stock;
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the
number of shares of the preferred stock offered, the liquidation preference per share and the offering price of the preferred stock;
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the
dividend rate(s), period(s) and/or payment date(s) or method(s) of calculation applicable to the preferred stock;
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whether
dividends are cumulative or non-cumulative and, if cumulative, the date from which dividends on the preferred stock will accumulate;
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the
procedures for any auction and remarketing, if any, for the preferred stock;
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the
provisions for a sinking fund, if any, for the preferred stock;
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the
provision for redemption, if applicable, of the preferred stock;
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any
listing of the preferred stock on any securities exchange;
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the
terms and conditions, if applicable, upon which the preferred stock will be convertible into common stock, including the conversion
price (or manner of calculation) and conversion period;
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voting
rights, if any, of the preferred stock;
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a
discussion of any material and/or special United States federal income tax considerations applicable to the preferred stock;
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the
relative ranking and preferences of the preferred stock as to dividend rights and rights upon the liquidation, dissolution or winding
up of our affairs;
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any
limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the class or series of
preferred stock as to dividend rights and rights upon liquidation, dissolution or winding up of our affairs; and
•
any
other specific terms, preferences, rights, limitations or restrictions of the preferred stock.
The transfer agent and
registrar for any series of preferred stock will be set forth in the applicable prospectus supplement.
Anti-Takeover Provisions
Delaware Law
We are subject to Section 203 of the Delaware
General Corporation Law. This provision generally prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless:
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prior to such date, the board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual meeting or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
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Section 203 defines a business combination
to include:
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any merger or consolidation involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
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In general, Section 203 defines an “interested
stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of a corporation, or
an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of a corporation
at any time within three years prior to the time of determination of interested stockholder status; and any entity or person affiliated
with or controlling or controlled by such entity or person.
These statutory provisions could delay
or frustrate the removal of incumbent directors or a change in control of our company. They could also discourage, impede, or prevent
a merger, tender offer, or proxy contest, even if such event would be favorable to the interests of stockholders. In addition,
note that while Delaware law permits companies to opt out of its business combination statute, our Certificate of Incorporation
does not include this opt-out provision.
Certificate of Incorporation and Bylaws
Our current Certificate of Incorporation
authorizes the issuance of “blank check” preferred stock that could be issued by our Board of Directors to defend against
a takeover attempt. See “Preferred Stock” above.
Transfer Agent and Registrar
The transfer agent and registrar for our
common stock is Corporate Stock Transfer, Inc.
Listing
The shares of our common stock are listed
on The NASDAQ Capital Market under the symbol “SKLN.” On September 19, 2016, the last reported sale price per share
for our common stock as reported by The NASDAQ Capital Market was $0.178.
DESCRIPTION OF WARRANTS
We may issue warrants
for the purchase of our common stock or preferred stock, or a combination thereof. Warrants may be issued independently or together
with our debt securities, preferred stock or common stock and may be attached to or separate from any 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. The warrant agent will not have
any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants. This description is
a summary of the certain provisions of the units, and does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the provisions of the warrant agreement that will be filed with the SEC in connection with an offering of the
warrants. The particular terms of any units offered by us will be described in the applicable prospectus supplement. To the extent
the terms of the warrants described in the prospectus supplement differ from the terms set forth in this summary, the terms described
in the prospectus supplement will supersede the terms described below.
The prospectus supplement
relating to a particular series of warrants to purchase our common stock or preferred stock will describe the terms of the warrants,
including the following:
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the title of the warrants;
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the offering price for the warrants, if any;
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the aggregate number of warrants;
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the designation and terms of the common stock or preferred stock that may be purchased upon exercise
of the warrants;
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if applicable, the designation and terms of the securities with which the warrants are issued and
the number of warrants issued with each security;
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if applicable, the date from and after which the warrants and any securities issued with the warrants
will be separately transferable;
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the number of shares of common stock or preferred stock that may be purchased upon exercise of a warrant
and the exercise price for the warrants;
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the dates on which the right to exercise the warrants shall commence and expire;
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if applicable, the minimum or maximum amount of the warrants that may be exercised at any one time;
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the currency or currency units in which the offering price, if any, and the exercise price are payable;
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if applicable, a discussion of material U.S. federal income tax considerations;
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the antidilution provisions of the warrants, if any;
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the redemption or call provisions, if any, applicable to the warrants;
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any provisions with respect to holder’s right to require us to repurchase the warrants upon
a change in control or similar event; and
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any additional terms of the warrants, including procedures, and limitations relating to the exchange,
exercise and settlement of the warrants.
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Holders of equity warrants
will not be entitled:
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to vote, consent or receive dividends;
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receive notice as stockholders with respect to any meeting of stockholders for the election of our
directors or any other matter; or
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exercise any rights as stockholders of the Company.
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DESCRIPTION OF DEBT SECURITIES
This description is a
summary of the material provisions of the debt securities and the related indenture. We urge you to read the form of indenture
filed as an exhibit to the registration statement of which this prospectus is a part because the indenture, and not this description,
governs your rights as a holder of debt securities. References in this prospectus to an “indenture” refer to the particular
indenture under which we may issue a series of debt securities.
General
The terms of each series
of debt securities will be established by or pursuant to a resolution of our board of directors and set forth or determined in
the manner provided in an officers’ certificate or by a supplemental indenture. Debt securities may be issued in separate
series without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt securities
of any series. The particular terms of each series of debt securities will be described in a prospectus supplement relating to
such series, including any pricing supplement. The prospectus supplement will set forth specific terms relating to some or all
of the following:
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any limit on the aggregate principal amount;
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the person who shall be entitled to receive interest, if other than the record holder on the record
date;
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the date the principal will be payable;
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the interest rate, if any, the date interest will accrue, the interest payment dates and the regular
record dates;
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the place where payments may be made;
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any mandatory or optional redemption provisions;
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if applicable, the method for determining how the principal, premium, if any, or interest will be
calculated by reference to an index or formula;
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if other than U.S. currency, the currency or currency units in which principal, premium, if any, or
interest will be payable and whether we or the holder may elect payment to be made in a different currency;
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the portion of the principal amount that will be payable upon acceleration of stated maturity, if
other than the entire principal amount;
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any defeasance provisions if different from those described below under “Satisfaction and Discharge;
Defeasance”;
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any conversion or exchange provisions;
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any obligation to redeem or purchase the debt securities pursuant to a sinking fund;
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whether the debt securities will be issuable in the form of a global security;
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any subordination provisions, if different from those described below under “Subordination”;
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any deletions of, or changes or additions to, the events of default or covenants; and
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any other specific terms of such debt securities.
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Unless otherwise specified
in the prospectus supplement, the debt securities will be registered debt securities. Debt securities may be sold at a substantial
discount below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below
market rates.
Exchange and Transfer
Debt securities may be
transferred or exchanged at the office of the security registrar or at the office of any transfer agent designated by us.
We will not impose a
service charge for any transfer or exchange, but we may require holders to pay any tax or other governmental charges associated
with any transfer or exchange.
In the event of any potential
redemption of debt securities of any series, we will not be required to:
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issue, register the transfer of, or exchange, any debt security of that series during a period beginning
at the opening of business 15 days before the day of mailing of a notice of redemption and ending at the close of business on the
day of the mailing; or
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register the transfer of or exchange any debt security of that series selected for redemption, in
whole or in part, except the unredeemed portion being redeemed in part.
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We may initially appoint
the trustee as the security registrar. Any transfer agent, in addition to the security registrar, initially designated by us will
be named in the prospectus supplement. We may designate additional transfer agents or change transfer agents or change the office
of the transfer agent. However, we will be required to maintain a transfer agent in each place of payment for the debt securities
of each series.
Global Securities
The debt securities of
any series may be represented, in whole or in part, by one or more global securities. Each global security will:
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be registered in the name of a depositary that we will identify in a prospectus supplement;
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be deposited with the depositary or nominee or custodian; and
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bear any required legends.
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No global security may
be exchanged in whole or in part for debt securities registered in the name of any person other than the depositary or any nominee
unless:
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the depositary has notified us that it is unwilling or unable to continue as depositary or has ceased
to be qualified to act as depositary;
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an event of default is continuing; or
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the Company executes and delivers to the trustee an officers’ certificate stating that the global
security is exchangeable.
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As long as the depositary,
or its nominee, is the registered owner of a global security, the depositary or nominee will be considered the sole owner and holder
of the debt securities represented by the global security for all purposes under the indenture. Except in the above limited circumstances,
owners of beneficial interests in a global security:
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will not be entitled to have the debt securities registered in their names;
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will not be entitled to physical delivery of certificated debt securities; and
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will not be considered to be holders of those debt securities under the indentures.
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Payments on a global
security will be made to the depositary or its nominee as the holder of the global security. Some jurisdictions have laws that
require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair
the ability to transfer beneficial interests in a global security.
Institutions that have
accounts with the depositary or its nominee are referred to as “participants.” Ownership of beneficial interests in
a global security will be limited to participants and to persons that may hold beneficial interests through participants. The depositary
will credit, on its book-entry registration and transfer system, the respective principal amounts of debt securities represented
by the global security to the accounts of its participants.
Ownership of beneficial
interests in a global security will be shown on and effected through records maintained by the depositary, with respect to participants’
interests, or any participant, with respect to interests of persons held by participants on their behalf.
Payments, transfers and
exchanges relating to beneficial interests in a global security will be subject to policies and procedures of the depositary.
The depositary policies
and procedures may change from time to time. Neither we nor the trustee will have any responsibility or liability for the depositary’s
or any participant’s records with respect to beneficial interests in a global security.
Payment and Paying Agent
The provisions of this
paragraph will apply to the debt securities unless otherwise indicated in the prospectus supplement. Payment of interest on a debt
security on any interest payment date will be made to the person in whose name the debt security is registered at the close of
business on the regular record date. Payment on debt securities of a particular series will be payable at the office of a paying
agent or paying agents designated by us. However, at our option, we may pay interest by mailing a check to the record holder. The
corporate trust office will be designated as our sole paying agent.
We may also name any
other paying agents in the prospectus supplement. We may designate additional paying agents, change paying agents or change the
office of any paying agent. However, we will be required to maintain a paying agent in each place of payment for the debt securities
of a particular series.
All moneys paid by us
to a paying agent for payment on any debt security which remain unclaimed at the end of two years after such payment was due will
be repaid to us. Thereafter, the holder may look only to us for such payment.
Consolidation, Merger and Sale of Assets
Except as otherwise set
forth in the prospectus supplement, we may not consolidate with or merge into any other person, in a transaction in which we are
not the surviving corporation, or convey, transfer or lease our properties and assets substantially as an entirety to, any person,
unless:
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the successor, if any, is a U.S. corporation, limited liability company, partnership, trust or other
entity;
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the successor assumes our obligations on the debt securities and under the indenture;
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immediately after giving effect to the transaction, no default or event of default shall have occurred
and be continuing; and
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certain other conditions are met.
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Events of Default
Unless we inform you otherwise
in the prospectus supplement, the indenture will define an event of default with respect to any series of debt securities as one
or more of the following events:
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(1)
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failure to pay principal of or any premium on any debt security of that series when due;
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(2)
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failure to pay any interest on any debt security of that series for 30 days when due;
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(3)
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failure to deposit any sinking fund payment when due;
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(4)
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failure to perform any other covenant in the indenture continued for 90 days after being given the
notice required in the indenture;
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(5)
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our bankruptcy, insolvency or reorganization; and
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(6)
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any other event of default specified in the prospectus supplement.
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An event of default of
one series of debt securities is not necessarily an event of default for any other series of debt securities.
If an event of default,
other than an event of default described in clause (5) above, shall occur and be continuing, either the trustee or the holders
of at least 25% in aggregate principal amount of the outstanding securities of that series may declare the principal amount of
the debt securities of that series to be due and payable immediately.
If an event of default
described in clause (5) above shall occur, the principal amount of all the debt securities of that series will automatically become
immediately due and payable. Any payment by us on subordinated debt securities following any such acceleration will be subject
to the subordination provisions described below under “Subordinated Debt Securities.”
After acceleration the
holders of a majority in aggregate principal amount of the outstanding securities of that series may, under certain circumstances,
rescind and annul such acceleration if all events of default, other than the non-payment of accelerated principal, or other specified
amount, have been cured or waived.
Other than the duty to
act with the required care during an event of default, the trustee will not be obligated to exercise any of its rights or powers
at the request of the holders unless the holders shall have offered to the trustee reasonable indemnity. Generally, the holders
of a majority in aggregate principal amount of the outstanding debt securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred
on the trustee.
A holder will not have
any right to institute any proceeding under the indentures, or for the appointment of a receiver or a trustee, or for any other
remedy under the indentures, unless:
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(1)
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the
holder has previously given to the trustee written notice of a continuing event of default with respect to the debt securities
of that series;
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(2)
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the
holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written request
and have offered reasonable indemnity to the trustee to institute the proceeding; and
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(3)
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the
trustee has failed to institute the proceeding and has not received direction inconsistent with the original request from the holders
of a majority in aggregate principal amount of the outstanding debt securities of that series within 90 days after the original
request.
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Holders may, however,
sue to enforce the payment of principal or interest on any debt security on or after the due date without following the procedures
listed in (1) through (3) above.
Modification and Waiver
Except as provided in
the next two succeeding paragraphs, the applicable trustee and we may make modifications and amendments to the indentures (including,
without limitation, through consents obtained in connection with a tender offer or exchange offer for, outstanding securities)
and may waive any existing default or event of default (including, without limitation, through consents obtained in connection
with a tender offer or exchange offer for, outstanding securities) with the consent of the holders of a majority in aggregate principal
amount of the outstanding securities of each series affected by the modification or amendment.
However, neither we nor
the trustee may make any amendment or waiver without the consent of the holder of each outstanding security of that series affected
by the amendment or waiver if such amendment or waiver would, among other things:
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change the amount of securities whose holders must consent to an amendment, supplement or waiver;
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change the stated maturity of any debt security;
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reduce the principal on any debt security or reduce the amount of, or postpone the date fixed for,
the payment of any sinking fund;
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reduce the principal of an original issue discount security on acceleration of maturity;
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reduce the rate of interest or extend the time for payment of interest on any debt security;
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make a principal or interest payment on any debt security in any currency other than that stated in
the debt security;
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impair the right to enforce any payment after the stated maturity or redemption date;
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waive any default or event of default in payment of the principal of, premium or interest on any debt
security (except certain rescissions of acceleration); or
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waive a redemption payment or modify any of the redemption provisions of any debt security;
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Notwithstanding the preceding,
without the consent of any holder of outstanding securities, we and the trustee may amend or supplement the indentures:
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to provide for the issuance of and establish the form and terms and conditions of debt securities
of any series as permitted by the indenture;
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to provide for uncertificated securities in addition to or in place of certificated securities;
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to provide for the assumption of our obligations to holders of any debt security in the case of a
merger, consolidation, transfer or sale of all or substantially all of our assets;
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to make any change that does not adversely affect the legal rights under the indenture of any such
holder;
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to comply with requirements of the Commission in order to effect or maintain the qualification of
an indenture under the Trust Indenture Act; or
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to evidence and provide for the acceptance of appointment by a successor trustee with respect to the
debt securities of one or more series and to add to or change any of the provisions of the indenture as shall be necessary to provide
for or facilitate the administration of the trusts by more than one Trustee.
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The consent of holders
is not necessary under the indentures to approve the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
Satisfaction and Discharge; Defeasance
We may be discharged
from our obligations on the debt securities of any series that have matured or will mature or be redeemed within one year if we
deposit with the trustee enough cash to pay all the principal, interest and any premium due to the stated maturity date or redemption
date of the debt securities.
Each indenture contains
a provision that permits us to elect:
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to be discharged from all of our obligations, subject to limited exceptions, with respect to any series
of debt securities then outstanding; and/or
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to be released from our obligations under the following covenants and from the consequences of an
event of default resulting from a breach of certain covenants, including covenants as to payment of taxes and maintenance of corporate
existence.
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To make either of the
above elections, we must deposit in trust with the trustee enough money to pay in full the principal and interest on the debt securities.
This amount may be made in cash and/or U.S. government obligations. As a condition to either of the above elections, we must deliver
to the trustee an opinion of counsel that the holders of the debt securities will not recognize income, gain or loss for federal
income tax purposes as a result of the action.
If any of the above events
occurs, the holders of the debt securities of the series will not be entitled to the benefits of the indenture, except for the
rights of holders to receive payments on debt securities or the registration of transfer and exchange of debt securities and replacement
of lost, stolen or mutilated debt securities.
Notices
Notices to holders will
be given by mail to the addresses of the holders in the security register.
Governing Law
The indentures and the
debt securities will be governed by, and construed under, the law of the State of New York.
Regarding the Trustee
The indenture limits
the right of the trustee, should it become a creditor of us, to obtain payment of claims or secure its claims.
The trustee is permitted
to engage in certain other transactions. However, if the trustee acquires any conflicting interest, and there is a default under
the debt securities of any series for which they are trustee, the trustee must eliminate the conflict or resign.
Subordination
Payment on subordinated
debt securities will, to the extent provided in the indenture, be subordinated in right of payment to the prior payment in full
of all of our senior indebtedness (except that holders of the notes may receive and retain (i) permitted junior securities and
(ii) payments made from the trust described under “Satisfaction and Discharge; Defeasance”). Any subordinated debt
securities also are effectively subordinated to all debt and other liabilities, including lease obligations, if any.
Upon any distribution
of our assets upon any dissolution, winding up, liquidation or reorganization, the payment of the principal of and interest on
subordinated debt securities will be subordinated in right of payment to the prior payment in full in cash or other payment satisfactory
to the holders of senior indebtedness. In the event of any acceleration of subordinated debt securities because of an event of
default, the holders of any senior indebtedness would be entitled to payment in full in cash or other payment satisfactory to such
holders of all senior indebtedness obligations before the holders of subordinated debt securities are entitled to receive any payment
or distribution, except for certain payments made by the trust described under “Satisfaction and Discharge; Defeasance.”
The indenture requires us or the trustee to promptly notify holders of designated senior indebtedness if payment of subordinated
debt securities is accelerated because of an event of default.
We may not make any payment
on subordinated debt securities, including upon redemption at the option of the holder of any subordinated debt securities or at
our option, if:
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a default in the payment of the principal, premium, if any, interest, rent or other obligations in
respect of designated senior indebtedness occurs and is continuing beyond any applicable period of grace (called a “payment
default”); or
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a default other than a payment default on any designated senior indebtedness occurs and is continuing
that permits holders of designated senior indebtedness to accelerate its maturity, and the trustee receives notice of such default
(called a “payment blockage notice) from us or any other person permitted to give such notice under the indenture (called
a “non-payment default”).
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If the trustee or any
holder of the notes receives any payment or distribution of our assets in contravention of the subordination provisions on subordinated
debt securities before all senior indebtedness is paid in full in cash, property or securities, including by way of set-off, or
other payment satisfactory to holders of senior indebtedness, then such payment or distribution will be held in trust for the benefit
of holders of senior indebtedness or their representatives to the extent necessary to make payment in full in cash or payment satisfactory
to the holders of senior indebtedness of all unpaid senior indebtedness.
In the event of our bankruptcy,
dissolution or reorganization, holders of senior indebtedness may receive more, ratably, and holders of subordinated debt securities
may receive less, ratably, than our other creditors (including our trade creditors). This subordination will not prevent the occurrence
of any event of default under the indenture.
We are not prohibited
from incurring debt, including senior indebtedness, under the indenture. We may from time to time incur additional debt, including
senior indebtedness.
We are obligated to pay
reasonable compensation to the trustee and to indemnify the trustee against certain losses, liabilities or expenses incurred by
the trustee in connection with its duties under the indenture. The trustee’s claims for these payments will generally be
senior to those of noteholders in respect of all funds collected or held by the trustee.
Certain Definitions
“indebtedness”
means:
(1) all indebtedness,
obligations and other liabilities for borrowed money, including overdrafts, foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, and any loans or advances from banks, or evidenced by bonds, debentures, notes or similar
instruments, other than any account payable or other accrued current liability or obligation incurred in the ordinary course of
business in connection with the obtaining of materials or services;
(2) all reimbursement
obligations and other liabilities with respect to letters of credit, bank guarantees or bankers’ acceptances;
(3) all obligations
and liabilities in respect of leases required in conformity with generally accepted accounting principles to be accounted for as
capitalized lease obligations on our balance sheet;
(4) all obligations
and other liabilities under any lease or related document in connection with the lease of real property which provides that we
are contractually obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor and our obligations under the lease or related document to purchase or to cause
a third party to purchase the leased property;
(5) all obligations
with respect to an interest rate or other swap, cap or collar agreement or other similar instrument or agreement or foreign currency
hedge, exchange, purchase or other similar instrument or agreement;
(6) all direct
or indirect guaranties or similar agreements in respect of, and our obligations or liabilities to purchase, acquire or otherwise
assure a creditor against loss in respect of, indebtedness, obligations or liabilities of others of the type described in (1) through
(5) above;
(7) any indebtedness
or other obligations described in (1) through (6) above secured by any mortgage, pledge, lien or other encumbrance existing on
property which is owned or held by us; and
(8) any and all
refinancings, replacements, deferrals, renewals, extensions and refundings of, or amendments, modifications or supplements to,
any indebtedness, obligation or liability of the kind described in clauses (1) through (7) above.
“permitted junior
securities” means (i) equity interests in the Company; or (ii) debt securities of the Company that are subordinated to all
senior indebtedness and any debt securities issued in exchange for senior indebtedness to substantially the same extent as, or
to a greater extent than the notes are subordinated to senior indebtedness under the indenture.
“senior indebtedness”
means the principal, premium, if any, interest, including any interest accruing after bankruptcy, and rent or termination payment
on or other amounts due on our current or future indebtedness, whether created, incurred, assumed, guaranteed or in effect guaranteed
by us, including any deferrals, renewals, extensions, refundings, amendments, modifications or supplements to the above. However,
senior indebtedness does not include:
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indebtedness that expressly provides that it shall not be senior in right of payment to subordinated
debt securities or expressly provides that it is on the same basis or junior to subordinated debt securities;
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our indebtedness to any of our majority-owned subsidiaries; and
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subordinated debt securities.
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DESCRIPTION OF UNITS
This description is
a summary of the certain provisions of the units, and does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the provisions of the unit agreement that will be filed with the SEC in connection with an offering of the units.
The particular terms of any units offered by us will be described in the applicable prospectus supplement. To the extent the terms
of the units described in the prospectus supplement differ from the terms set forth in this summary, the terms described in the
prospectus supplement will supersede the terms described below.
We may issue units
consisting of one or more of the other securities described in this prospectus or the applicable prospectus supplement in any combination
in such amounts and in such numerous distinct series as we determine.
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 terms of units
described in the applicable prospectus supplement may include the following:
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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;
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a description of the terms of any unit agreement governing the units;
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a description of any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
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whether the units will be issued in fully registered or global form.
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PLAN
OF DISTRIBUTION
We may sell the securities offered by this
prospectus in any one or more of the following ways from time to time:
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directly to investors, including through a specific bidding, auction or other process;
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to investors through agents;
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directly to agents;
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to or through brokers or dealers;
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to the public through underwriting syndicates led by one or more managing underwriters;
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to one or more underwriters acting alone for resale to investors or to the public; or
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through a combination of any such methods of sale.
We may also sell the securities offered
by this prospectus in “at the market offerings” within the meaning of Rule 415(a)(4) of the Securities Act, to or through
a market maker or into an existing trading market, on an exchange or otherwise.
The prospectus supplement related to a
particular offering will set forth the terms of the offering and the method of distribution and will identify any firms acting
as underwriters, dealers or agents in connection with the offering, including:
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the name or names of any underwriters, dealers or agents;
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the purchase price of the securities and the proceeds to us from the sale;
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any over-allotment options under which the underwriters may purchase additional securities from us;
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any underwriting discounts and other items constituting compensation to underwriters, dealers or agents;
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any public offering price;
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any discounts or concessions allowed or reallowed or paid to dealers; or
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any securities exchange or market on which the securities offered in the prospectus supplement may be listed.
Only those underwriters identified in such
prospectus supplement are deemed to be underwriters in connection with the securities offered in the prospectus supplement. Any
underwritten offering may be on a best efforts or a firm commitment basis.
The distribution of the securities may
be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at varying prices determined
at the time of sale, or at prices determined as the applicable prospectus supplement specifies. The securities may be sold through
a rights offering, forward contracts or similar arrangements. In any distribution of subscription rights to shareholders, if all
of the underlying securities are not subscribed for, we may then sell the unsubscribed securities directly to third parties or
may engage the services of one or more underwriters, dealers or agents, including standby underwriters, to sell the unsubscribed
securities to third parties.
In connection with the sale of the securities,
underwriters, dealers or agents may be deemed to have received compensation from us in the form of underwriting discounts or commissions
and also may receive commissions from securities purchasers for whom they may act as agent. Underwriters may sell the securities
to or through dealers, and the dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters
or commissions from the purchasers for whom they may act as agent.
We will provide in the applicable prospectus
supplement information regarding any underwriting discounts or other compensation that we pay to underwriters or agents in connection
with the securities offering, and any discounts, concessions or commissions which underwriters allow to dealers. Underwriters,
dealers and agents participating in the securities distribution may be deemed to be underwriters, and any discounts and commissions
they receive and any profit they realize on the sale of the securities may be deemed to be underwriting discounts and commissions
under the Securities Act.
In compliance with guidelines of the Financial
Industry Regulatory Authority, or FINRA, the aggregate maximum discount, commission, agency fees or other items constituting underwriting
compensation to be received by any FINRA member or independent broker dealer may not exceed 8% of the gross proceeds received from
the sale of the securities offered pursuant to this prospectus and any applicable prospectus supplement.
Underwriters and their controlling persons,
dealers and agents may be entitled, under agreements entered into with us, to indemnification against and contribution toward specific
civil liabilities, including liabilities under the Securities Act.
Unless otherwise specified in the related
prospectus supplement, each series of securities will be a new issue with no established trading market, other than shares of our
common stock, which are listed on The NASDAQ Capital Market. Any common stock sold pursuant to a prospectus supplement will be
listed on The NASDAQ Capital Market, subject to compliance with applicable NASDAQ continued listing requirements. We may elect
to list any series on an exchange, but we are not obligated to do so. It is possible that one or more underwriters may make a market
in the securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of, or the trading market for, any offered securities.
In connection with an offering, the underwriters
may purchase and sell securities in the open market. These transactions may include short sales, stabilizing transactions and purchases
to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of securities than
they are required to purchase in an offering. Stabilizing transactions consist of bids or purchases made for the purpose of preventing
or retarding a decline in the market price of the securities while an offering is in progress. The underwriters also may impose
a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received
by it because the underwriters have repurchased securities sold by or for the account of that underwriter in stabilizing or short-covering
transactions. These activities by the underwriters may stabilize, maintain or otherwise affect the market price of the securities.
As a result, the price of the securities may be higher than the price that otherwise might exist in the open market. If these activities
are commenced, they may be discontinued by the underwriters at any time. Underwriters may engage in over-allotment. If any underwriters
create a short position in the securities in an offering in which they sell more securities than are set forth on the cover page
of the applicable prospectus supplement, the underwriters may reduce that short position by purchasing the securities in the open
market.
Underwriters, dealers or agents that participate
in the offer of securities, or their affiliates or associates, may be customers of, have engaged or engage in transactions with,
and perform services for, us or our affiliates in the ordinary course of business for which they may have received or receive customary
fees and reimbursement of expenses.
LEGAL MATTERS
The validity of any securities offered
from time to time by this prospectus and any related prospectus supplement will be passed upon by Maslon LLP, Minneapolis, Minnesota.
If legal matters in connection with offerings made pursuant to this prospectus and any related prospectus supplement are passed
upon by counsel to underwriters, dealers or agents, if any, such counsel will be named in the prospectus supplement related to
such offering.
EXPERTS
Our financial
statements for the fiscal years ended December 31, 2015 and December 31, 2014
incorporated
by reference in this prospectus have been so incorporated in reliance on the report of our auditors, Olsen Thielen & Co., Ltd.,
certified public accountants registered with the Public Company Accounting Oversight Board.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the securities we are offering under this prospectus. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits to the registration statement. For further information with
respect to us and the securities we are offering under this prospectus, we refer you to the registration statement and the exhibits
and schedules filed as a part of the registration statement. Reports filed with the SEC pursuant to the Exchange Act, including
proxy statements, annual and quarterly reports, and other reports filed by the Company can be inspected and copied at the public
reference facilities maintained by the SEC at the Headquarters Office, 100 F Street N.E., Room 1580, Washington, D.C. 20549. The
reader may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The reader can
request copies of these documents upon payment of a duplicating fee by writing to the SEC. Our filings are also available on the
SEC’s internet site at http://www.sec.gov. and the Company’s website at www.skylinemedical.com. Information on any
Skyline Medical website, any subsection, page, or other subdivision of any Skyline Medical website, or any website linked to by
content on any Skyline Medical website, is not part of this prospectus and you should not rely on that information unless that
information is also in this prospectus or incorporated by reference in this prospectus.
IMPORTANT INFORMATION INCORPORATED BY
REFERENCE
The SEC allows us to “incorporate
by reference” information into this prospectus, which means that we can disclose important information to you by referring
you to another document filed separately with the SEC. The documents incorporated by reference into this prospectus contain important
information that you should read about us. The following documents are incorporated by reference into this prospectus:
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(a)
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Our Annual Report on Form 10-K for the fiscal year ended December 31, 2015;
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(b)
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Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016;
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(c)
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Current Reports on Form 8-K filed on January 12, 2016, January 14, 2016, January 27, 2016, March 24, 2016, April 18, 2016,
May 11, 2016, June 17, 2016, July 29, 2016, August 19, 2016 and September 16, 2016, and Amendment to Current Report on Form 8-K/A
filed on August 9, 2016; and
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(d)
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The description of the Company’s common stock under the caption “Description of Securities – Common Stock”
in the Company’s Amendment No. 1 to registration statement on Form S-4 filed on March 25, 2016.
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We also incorporate
by reference any future filings (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed
on such form that are related to such items unless such Form 8-K expressly provides to the contrary) made with the SEC pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including those made after the date of the initial filing of the registration
statement of which this prospectus is a part and prior to effectiveness of such registration statement, until we file a post-effective
amendment that indicates the termination of the offering of the securities made by this prospectus and will become a part of this
prospectus from the respective dates that such documents are filed with the SEC. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof
or of the related prospectus supplement to the extent that a statement contained herein or in any other subsequently filed document
which is also incorporated or deemed to be incorporated herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. We will furnish
without charge to you, upon written or oral request, a copy of any or all of the documents incorporated by reference, including
exhibits to these documents, by writing or telephoning us at the following address or phone number:
Skyline Medical Inc.
Attention: Corporate Secretary
2915 Commers Drive, Suite 900
Eagan, Minnesota 55121
(651) 389-4800
$20,000,000
Skyline Medical Inc.
Common Stock
Preferred Stock
Warrants to Purchase Common Stock or Preferred Stock
Debt Securities
Units
______________________
PROSPECTUS
______________________
, 2016
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses Of Issuance And Distribution.
The following table
sets forth the costs and expenses, payable by the registrant in connection with the sale of common stock being registered. All
amounts are estimates except the SEC registration fee and the NASDAQ listing fee.
Securities and Exchange Commission registration fee
|
|
$
|
2,014.00
|
|
NASDAQ listing fee
|
|
$
|
|
|
Printing and engraving expenses
|
|
$
|
2,000.00
|
|
Blue Sky fees and expenses
|
|
$
|
|
|
Legal fees and expenses
|
|
$
|
15,000.00
|
|
Accounting fees and expenses
|
|
$
|
2,500.00
|
|
Miscellaneous
|
|
$
|
|
|
Total
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|
$
|
21,514.00
|
|
Item 15. Indemnification of
Directors and Officers.
We are a Delaware corporation and certain
provisions of the Delaware Statutes and our bylaws provide for indemnification of our officers and directors against liabilities
that they may incur in such capacities. A summary of the circumstances in which indemnification is provided is discussed below,
but this description is qualified in its entirety by reference to our bylaws and to the statutory provisions.
Section 145 of the Delaware General Corporation
Law provides for, under certain circumstances, the indemnification of our officers, directors, employees and agents against liabilities
that they may incur in such capacities. A summary of the circumstances in which such indemnification provided for is contained
herein, but that description is qualified in its entirety by reference to the relevant Section of the Delaware General Corporation
Law.
In general, the statute provides that any
director, officer, employee or agent of a corporation may be indemnified against expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement, actually and reasonably incurred in a proceeding (including any civil, criminal, administrative
or investigative proceeding) to which the individual was a party by reason of such status. Such indemnity may be provided if the
indemnified person’s actions resulting in the liabilities: (i) were taken in good faith; (ii) were reasonably believed to
have been in or not opposed to our best interest; and (iii) with respect to any criminal action, such person had no reasonable
cause to believe the actions were unlawful. Unless ordered by a court, indemnification generally may be awarded only after a determination
of independent members of the Board of Directors or a committee thereof, by independent legal counsel or by vote of the stockholders
that the applicable standard of conduct was met by the individual to be indemnified.
The statutory provisions further provide
that to the extent a director, officer, employee or agent is wholly successful on the merits or otherwise in defense of any proceeding
to which he was a party, he is entitled to receive indemnification against expenses, including attorneys’ fees, actually
and reasonably incurred in connection with the proceeding.
Indemnification in connection with a proceeding
by or in the right of the Company in which the director, officer, employee or agent is successful is permitted only with respect
to expenses, including attorneys’ fees actually and reasonably incurred in connection with the defense. In such actions,
the person to be indemnified must have acted in good faith, in a manner believed to have been in our best interest and must not
have been adjudged liable to us unless and only to the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of liability, in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such expense which the Court of Chancery or such other court
shall deem proper. Indemnification is otherwise prohibited in connection with a proceeding brought on behalf of the Company in
which a director is adjudged liable to us, or in connection with any proceeding charging improper personal benefit to the director
in which the director is adjudged liable for receipt of an improper personal benefit.
Delaware law authorizes us to reimburse
or pay reasonable expenses incurred by a director, officer, employee or agent in connection with a proceeding in advance of a final
disposition of the matter. Such advances of expenses are permitted if the person furnishes to us a written agreement to repay such
advances if it is determined that he is not entitled to be indemnified by us.
The statutory section cited above further
specifies that any provisions for indemnification of or advances for expenses does not exclude other rights under our certificate
of incorporation, corporate bylaws, resolutions of our stockholders or disinterested directors, or otherwise. These indemnification
provisions continue for a person who has ceased to be a director, officer, employee or agent of the corporation and inure to the
benefit of the heirs, executors and administrators of such persons.
The statutory provision cited above also
grants the power to the Company to purchase and maintain insurance policies that protect any director, officer, employee or agent
against any liability asserted against or incurred by him in such capacity arising out of his status as such. Such policies may
provide for indemnification whether or not the corporation would otherwise have the power to provide for it.
Article 8 of our certificate of incorporation
provides that we shall indemnify our directors and officers to the fullest extent permitted by the Delaware General Corporation
Law.
We have purchased directors’ and
officers’ liability insurance in order to limit the exposure to liability for indemnification of directors and officers,
including liabilities under the Securities Act of 1933.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted for our directors, officers, and controlling persons pursuant to the foregoing
provisions or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Item 16. Exhibits.
(a) Exhibits
See “Exhibit Index” below,
which follows the signature pages to this registration statement.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
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(a)
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(1)
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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(i)
|
to include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
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|
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(ii)
|
to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, an increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
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(iii)
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to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
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(2)
|
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3)
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To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
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|
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|
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(4)
|
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser:
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|
|
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(i)
|
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
|
|
|
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(ii)
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Each prospectus required to be filed pursuant to Rule 424(b)(2), 424(b)(5), or 424(b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), 415(a)(1)(vii), or 415(a)(1)(x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
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(5)
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That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
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(i)
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Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
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(ii)
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Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
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(iii)
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The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
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(iv)
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Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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(b)
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The undersigned registrant hereby further undertakes that, for the purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(c)
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The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(d)
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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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(e)
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For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
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(f)
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For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(g)
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If and when applicable, the Registrant hereby further undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of the Trust Indenture Act.
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SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Eagan, State of Minnesota, on September 23, 2016.
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SKYLINE MEDICAL INC.
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/s/ Bob Myers
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Bob Myers
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Chief Financial Officer
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Each person whose signature appears below
hereby constitutes and appoints Carl Schwartz and Bob Myers, and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this registration statement, and any and all additional registration
statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated:
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Signature
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Title
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Date
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/s/ Carl Schwartz
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Interim Chief Executive Officer (principal
executive officer) and Director
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September 23, 2016
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Carl Schwartz
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/s/ Bob Myers
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|
Chief Financial Officer (principal financial and accounting officer)
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September 23, 2016
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Bob Myers
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/s/ Thomas J. McGoldrick
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Director
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September 23, 2016
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Thomas J. McGoldrick
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/s/ Andrew P. Reding
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Director
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September 23, 2016
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Andrew P. Reding
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EXHIBIT INDEX
Exhibit
Number
|
|
Description
|
1.1**
|
|
Form of Underwriting Agreement
|
4.1
|
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Certificate of Incorporation (1)
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4.2
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|
Certificate of Amendment to Certificate of Incorporation regarding reverse stock split, filed with the Delaware Secretary of State on October 20, 2014 (2)
|
4.3
|
|
Certificate of Amendment to Certificate of Incorporation regarding increase in share capital, filed with the Delaware Secretary of State on July 24, 2015 (3)
|
4.4
|
|
Certificate of Amendment to Certificate of Incorporation regarding increase in share capital, filed with the Delaware Secretary of State on September 16, 2016 (4)
|
4.5
|
|
Bylaws (5)
|
4.6
|
|
Specimen certificate evidencing shares of Common Stock (6)
|
4.7**
|
|
Specimen certificate evidencing shares of Preferred Stock
|
4.8**
|
|
Form of Warrant
|
4.9**
|
|
Form of Warrant Agreement
|
4.10**
|
|
Form of Indenture between the Registrant and one or more trustees to be named
|
4.11**
|
|
Form of Unit
|
4.12**
|
|
Form of Unit Agreement
|
5.1**
|
|
Opinion of Maslon LLP
|
12.1*
|
|
Statement of Computation of Ratio of Earnings to Fixed Charges
|
23.1*
|
|
Consent of Olsen Thielen & Co., Ltd.
|
23.2**
|
|
Consent of Maslon LLP (included as part of Exhibit 5.1)
|
24.1
|
|
Power of Attorney (included as part of the signature pages to this registration statement)
|
25.1**
|
|
Statement of Eligibility of Trustee on Form T-1
|
———————
**
|
|
To be filed by an amendment or as an exhibit to a document filed under the Securities Exchange Act of 1934, as amended, and incorporated by reference herein.by amendment.
|
(1)
|
|
Filed on December 19, 2013 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|
(2)
|
|
Filed on October 24, 2014 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|
(3)
|
|
Filed on June 30, 2015 as an appendix to our Information Statement on Schedule 14C and incorporated herein by reference.
|
(4)
|
|
Filed on September 16, 2016 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|
(5)
|
|
Filed on January 27, 2016 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|
(6)
|
|
Filed on July 20, 2015 as an exhibit to our Registration Statement on Form S-1 (File No. 333-198962) and incorporated herein by reference.
|
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