Filed Pursuant to Rule 424(b)(5)
Registration No. 333-217164
PROSPECTUS SUPPLEMENT
(to Prospectus dated May 4, 2017)
4,375,000
Shares
Adesto Technologies Corporation
Common Stock
We are offering
4,375,000 shares of our common stock. Our common stock is listed on The NASDAQ Capital Market under the symbol “IOTS.” On June 14, 2017, the last reported sale price for our common stock on The NASDAQ Capital Market was $4.80 per share.
The aggregate market value of our outstanding common stock held by non-affiliates was approximately $68.6 million, which was calculated based on
12.3 million shares of outstanding common stock that was held by non-affiliates as of May 9, 2017, and a price per share of $5.60, the closing price of our common stock on May 5, 2017. Pursuant to General Instruction I.B.6 of Form
S-3, in no event will we sell securities pursuant to the registration statement (of which this prospectus supplement forms a part) with a value more than one-third of the aggregate market value of our common stock held by non-affiliates in any
12-month period, so long as the aggregate market value of our common stock held by non-affiliates is less than $75.0 million. During the prior 12 calendar month period that ends on, and includes, the date of this prospectus supplement, we have
offered securities with an aggregate market value of $20.0 million pursuant to General Instruction I.B.6 on Form S-3.
We are an
“emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, we may have elected to comply with certain reduced public company reporting requirements.
Investing in our common stock involves a high degree of risk. See “
Risk Factors
” beginning on
page S-3 of this prospectus supplement.
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Per Share
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Total
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Public Offering Price
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$
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4.00
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$
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17,500,000
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Underwriting Discount(1)
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$
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0.24
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$
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1,050,000
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Proceeds, Before Expenses, to us
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$
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3.76
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$
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16,450,000
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(1)
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See “Underwriting” for additional information regarding underwriting compensation.
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We have
granted the underwriters the right to purchase up to an additional 625,000 shares of our common stock at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus supplement.
The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete. It is illegal for any person to tell you otherwise.
We anticipate
that delivery of the shares of common stock will be made on or about June 20, 2017.
Sole Book-Running
Manager
Needham & Company
Co-Manager
The Benchmark Company
The date of this prospectus supplement is June 15, 2017.
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
We have not, and the underwriters have not, authorized anyone to provide you with information different than that contained
or incorporated by reference in this prospectus supplement, the accompanying prospectus or any free writing prospectus that we have authorized for use in connection with this offering. We take no responsibility for, and can provide no assurance as
to the reliability of, any other information that others may give you. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus, the documents incorporated by reference herein and therein, and in
any free writing prospectus that we have authorized for use in connection with this offering is accurate only as of the date of those respective documents. Our business, financial condition, results of operations and prospects may have changed since
those dates. You should read this prospectus supplement, the accompanying prospectus, the documents incorporated by reference herein and therein, and any free writing prospectus that we have authorized for use in connection with this offering in
their entirety before making an investment decision. You should also read and consider the information in the documents to which we have referred you in the sections of this prospectus supplement entitled “Where You Can Find More
Information” and “Incorporation of Information by Reference.”
S-i
ABOUT THIS PROSPECTUS SUPPLEMENT
On April 5, 2017, we filed with the Securities and Exchange Commission, or SEC, a registration statement on Form S-3 (File
No. 333-217164) utilizing a shelf registration process relating to the securities described in this prospectus supplement, which registration statement became effective on May 4, 2017. Under this shelf registration process, we may, from
time to time, sell common stock and other securities, of which this offering is a part.
This document is in two parts. The first part is
the prospectus supplement, including the documents incorporated by reference herein, which describes the specific terms of this offering and also adds to and updates the information contained in the accompanying prospectus and the documents
incorporated by reference. The second part, the accompanying prospectus, including the documents incorporated by reference therein, provides more general information, some of which may not apply to this offering. Generally, when we refer to this
prospectus, we are referring to both parts of this document combined. Before you invest, you should carefully read this prospectus supplement, the accompanying prospectus and the information incorporated by reference herein and therein, as well as
the additional information described in this prospectus supplement under “Where You Can Find More Information.” This prospectus supplement may add, update or change information contained in the accompanying prospectus. To the extent that
any statement we make in this prospectus supplement is inconsistent with statements made in the accompanying prospectus or any documents incorporated by reference herein or therein, the statements made in this prospectus supplement will be deemed to
modify or supersede those made in the accompanying prospectus and such documents incorporated by reference herein or therein.
We are
offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the common stock
in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of this prospectus supplement and the accompanying prospectus must inform themselves about, and observe any restrictions relating to, the
offering of the common stock and the distribution of this prospectus supplement and the accompanying prospectus outside the United States. This prospectus supplement and the accompanying prospectus does not constitute, and may not be used in
connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this prospectus supplement by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
This prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein include trademarks,
service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included or incorporated by reference into this prospectus supplement or the accompanying prospectus are the property of their respective
owners.
Unless the context indicates otherwise, as used in this prospectus supplement and the accompanying prospectus, the terms
“Company,” “Adesto,” “Registrant,” “we,” “us” and “our” refer to Adesto Technologies Corporation, a Delaware corporation, and its subsidiaries, taken as a whole, unless otherwise noted. The
Adesto design logo and the marks “Adesto,” “CBRAM,” “DataFlash,” “Mavriq,” and “Moneta” are the property of Adesto Technologies Corporation. This prospectus supplement, the accompanying prospectus
and the information incorporated by reference herein and therein contains additional trade names, trademarks and service marks of other companies, which are the property of their respective owners. We do not intend our use or display of other
companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
S-ii
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights selected information about us, this offering and information appearing elsewhere in this prospectus supplement, in the accompanying
prospectus and in the documents incorporated by reference herein and therein. This summary is not complete and does not contain all the information you should consider before investing in our common stock pursuant to this prospectus supplement and
the accompanying prospectus. Before making an investment decision, to fully understand this offering and its consequences to you, you should carefully read this entire prospectus supplement, the accompanying prospectus and the information
incorporated by reference, including “Risk Factors,” the financial statements, and related notes, and the other information that we incorporate by reference herein and therein.
Company Overview
We are a leading
provider of application-specific and ultra-low power non-volatile memory products. We optimize our non-volatile memory, or NVM, products for Internet of Things, or IoT, applications including current and next-generation Internet-connected devices in
the consumer, industrial, medical and wearables markets. We combine our NVM design capabilities with proprietary intellectual property and differentiated technology platforms to deliver high-performance products that dramatically reduce the overall
energy consumption of our customers’ systems and extend battery life. Our products feature embedded intelligence in a small form factor and high reliability.
We sell our products directly to leading original equipment manufacturers and original design manufacturers that manufacture products for our
end customers. In general, we work directly with our customers to have our NVM devices designed into and qualified for their products, which we refer to as design wins. Although we maintain direct sales, support and development relationships with
our end customers, most of our products are sold to those end customers through distributors.
We offer five product families, DataFlash,
Fusion Flash, EcoXip, Mavriq and Moneta, which are manufactured using two technology platforms: industry-standard “floating gate” technology and our proprietary Conductive Bridging Random Access Memory, or CBRAM, technology. We optimize
our products to operate at a wide voltage range, allowing continued operation even as the battery discharges and reaches very low power levels, where commodity NVM devices typically fail. Operating intelligence, such as low power mode, is designed
into our products to help systems save energy. Our components allow for greater storage efficiency than competing commodity NVM products in logging small packets of data for the IoT. This reduces microcontroller unit burden on system resources and
allows for less frequent re-write cycles, enabling dramatic increases in battery life and enhancing the reliability of the flash memory components. By incorporating power management features in our NVM products, we enable our customers to reduce the
number of components included in and the overall footprint of their systems, thereby lowering the total cost of their systems. Some of our new products significantly improve system performance and power consumption by using intelligent design to
accelerate data handling capability between the microprocessor and memory.
Corporate Information
We were originally incorporated in California in January 2006, and reincorporated in Delaware in October 2015. Our principal executive offices
are located at 3600 Peterson Way, Santa Clara, CA 95054 and our telephone number is (408) 400-0578. Our website is www.adestotech.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into
this prospectus supplement or the accompanying prospectus, and you should not consider information on our website to be part of this prospectus supplement or the accompanying prospectus.
JOBS Act
We are an “emerging growth
company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerging growth company until the earlier of the last day of the fiscal year following the fifth anniversary of the completion of our
initial public offering in October 2015, the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, the date on which we are deemed to be a large accelerated filer (this means that we have been public for
at least 12 months, have filed at least one annual report and the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year), or the date on which we have issued more
than $1.0 billion in nonconvertible debt securities during the prior three-year period.
S-1
THE OFFERING
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Common stock offered by us
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4,375,000 shares
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Common stock to be outstanding after this offering
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20,108,709 shares
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Option to purchase additional shares
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We have granted the underwriters an option for a period of 30 days to purchase up to an additional 625,000 shares of common stock.
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Use of proceeds
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We intend to use the net proceeds of this offering for general corporate purposes, which may include increasing our working capital, acquisitions or investments in businesses, products or technologies that are complementary to
our own, capital expenditures and reducing indebtedness. See “Use of Proceeds.”
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Risk factors
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See “Risk Factors” for a discussion of factors that you should read and consider before investing in our common stock.
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NASDAQ Capital Market symbol
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IOTS
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The number of shares of our common stock to be outstanding immediately after this offering as shown above is based on
15,733,709 shares of common stock outstanding as of March 31, 2017 and excludes:
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1,414,526 shares of common stock issuable upon exercise of outstanding options as of March 31, 2017, with a weighted-average exercise price of $3.07 per share;
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410,664 shares of common stock issuable upon the settlement of outstanding performance-based or other restricted stock units, or RSUs, as of March 31, 2017;
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•
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272,293 shares of common stock issuable upon the settlement of outstanding RSUs granted after March 31, 2017;
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404,136 shares of our common stock issuable upon the exercise of warrants outstanding as of March 31, 2017, with a weighted-average exercise price of $7.51 per share;
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1,364,466 shares of common stock reserved for future issuance under our 2015 Equity Incentive Plan as of March 31, 2017; and
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335,381 shares of common stock reserved for future issuance under our 2015 Employee Stock Purchase Plan as of March 31, 2017.
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Except as otherwise indicated, all information in this prospectus supplement assumes no exercise or settlement of outstanding options, RSUs or warrants
described above and no exercise of the underwriters’ option to purchase additional shares of common stock.
S-2
RISK FACTORS
An investment in our common stock involves a high degree of risk. Prior to making a decision about investing in our common stock, you should carefully
consider the risk factors described below together with all of the risks, uncertainties and assumptions discussed under Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31,
2016 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which are incorporated herein by reference except as updated below, and may be amended, supplemented or superseded from time to time by other reports we file with
the SEC in the future. If any of the risks incorporated by reference or set forth below occurs, our business, operations and financial condition could suffer significantly. As a result, you could lose some or all of your investment in our common
stock. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, operations and financial condition,
or cause the value of our common stock to decline.
Risks Related to This Offering
Our management will have broad discretion as to the use of the proceeds from this offering and we may not use the proceeds effectively.
Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that
do not improve our results of operations or enhance the value of our common stock. You will be relying on the judgment of our management concerning these uses and you will not have the opportunity, as part of your investment decision, to assess
whether the proceeds are being used appropriately. The failure of our management to apply these funds effectively could result in unfavorable returns and uncertainty about our prospects, each of which could cause the price of our common stock to
decline.
If you purchase shares of common stock sold in this offering you will experience immediate and substantial dilution in your investment.
You also will experience further dilution if we issue additional equity securities in the future.
Since the price per share of
our common stock being offered is substantially higher than the net tangible book value per share of our common stock, you will suffer substantial dilution with respect to the net tangible book value of the shares of common stock you purchase in
this offering. Based on the public offering price of $4.00 per share and our net tangible book value as of March 31, 2017, if you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of
$2.87 per share with respect to the net tangible book value of the common stock. See “Dilution” for a more detailed discussion of the dilution you will incur if you purchase shares of common stock in this offering.
In addition, we have a significant number of stock options, RSUs and warrants outstanding, and may also choose to issue additional common
stock, or securities convertible into or exchangeable for common stock, in the future. In the event that the outstanding options, RSUs and warrants are exercised or settled, or that we issue additional common stock or other convertible or
exchangeable securities, you could experience additional dilution. Furthermore, we cannot assure you that we will be able to issue shares or other securities in any other offering at a price per share that is equal to or greater than the price per
share paid by investors in this offering, and investors purchasing our securities in the future may have rights superior to investors purchasing shares in this offering.
Future sales of our common stock in the public market could cause the market price of our common stock to drop significantly, even if our business is
doing well.
The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in
the public market after the closing of this offering, or the perception that these sales could occur. For example, certain holders of our common stock have rights, subject to conditions, to require us to file registration statements covering their
common stock or to include their common stock registration statements that we may file for ourselves or other stockholders. Once we register these shares, they can be freely sold in the public market. Moreover, we have also registered under the
Securities Act of 1933, as amended, shares of common stock that we may issue under our equity compensation plans.
We and our executive
officers and directors who collectively hold shares representing less than 10% of our outstanding common stock have agreed, subject to certain exceptions, not to dispose of or hedge any of the shares of common stock or securities convertible into or
exchangeable for shares of common stock during the period from the date of this prospectus supplement continuing through the date 90 days after the date of this prospectus supplement. As of the date of this prospectus supplement, most
S-3
of our other outstanding shares of common stock are available for sale in the public market at any time by our existing stockholders, subject to Rule 144 limitations applicable to
affiliates.
In addition, we have a significant number of stock options, RSUs and warrants outstanding. If a substantial number of shares
of common stock underlying these options, RSUs or warrants are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline. Sales of a substantial number of shares of our common stock
in the public market, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock and make it more difficult for you to sell your common stock
at a time and price that you deem appropriate.
In addition, in the future, we may issue additional shares of common stock or other equity
or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could
cause our stock price to decline.
S-4
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus, and documents incorporated by reference herein and therein contain
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is
not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. Such statements include, but are not
limited to, statements about future financial and operating results, plans, objectives, expectations and intentions, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, cost savings,
objectives of management, business strategies, product attributes and benefits, market opportunities, financing needs, anticipated trends and challenges in our business and in the markets in which we operate, the development and enhancement of our
products to meet anticipated market needs, and other statements that are not historical facts. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates,”
“may,” “might,” “should,” “will,” “could,” “plan,” “intend,” “project,” “seek” or similar expressions in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference herein and therein and any free writing prospectus. We intend that such forward-looking statements be subject to the safe harbors created thereby.
These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and
uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. Factors that might cause such a difference include those
discussed in Part II, Item 1A “Risk Factors” in our Quarterly on Form 10-Q for the quarter ended March 31, 2017, as well as those discussed in this prospectus supplement, the accompanying prospectus and the documents
incorporated by reference herein and therein and any free writing prospectus. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made.
All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this
prospectus supplement or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make
additional updates with respect to those or other forward-looking statements.
S-5
USE OF PROCEEDS
We estimate that the net proceeds of this offering, after deducting the underwriting discount and estimated offering expenses payable by us,
will be approximately $16.0 million, or $18.4 million if the underwriters’ option to purchase additional shares is exercised in full. We cannot assure you that this offering will be completed.
We currently intend to use the net proceeds from the sale of common stock in this offering for general corporate purposes, which may include
increasing our working capital, acquisitions or investments in businesses, products or technologies that are complementary to our own, capital expenditures and reducing indebtedness. We have no current agreements or commitments for any such
acquisitions or investments.
As of the date of this prospectus supplement, we cannot specify with certainty any or all of the particular
uses for the net proceeds to us from this offering. We also cannot estimate precisely the allocation of the net proceeds from this offering among these uses. The occurrence of unforeseen events or changed business conditions could result in the
application of the net proceeds from this offering in a manner other than as described in this prospectus supplement. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. Pending
application of the proceeds of sale of our common stock, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing instruments.
S-6
PRICE RANGE OF COMMON STOCK
Our common stock has been quoted on The NASDAQ Capital Market under the symbol “IOTS” since our initial public offering in October
2015. The following table sets forth, for the periods indicated, the reported high and low closing sales prices per share of our common stock as reported by The NASDAQ Capital Market:
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High
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Low
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Fiscal Year ended December 31, 2015
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Fourth Fiscal Quarter(1)
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$
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8.18
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$
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5.23
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Fiscal Year ending December 31, 2016
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First Fiscal Quarter
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$
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7.59
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$
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5.11
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Second Fiscal Quarter
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5.76
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3.02
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Third Fiscal Quarter
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3.81
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2.02
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Fourth Fiscal Quarter
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2.59
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1.60
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Fiscal Year ending December 31, 2017
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First Fiscal Quarter
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$
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4.40
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$
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1.90
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Second Fiscal Quarter (through June 14, 2017)
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5.60
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3.85
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(1)
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The period reported for the fourth fiscal quarter is from October 27, 2015 through December 31, 2015.
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The last reported sale price for our common stock on June 14, 2017 was $4.80 per share.
As of June 13, 2017, our common stock was held of record by 43 holders.
DIVIDEND POLICY
We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation
of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on our capital stock will be at the discretion of our board of directors, subject to applicable laws, and
will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. In addition, the terms of our $18.0 million term loan facility and our
$2.0 million line of credit currently prohibit us from paying dividends.
S-7
DILUTION
If you invest in our common stock, your interest will be diluted to the extent of the difference between the public offering price per share
of our common stock and the as adjusted net tangible book value per share of our common stock immediately after this offering.
Our net
tangible book value as of March 31, 2017 was approximately $6.6 million, or $0.42 per share. Net tangible book value per share is determined by dividing our total tangible assets, less total liabilities, by the number of shares of our common
stock outstanding as of March 31, 2017. Dilution with respect to net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the net tangible book
value per share of our common stock immediately after this offering.
After giving effect to the sale of 4,375,000 shares of our common
stock at the public offering price of $4.00 per share and after deducting the underwriting discount and estimated offering expenses payable by us, our as adjusted net tangible book value as of March 31, 2017 would have been approximately
$22.6 million, or $1.13 per share. This represents an immediate increase in net tangible book value of $0.71 per share to existing stockholders and immediate dilution of $2.87 per share to investors purchasing our common stock in this offering
at the public offering price. The following table illustrates this dilution on a per share basis:
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Public offering price per share
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$
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4.00
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Net tangible book value per share of as March 31, 2017
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$
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0.42
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Increase in net tangible book value per share attributable to investors purchasing our common
stock in this offering
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0.71
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As adjusted net tangible book value per share after this offering
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1.13
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Dilution per share to investors purchasing our common stock in this offering
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$
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2.87
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If the underwriters exercise their option to purchase additional shares of common stock in full, the as
adjusted net tangible book value per share of our common stock after giving effect to this offering would be $1.20 per share, and the dilution in net tangible book value per share to investors purchasing common stock in this offering would be $2.80
per share.
The table and discussion above are based on 15,733,709 shares of common stock outstanding as of March 31, 2017 and
excludes:
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1,414,526 shares of common stock issuable upon exercise of outstanding options as of March 31, 2017, with a weighted-average exercise price of $3.07 per share;
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•
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410,664 shares of common stock issuable upon the settlement of outstanding RSUs as of March 31, 2017;
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•
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272,293 shares of common stock issuable upon the settlement of outstanding RSUs granted after March 31, 2017;
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•
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404,136 shares of our common stock issuable upon the exercise of warrants outstanding as of March 31, 2017, with a weighted-average exercise price of $7.51 per share;
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•
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1,364,466 shares of common stock reserved for future issuance under our 2015 Equity Incentive Plan as of March 31, 2017; and
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•
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335,381 shares of common stock reserved for future issuance under our 2015 Employee Stock Purchase Plan as of March 31, 2017.
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To the extent that outstanding options, RSUs or warrants have been or may be exercised or settled or other shares of common stock are issued,
investors purchasing our common stock in this offering may experience further dilution. In addition, we may choose to issue additional common stock, or securities convertible into or exchangeable for common stock, in the future. The issuance of
these securities could result in further dilution for investors purchasing our common stock in this offering.
S-8
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
FOR NON-U.S. HOLDERS OF OUR COMMON STOCK
The following summary describes the material U.S. federal income tax consequences of the acquisition, ownership and disposition of our common
stock acquired in this offering by Non-U.S. Holders (as defined below). This discussion does not address all aspects of U.S. federal income taxes, does not discuss the potential application of the alternative minimum or Medicare Contribution tax and
does not discuss state, local, U.S. federal gift and, except to the limited extent provided below, estate tax laws, or non-U.S. tax consequences that may be relevant to Non-U.S. Holders in light of their particular circumstances.
Special rules different from those described below may apply to certain Non-U.S. Holders that are subject to special treatment under the
Internal Revenue Code of 1986, as amended, or Code, such as:
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insurance companies, banks and other financial institutions;
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tax-exempt organizations (including private foundations) and tax-qualified retirement plans;
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foreign governments and international organizations;
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broker-dealers and traders in securities;
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U.S. expatriates and certain former citizens or long-term residents of the United States;
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persons who acquired our common stock as compensation for services;
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persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);
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“controlled foreign corporations,” “passive foreign investment companies” and corporations that accumulate earnings to avoid U.S. federal income tax;
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persons that hold our common stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or integrated investment or other risk reduction strategy;
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persons who hold our common stock as “qualified small business stock” within the meaning of Sections 1202 and/or 1045 of the Code;
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persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); and
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“qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds.
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Such Non-U.S. Holders are urged to consult their tax advisors to determine the U.S. federal, state, local and other tax consequences that may
be relevant to them.
In addition, this discussion does not address the tax treatment of partnerships (or entities or arrangements that
are treated as partnerships) or pass-through entities for U.S. federal income tax purposes or partners in such partnerships (or investors in such pass-through entities). If a partnership, including any entity or arrangement treated as a partnership
or a pass-through entity for U.S. federal income tax purposes, owns shares of our common stock, the U.S. federal income tax treatment of a partner in such partnership (or an investor in such pass-through entity) will generally depend upon the status
of the partner and the activities of the partnership (or the status of the investor and the activities of the pass-through entity). Such partners and partnerships (and such investors and pass-through entities) should consult their tax advisors
regarding the tax consequences of the acquisition, ownership and disposition of our common stock.
The discussion below is based upon the
provisions of the Code, and Treasury regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified, possibly retroactively, and are subject to differing interpretations which
could result in U.S. federal income tax consequences different from those discussed below. We have not requested a ruling from the Internal Revenue Service, or IRS, with respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the IRS will agree with such statements and conclusions or will not take a contrary position regarding the tax consequences of the acquisition, ownership, and disposition of our common stock, or that any
such contrary position would not be sustained by a court.
S-9
The following discussion is for general information only and is not tax advice. Persons
considering the purchase of our common stock pursuant to this offering should consult their tax advisors concerning the U.S. federal income tax consequences of the acquisition, ownership, and disposition of our common stock in light of their
particular situations as well as any consequences arising under the laws of any other taxing jurisdiction, including any state, local or non-U.S. tax consequences or any U.S. federal non-income tax consequences, and the possible application of tax
treaties that might change the general provisions.
For the purposes of this discussion, a “Non-U.S. Holder” is, for U.S.
federal income tax purposes, a beneficial owner of common stock that is neither a U.S. Holder nor a partnership or other pass-through entity. A “U.S. Holder” means a beneficial owner of our common stock that is for U.S. federal income tax
purposes (a) an individual citizen or resident of the United States (as determined under U.S. federal income tax rules), (b) a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized
in or under the laws of the United States, any state thereof or the District of Columbia, (c) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (d) a trust if it (1) is subject to the
primary supervision of a court within the United States and one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust or (2) has a valid election
in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
If you are an individual non-U.S. citizen, you may,
in some cases, be deemed to be a resident alien (as opposed to a nonresident alien) by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year
period ending in the current calendar year. Generally, for this purpose, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year, are
counted.
Resident aliens are generally subject to U.S. federal income tax as if they were U.S. citizens. Individuals who are uncertain of
their status as resident or nonresident aliens for U.S. federal income tax purposes are urged to consult their tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership and disposition of our common stock.
Distributions
We do not expect to
declare or make any distributions on our common stock in the foreseeable future. If we do make distributions on our common stock, however, such distributions will constitute dividends for U.S. tax purposes to the extent made out of our current or
accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not
below zero, a Non-U.S. Holder’s adjusted tax basis in our common stock. Any remaining excess will be treated as gain realized on the sale or exchange of our common stock as described below under the section titled “— Disposition of
our Common Stock.” The amount of any distribution of property other than cash will be the fair market value of that property on the date of distribution.
Any distribution on our common stock that is treated as a dividend paid to a Non-U.S. Holder that is not effectively connected with the
holder’s conduct of a trade or business in the United States will generally be subject to withholding tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and the Non-U.S.
Holder’s country of residence. To obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder generally will be required to provide us or our paying agent with a properly executed IRS Form W-8BEN, IRS Form W-8BEN-E or other
appropriate form, certifying the Non-U.S. Holder’s entitlement to benefits under that treaty. Such form must be provided prior to the payment of dividends and may be required to be updated periodically. In the case of a Non-U.S. Holder that is
an entity, Treasury Regulations and the relevant tax treaty provide rules to determine whether, for purposes of determining the applicability of a tax treaty, dividends will be treated as paid to the entity or to those holding an interest in that
entity. If a Non-U.S. Holder holds stock through a financial institution or other agent acting on the holder’s behalf, the Non-U.S. Holder will be required to provide appropriate documentation to such agent. The Non-U.S. Holder’s agent may
then be required to provide certification to us or our paying agent, either directly or through other intermediaries. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you should consult with your tax
advisor to determine if you are able to obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund with the IRS.
We generally are not required to withhold tax on dividends paid to a Non-U.S. Holder that are effectively connected with the holder’s
conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment that the holder maintains in the United States) if a properly executed IRS Form W-8ECI,
stating that the dividends are so connected, is furnished to us (or, if stock is held through a financial institution or other agent, to the
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agent). In general, such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated rates applicable to U.S. persons, unless a
specific treaty exemption applies. A corporate Non-U.S. Holder receiving effectively connected dividends may also be subject to an additional “branch profits tax,” which is imposed, under certain circumstances, at a rate of 30% (or such
lower rate as may be specified by an applicable treaty) on the corporate Non-U.S. Holder’s effectively connected earnings and profits, subject to certain adjustments.
See also the section below titled “— Foreign Accounts” for additional withholding rules that may apply to dividends paid to
foreign financial institutions or non-financial foreign entities.
Disposition of Our Common Stock
Subject to the discussion below under the sections titled “— Backup Withholding and Information Reporting” and
“— Foreign Accounts,” a Non-U.S. Holder generally will not be subject to U.S. federal income tax with respect to gain realized on a sale or other disposition of our common stock unless (a) the gain is effectively connected
with a trade or business of the holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment that the holder maintains in the United States), (b) the Non-U.S. Holder is a
nonresident alien individual and is present in the United States for 183 or more days in the taxable year of the disposition and certain other conditions are met, or (c) we are or have been a “United States real property holding
corporation” within the meaning of Code Section 897(c)(2) at any time within the shorter of the five-year period preceding such disposition or the holder’s holding period in the common stock.
If you are a Non-U.S. Holder described in (a) above, in general, you will be required to pay tax on the net gain derived from the sale at
the regular graduated U.S. federal income tax rates applicable to U.S. persons, unless a specific treaty provides otherwise. Corporate Non-U.S. Holders described in (a) above may also be subject to the additional branch profits tax at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty. If you are an individual Non-U.S. Holder described in (b) above, you will be required to pay a flat 30% tax on the gain derived from the sale, which gain may be
offset by certain U.S. source capital losses (even though you are not considered a resident of the United States), provided you have timely filed U.S. federal income tax returns with respect to such losses. With respect to (c) above, in
general, we would be a U.S. real property holding corporation if interests in U.S. real estate comprised (by fair market value) at least half of our business assets. We believe that we are not, and do not anticipate becoming, a U.S. real property
holding corporation. However, there can be no assurance that we will not become a U.S. real property holding corporation in the future. Even if we are treated as a U.S. real property holding corporation, gain realized by a Non-U.S. Holder on a
disposition of our common stock will not be subject to U.S. federal income tax so long as (1) the Non-U.S. Holder owned, directly, indirectly or constructively, no more than five percent of our common stock at all times within the shorter of
(i) the five-year period preceding the disposition or (ii) the holder’s holding period and (2) our common stock is regularly traded on an established securities market. There can be no assurance that our common stock will
continue to be regularly traded on an established securities market. See the section titled “— Foreign Accounts” for additional information regarding withholding rules that may apply to proceeds of a disposition of our common stock
paid to foreign financial institutions or non-financial foreign entities.
U.S. Federal Estate Tax
The estates of noncitizen resident individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a
U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent’s country of
residence provides otherwise. The terms “resident” and “nonresident” are defined differently for U.S. federal estate tax purposes than for U.S. federal income tax purposes. Investors are urged to consult their tax advisors
regarding the U.S. federal estate tax consequences of the acquisition, ownership and disposition of our common stock.
Information Reporting and Backup
Withholding
Generally, we or certain financial middlemen must report information to the IRS with respect to any distributions (whether
or not they constitute dividends) we make on our common stock including the name and address of the recipient, and the amount, if any, of tax withheld. A similar report is sent to the Non-U.S. Holder to whom any such distributions are paid. Pursuant
to tax treaties or certain other agreements, the IRS may make its reports available to tax authorities in the recipient’s country of residence.
Dividends paid by us (or our paying agents) to a Non-U.S. Holder may also be subject to U.S. backup withholding. U.S. backup withholding
generally will not apply to a Non-U.S. Holder who provides a properly executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or otherwise establishes an exemption, provided that the applicable withholding agent does not have actual knowledge
or reason to know the holder is a U.S. person.
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Under current U.S. federal income tax law, U.S. information reporting and backup withholding
requirements generally will apply to the proceeds of a disposition of our common stock effected by or through a U.S. office of any broker, U.S. or non-U.S., unless the Non-U.S. Holder provides a properly executed IRS Form W-8BEN or IRS
Form W-8BEN-E, as applicable, or otherwise meets documentary evidence requirements for establishing Non-U.S. Holder status or otherwise establishes an exemption. Generally, U.S. information reporting and backup withholding requirements will not
apply to a payment of disposition proceeds to a Non-U.S. Holder where the transaction is effected outside the United States through a non-U.S. office of a non-U.S. broker. Information reporting and backup withholding requirements may, however, apply
to a payment of disposition proceeds if the broker has actual knowledge, or reason to know, that the holder is, in fact, a U.S. person. For information reporting purposes, certain brokers with substantial U.S. ownership or operations will generally
be treated in a manner similar to U.S. brokers.
Backup withholding is not an additional tax. If backup withholding is applied to you, you
should consult with your tax advisor to determine whether you have overpaid your U.S. federal income tax, and whether you are able to obtain a tax refund or credit of the overpaid amount.
Foreign Accounts
In addition to, and
separately from, the withholding rules described above, U.S. federal withholding taxes at a rate of 30% may apply under Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance thereunder commonly known as the
Foreign Account Tax Compliance Act, or FATCA, on certain types of payments, including dividends and the gross proceeds of a disposition of our common stock, made to (A) a “foreign financial institution” (as defined for this purpose)
unless such institution (i) is exempt from FATCA withholding pursuant to an applicable intergovernmental agreement between the jurisdiction in which it is located and the United States, (ii) enters into an agreement with the U.S.
government to collect and provide to the U.S. tax authorities information regarding U.S. account holders of such institution or (iii) meets other exemptions or (B) a “non-financial foreign entity” (as defined for this purpose),
unless such entity (i) is exempt from FATCA withholding pursuant to an applicable intergovernmental agreement between the jurisdiction in which it is located and the United States, (ii) provides the withholding agent with a certification
identifying any “substantial U.S. owners” of the entity (as defined for this purpose), (iii) certifies that it does not have any substantial U.S. owners or (iv) meets other exemptions. Foreign financial institutions located in
jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under
applicable Treasury Regulations and administrative guidance, FATCA withholding as described above currently applies to payments of dividends on our common stock, and will apply to payments of gross proceeds from the sale or other disposition of our
common stock if such disposition occurs after December 31, 2018.
Prospective investors should consult their tax advisors regarding
the potential application of withholding under FATCA to their investment in our common stock.
THE PRECEDING DISCUSSION OF MATERIAL U.S. FEDERAL INCOME
TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK, INCLUDING THE
CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAW, AS WELL AS TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL, NON-U.S. OR U.S. FEDERAL NON-INCOME TAX LAWS SUCH AS ESTATE AND GIFT TAX.
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UNDERWRITING
We have entered into an underwriting agreement with the underwriters named below. Needham & Company, LLC is acting as representative
of the underwriters. The underwriters’ obligations are several, which means that each underwriter is required to purchase a specific number of shares, but is not responsible for the commitment of any other underwriter to purchase shares.
Subject to the terms and conditions of the underwriting agreement, each underwriter has severally agreed to purchase from us the number of shares of common stock set forth opposite its name below.
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Underwriter
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Number of
Shares
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Needham & Company, LLC
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3,937,500
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The Benchmark Company, LLC
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437,500
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Total
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4,375,000
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The underwriting agreement provides that the underwriters are obligated to purchase all the shares of common
stock in the offering if any are purchased, other than those shares covered by the option described below.
The underwriting agreement
provides that we will indemnify the underwriters against certain liabilities that may be incurred in connection with this offering, including liabilities under the Securities Act, or to contribute payments that the underwriters may be required to
make in respect thereof.
We have granted an option to the underwriters to purchase up to 625,000 additional shares of common stock at the
public offering price per share, less the underwriting discount, set forth on the cover page of this prospectus supplement. This option is exercisable during the
30-day
period after the date of this prospectus
supplement. If this option is exercised, each of the underwriters will purchase approximately the same percentage of the additional shares as the number of shares of common stock to be purchased by that underwriter, as shown in the table above,
bears to the total shown.
The representative has advised us that the underwriters propose to offer the shares of common stock to the
public at the public offering price per share set forth on the cover page of this prospectus supplement. The underwriters may offer shares to securities dealers, who may include the underwriters, at that public offering price less a concession of up
to $0.144 per share. After the offering to the public, the offering price and other selling terms may be changed by the representative.
The following table shows the per share and total underwriting discount to be paid to the underwriters by us. These amounts are shown assuming
both no exercise and full exercise of the underwriters’ option to purchase additional shares.
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Total
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Per Share
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No Exercise
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Full Exercise
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Paid by us
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$
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0.24
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$
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1,050,000
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$
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1,200,000
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We estimate that the total expenses of the offering to be paid by us, excluding the underwriting discount,
will be approximately $432,500. We have also agreed to reimburse the underwriters for fees and expenses incurred by them in connection with this offering up to $100,000. In addition, Roth Capital Partners, LLC (“Roth”) is serving as our
independent financial advisor in connection with this offering, for which we will pay Roth an advisory fee of $87,500. Roth was not engaged in the solicitation or distribution of this offering.
We have agreed not to offer, sell, contract to sell, pledge, grant options to purchase, or otherwise dispose of any shares of our common stock
or securities exchangeable for or convertible into our common stock for a period of 90 days after the date of this prospectus supplement without the prior written consent of Needham & Company, LLC. This agreement does not apply to any
existing employee benefit plans or the exercise of warrants outstanding as of the date of this prospectus supplement. Our directors and officers who collectively hold shares representing less than 10% of our outstanding common stock have agreed,
subject to certain exceptions, not to, directly or indirectly, sell, hedge, or otherwise dispose of any shares of common stock, options to acquire shares of common stock or securities exchangeable for or convertible into shares of common stock, for
a period of 90 days after the date of this prospectus supplement without the prior written consent of Needham & Company, LLC.
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In connection with this offering, the underwriters may engage in transactions that stabilize,
maintain or otherwise affect the price of our common stock. Specifically, the underwriters may sell more shares than are set forth on the cover page of this prospectus supplement. This creates a short position in our common stock for their own
account. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares sold by the underwriters is not greater than the number of shares that they may purchase pursuant to
their option to purchase additional shares described above. In a naked short position, the number of shares involved is greater than the number of shares in that option. To close out a short position or to stabilize the price of our common stock,
the underwriters may bid for, and purchase, common stock in the open market. The underwriters may also elect to reduce any short position by exercising all or part of their option to purchase additional shares. In determining the source of shares to
close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through their option to purchase additional
shares. If the underwriters sell more shares than could be covered by their option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the
underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it
for distributing our common stock in this offering because the underwriters repurchase that stock in stabilizing or short covering transactions.
Finally, the underwriters may bid for, and purchase, shares of our common stock in market making transactions, including “passive”
market making transactions as described below.
These activities may stabilize or maintain the market price of our common stock at a price
that is higher than the price that might otherwise exist in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of these activities at any time without notice. These transactions
may be effected on The NASDAQ Capital Market, or otherwise.
In connection with this offering, the underwriters or their affiliates may
engage in passive market making transactions in our common stock on The NASDAQ Capital Market immediately prior to the commencement of sales in this offering, in accordance with Rule 103 of Regulation M under the Exchange Act. Rule 103 generally
provides that:
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a passive market maker may not effect transactions or display bids for our common stock in excess of the highest independent bid price by persons who are not passive market makers;
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net purchases by a passive market maker on each day are generally limited to 30% of the passive market maker’s average daily trading volume in our common stock during a specified
two-month
prior period or 200 shares, whichever is greater, and must be discontinued when that limit is reached; and
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passive market making bids must be identified as such.
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Passive market making may stabilize or maintain the
market price of our common stock at a level above that which might otherwise prevail and, if commenced, may be discontinued at any time.
Notice to
Prospective Investors in Canada
The common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal
that are accredited investors, as defined in National Instrument 45-106
Prospectus Exemptions
or subsection 73.3(1) of the
Securities Act
(Ontario), and are permitted clients, as defined in National Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant Obligations
. Any resale of the common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable
securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for
rescission or damages if this prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the
securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with
a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105
Underwriting Conflicts
(NI 33-105), the
underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
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Notice to Prospective Investors in the European Economic Area
To the extent that the offer of the common stock is made in any Member State of the European Economic Area that has implemented the Prospectus
Directive before the date of publication of a prospectus in relation to the common stock which has been approved by the competent authority in the Member State in accordance with the Prospectus Directive (or, where appropriate, published in
accordance with the Prospectus Directive and notified to the competent authority in the Member State in accordance with the Prospectus Directive), the offer (including any offer pursuant to this document) is only addressed to qualified investors in
that Member State within the meaning of the Prospectus Directive or has been or will be made otherwise in circumstances that do not require us to publish a prospectus pursuant to the Prospectus Directive.
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member
State”), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and
will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate,
approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date,
make an offer of shares to the public in that Relevant Member State at any time:
(a) to legal entities which are
authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities,
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial
year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts, or
(c) in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of
the Prospectus Directive. For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient
information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus
Directive in that Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
The European Economic Area selling restriction is in addition to any other selling restrictions set out below. In relation to each Relevant
Member State, each purchaser of shares of common stock (other than the underwriters) will be deemed to have represented, acknowledged and agreed that it will not make an offer of shares of common stock to the public in any Relevant Member State,
except that it may, with effect from and including the date on which the Prospectus Directive is implemented in the Relevant Member State, make an offer of shares of common stock to the public in that Relevant Member State at any time in any
circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive, provided that such purchaser agrees that it has not and will not make an offer of any shares of common stock in reliance
or purported reliance on Article 3(2)(b) of the Prospectus Directive. For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares of common stock in any Relevant Member State has the
same meaning as in the preceding paragraph.
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Notice to Prospective Investors in the United Kingdom
In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may
only be directed at persons who are “qualified investors” (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a)
to (d) of the Order (all such persons together being referred to as “relevant persons”). This document must not be acted on or relied on in the United Kingdom by persons who are not relevant persons. In the United Kingdom, any
investment or investment activity to which this document relates is only available to, and will be engaged in with, relevant persons.
Notice to
Prospective Investors in Switzerland
This document does not constitute a prospectus within the meaning of Art. 652a of the Swiss Code
of Obligations. The shares of common stock may not be sold directly or indirectly in or into Switzerland except in a manner which will not result in a public offering within the meaning of the Swiss Code of Obligations. Neither this document nor any
other offering materials relating to the shares of common stock may be distributed, published or otherwise made available in Switzerland except in a manner which will not constitute a public offer of the shares of common stock in Switzerland.
S-16
LEGAL MATTERS
The validity of the shares of common stock offered hereby and certain legal matters in connection with this offering will be passed upon for
us by Fenwick & West LLP, Mountain View, California. Pillsbury Winthrop Shaw Pittman LLP, Palo Alto, California, is acting as counsel for the underwriters in connection with certain legal matters relating to the shares of common stock
offered by this prospectus supplement.
EXPERTS
The consolidated financial statements of Adesto Technologies Corporation as of December 31, 2016 and 2015 and for each of the three years
in the period ended December 31, 2016, incorporated in this prospectus supplement by reference to the Annual Report on Form 10-K for the year ended December 31, 2016, have been so incorporated in reliance on the report of BPM LLP, an
independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
S-17
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and are required to file annual,
quarterly and other reports, proxy statements and other information with the SEC. You may request copies of these reports, proxy statements and other information without charge, by written or telephonic request directed to Adesto Technologies
Corporation, Attn: Investor Relations, 3600 Peterson Way, Santa Clara, California 95054, telephone number (408) 400-0578. You may also inspect and copy these reports, proxy statements and other information at the public reference facilities
maintained by the SEC in Washington, D.C., 100 F Street N.E., Washington, D.C. 20549. Copies of such materials can be obtained from the SEC’s public reference section at prescribed rates. You may obtain information on the operation of the
public reference rooms by calling the SEC at (800) SEC-0330. Additionally, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and various other information about us. You may also
inspect the documents described herein at our principal executive offices, 3600 Peterson Way, Santa Clara, California 95054, during normal business hours.
Information about us is also available at our website at http://www.adestotech.com. However, the information on, or that can be accessed
through, our website is not a part of this prospectus supplement or the accompanying prospectus and is not incorporated by reference into this prospectus supplement (other than those filings with the SEC that we specifically incorporate by reference
into this prospectus supplement or accompanying prospectus).
S-18
INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you
by referring you to those other documents. The information incorporated by reference is an important part of this prospectus supplement and the accompanying prospectus, and information we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the termination of any offering of securities
made by this prospectus supplement and the accompanying prospectus:
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our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 24, 2017, as amended on April 28, 2017;
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our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 15, 2017;
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our Current Reports on Form 8-K filed on February 15, 2017, April 6, 2017, and June 7, 2017; and
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the description of our common stock in our Registration Statement on Form 8-A (No. 001-37582) filed with the SEC on October 5, 2015, and including any other amendments or reports filed for the purpose of updating
such description.
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We will furnish without charge to you, on written or oral request, a copy of any or all of such documents
that have been incorporated herein by reference (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the documents that this prospectus supplement or the accompanying prospectus incorporates by
reference). Written or oral requests for copies should be directed Adesto Technologies Corporation, Attn: Investor Relations, 3600 Peterson Way, Santa Clara, California 95054, telephone number (408) 400-0578. See the section of this prospectus
supplement entitled “Where You Can Find More Information” for information concerning how to read and obtain copies of materials that we file with the SEC at the SEC’s public offices.
Any statement contained in this prospectus supplement, or in a document all or a portion of which is incorporated by reference in this
prospectus supplement, shall be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any document incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this prospectus supplement.
S-19
PROSPECTUS
$20,000,000
Adesto
Technologies Corporation
Common Stock, Preferred Stock,
Debt Securities, Warrants, Subscription Rights and Units
From time to time, we may offer up to $20,000,000 aggregate dollar amount of shares of our common stock or preferred stock, debt securities,
warrants to purchase our common stock, preferred stock or debt securities, subscription rights to purchase our common stock, preferred stock or debt securities and/or units consisting of some or all of these securities, in any combination, together
or separately, in one or more offerings, in amounts, at prices and on the terms that we will determine at the time of the offering and which will be set forth in a prospectus supplement and any related free writing prospectus. The prospectus
supplement and any related free writing prospectus may also add, update or change information contained in this prospectus. The total amount of these securities will have an initial aggregate offering price of up to $20,000,000. Pursuant to
General Instruction I.B.6 of Form S-3, in no event will we sell securities in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75.0 million.
You should read this prospectus, the information incorporated, or deemed to be incorporated, by reference in this prospectus, and any
applicable prospectus supplement and related free writing prospectus carefully before you invest.
Our common stock is traded on The
Nasdaq Capital Market under the symbol “IOTS.” On April 4, 2017 the last reported sales price for our common stock was $4.00 per share. None of the other securities we may offer are currently traded on any securities exchange.
An investment in our securities involves a high degree of risk. You should carefully consider the information under the heading “
Risk
Factors
” beginning on page 4 of this prospectus before investing in our securities.
Common stock, preferred stock,
debt securities, warrants, subscription rights and/or units may be sold by us to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. For additional information on the methods of sale, you should
refer to the section entitled “Plan of Distribution” in this prospectus. If any underwriters, dealers or agents are involved in the sale of any securities with respect to which this prospectus is being delivered, the names of such
underwriters or agents and any applicable fees, discounts or commissions, details regarding over-allotment options, if any, and the net proceeds to us will be set forth in a prospectus supplement. The price to the public of such securities and the
net proceeds we expect to receive from such sale will also be set forth in a prospectus supplement.
Neither the
Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 4, 2017
TABLE OF CONTENTS
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the SEC) using a
“shelf” registration process. Under this shelf registration process, from time to time, we may sell any combination of the securities described in this prospectus in one or more offerings, up to a total dollar amount of $20,000,000. We
have provided to you in this prospectus a general description of the securities we may offer. Each time we sell securities under this shelf registration process, we will provide a prospectus supplement that will contain specific information about
the terms of the offering. We may also add, update or change in the prospectus supplement any of the information contained in this prospectus. To the extent there is a conflict between the information contained in this prospectus and the prospectus
supplement, you should rely on the information in the prospectus supplement;
provided
that, if any statement in one of these documents is inconsistent with a statement in another document having a later date—for example, a document
incorporated by reference in this prospectus or any prospectus supplement—the statement in the document having the later date modifies or supersedes the earlier statement. You should read both this prospectus and any prospectus supplement
together with additional information described under the next heading “Where You Can Find More Information.”
You should rely
only on the information contained in or incorporated by reference into this prospectus or any applicable prospectus supplement. No dealer, salesperson or any other person is authorized to give any information or to make any representation other than
the information and representations contained in or incorporated by reference into this prospectus or any applicable prospectus supplement. If different information is given or different representations are made, you may not rely on that information
or those representations as having been authorized by us. You may not imply from the delivery of this prospectus and any applicable prospectus supplement, nor from a sale made under this prospectus and any applicable prospectus supplement, that our
affairs are unchanged since the date of this prospectus and any applicable prospectus supplement or that the information contained in any document incorporated by reference is accurate as of any date other than the date of the document incorporated
by reference, regardless of the time of delivery of this prospectus and any applicable prospectus supplement or any sale of a security. This prospectus and any applicable prospectus supplement may only be used where it is legal to sell the
securities.
THIS PROSPECTUS MAY NOT BE USED TO OFFER AND SELL SECURITIES UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
In this prospectus, unless the context otherwise requires, the terms “Adesto,” the “Company,” “we,”
“us,” and “our” refer to Adesto Technologies Corporation, a Delaware corporation.
1
PROSPECTUS SUMMARY
This summary may not contain all the information that you should consider before investing in securities. You should read the entire
prospectus and the information incorporated by reference in this prospectus carefully, including “Risk Factors” and the financial data and related notes and other information incorporated by reference, before making an investment decision.
Company Overview
We are a leading
provider of application-specific and
ultra-low
power
non-volatile
memory products. We optimize our
non-volatile
memory, or NVM,
products for Internet of Things, or IoT, applications including current and next-generation Internet-connected devices in the consumer, industrial, medical and wearables markets. We combine our NVM design capabilities with proprietary intellectual
property and differentiated technology platforms to deliver high-performance products that dramatically reduce the overall energy consumption of our customers’ systems and extend battery life. Our products feature embedded intelligence in a
small form factor and high reliability.
We sell our products directly to leading original equipment manufacturers and original design
manufacturers, or OEMs and ODMs, respectively that manufacture products for our end customers. In general, we work directly with our customers to have our NVM devices designed into and qualified for their products, which we refer to as design wins.
Although we maintain direct sales, support and development relationships with our end customers, most of our products are sold to those end customers through distributors.
We offer five product families, DataFlash, Fusion Flash, EcoXip, Mavriq and Moneta, which are manufactured using two technology platforms:
industry-standard “floating gate” technology and our proprietary Conductive Bridging Random Access Memory, or CBRAM, technology. We optimize our products to operate at a wide voltage range, allowing continued operation even as the battery
discharges and reaches very low power levels, where commodity NVM devices typically fail. Operating intelligence, such as low power mode, is designed into our products to help systems save energy. Our components allow for greater storage efficiency
than competing commodity NVM products in logging small packets of data for the IoT. This reduces microcontroller unit burden on system resources and allows for less frequent
re-write
cycles, enabling dramatic
increases in battery life and enhancing the reliability of the flash memory components. By incorporating power management features in our NVM products, we enable our customers to reduce the number of components included in and the overall footprint
of their systems, thereby lowering the total cost of their systems. Some of our new products significantly improve system performance and power consumption by using intelligent design to accelerate data handling capability between the microprocessor
and memory.
The Securities We May Offer
With this prospectus, we may offer common stock, preferred stock, debt securities, warrants, subscription rights to purchase our common stock,
preferred stock or debt securities, and/or units consisting of some or all of these securities in any combination. The aggregate offering price of securities that we offer with this prospectus will not exceed $20,000,000. Each time we offer
securities with this prospectus, we will provide offerees with a prospectus supplement that will contain the specific terms of the securities being offered. The following is a summary of the securities we may offer with this prospectus.
Common Stock
We may offer shares of our
common stock, par value $0.0001 per share.
Preferred Stock
We may offer shares of our preferred stock, par value $0.0001 per share, in one or more series. Our board of directors or a committee
designated by the board will determine the dividend, voting, conversion and other rights of the series of shares of preferred stock being offered. Each series of preferred stock will be more fully described in the particular prospectus
supplement that will accompany this prospectus, including redemption provisions, rights in the event of our liquidation, dissolution or the winding up, voting rights and rights to convert into common stock.
Debt Securities
We may offer general
obligations, which may be secured or unsecured, senior or subordinated and convertible into shares of our common stock or preferred stock. In this prospectus, we refer to the senior debt securities and the subordinated debt securities together as
the “debt securities.” Our board of directors will determine the terms of each series of debt securities being offered.
We will
issue the debt securities under an indenture between us and a trustee. In this document, we have summarized general features of the debt securities from the indenture. We encourage you to read the indenture, which is an exhibit to the registration
statement of which this prospectus is a part.
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Warrants
We may offer warrants for the purchase of debt securities, shares of preferred stock or shares of common stock. We may issue warrants
independently or together with other securities. Our board of directors will determine the terms of the warrants.
Subscription Rights
We may offer subscription rights for the purchase of common stock, preferred stock or debt securities. We may issue subscription rights
independently or together with other securities. Our board of directors will determine the terms of the subscription rights.
Units
We may offer units consisting of some or all of the securities described above, in any combination, including common stock, preferred stock,
warrants and/or debt securities. The terms of these units will be set forth in a prospectus supplement. The description of the terms of these units in the related prospectus supplement will not be complete. You should refer to the applicable form of
unit and unit agreement for complete information with respect to these units.
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We were originally incorporated in California in January 2006, and reincorporated in Delaware in October 2015. Our principal executive offices
are located at 3600 Peterson Way, Santa Clara, California 95054 and our telephone number is (408)
400-0578.
Our website is www.adestotech.com. The information contained on, or that can be accessed through, our
website is not a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.
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RISK FACTORS
An investment in our securities involves a high degree of risk. The prospectus supplement applicable to each offering of securities will
contain a discussion of the risks applicable to an investment in our securities. Prior to making a decision about investing in our securities, you should carefully consider the specific factors discussed under the heading “Risk Factors” in
the applicable prospectus supplement, together with all of the other information contained or incorporated by reference in the prospectus supplement or appearing or incorporated by reference in this prospectus. You should also consider the risks,
uncertainties and assumptions discussed in our most recent Annual Report on Form
10-K
or Quarterly Report on
Form 10-Q
and other filings we make with the SEC from
time to time, which are incorporated herein by reference in this prospectus, and may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. The risks and uncertainties we have described are not
the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations.
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RATIO OF EARNINGS TO FIXED CHARGES
If we offer debt securities and/or preference equity securities under this prospectus and at the time of such offer we are no longer a smaller
reporting company, then we will, at that time, provide a ratio of earnings to fixed charges and/or ratio of combined fixed charges and preference dividends to earnings, respectively, in the applicable prospectus supplement for such offering.
5
FORWARD-LOOKING STATEMENTS
This prospectus and documents incorporated herein by reference contain “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results
could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. Such statements include, but are not limited to, statements about future financial and operating
results, plans, objectives, expectations and intentions, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, cost savings, objectives of management, business strategies, debt
financing, anticipated trends and challenges in our business and in the markets in which we operate, the development and enhancement of our products to meet anticipated market needs, and other statements that are not historical facts. You can find
many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates,” “may,” “might,” “should,” “will,” “could,”
“plan,” “intend,” “project,” “seek” or similar expressions in this prospectus or in documents incorporated by reference into this prospectus. We intend that such forward-looking statements be subject to the
safe harbors created thereby.
These forward-looking statements are based on the current beliefs and expectations of our management and
are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. Factors that might cause
such a difference include those discussed in our most recent Annual Report on Form
10-K
or Quarterly Report on
Form 10-Q,
as well as those discussed in this
prospectus and in the documents incorporated by reference into this prospectus. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus or, in the case of documents
referred to or incorporated by reference, the date of those documents.
All subsequent written or oral forward-looking statements
attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more
forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act) and are required to
file annual, quarterly and other reports, proxy statements and other information with the SEC. You may inspect and copy these reports, proxy statements and other information at the public reference facilities maintained by the SEC in Washington,
D.C., 100 F Street N.E., Washington, D.C. 20549. Copies of such materials can be obtained from the SEC’s public reference section at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC
at
(800) SEC-0330.
Additionally, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and various other information about us. You may also
inspect the documents described herein at our principal executive offices, 3600 Peterson Way, Santa Clara, California 95054, during normal business hours.
Information about us is also available at our website at www.adestotech.com. However, the information on our website is not a part of this
prospectus and is not incorporated by reference into this prospectus.
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INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important
information to you by referring you to those other documents. The information incorporated by reference is an important part of this prospectus, and information we file later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the termination of any offering of securities made by this prospectus:
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Our Annual Report on Form
10-K
for the year ended December 31, 2016 filed with the Commission on March 24, 2017 pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended, or the Exchange Act;
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All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by our Annual Report referred to in (1) above;
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The description of our common stock in our Registration Statement on Form
8-A
(No.
001-37582)
filed with the Commission on October 5,
2015, and including any other amendments or reports filed for the purpose of updating such description; and
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All of our filings pursuant to the Exchange Act after the date of the initial registration statement and prior to the effectiveness of the registration statement.
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Upon written or oral request, we will provide without charge to each person, including any beneficial owner, to whom this prospectus is
delivered, a copy of any or all of such information that has been incorporated herein by reference (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the documents that this prospectus
incorporates). Written or oral requests for copies should be directed Adesto Technologies Corporation, Attn: Investor Relations, 3600 Peterson Way, Santa Clara, California 95054, telephone number (408)
400-0578.
See the section of this prospectus entitled “Where You Can Find More Information” for information concerning how to read and obtain copies of materials that we file with the SEC at the
SEC’s public offices.
Any statement contained in this prospectus, or in a document all or a portion of which is incorporated by
reference, shall be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus, any prospectus supplement or any document incorporated by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this prospectus.
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USE OF PROCEEDS
We will retain broad discretion over the use of the net proceeds to us from the sale of our securities under this prospectus. Unless otherwise
provided in the applicable prospectus supplement, we intend to use the net proceeds from the sale of securities under this prospectus for general corporate purposes, which may include funding research and development activities and sales and
marketing activities, increasing our working capital, repaying debt, investments in or acquisitions of complementary businesses, products, services, technologies or other assets and capital expenditures. We will set forth in the prospectus
supplement our intended use for the net proceeds received from the sale of any securities. Pending the application of the net proceeds, we intend to invest the net proceeds in short-term or long-term, investment-grade, interest-bearing securities.
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PL
AN OF DISTRIBUTION
We may sell the securities covered by this prospectus to one or more underwriters for public offering and sale by them, and may also sell the
securities to investors directly or through agents. We will name any underwriter or agent involved in the offer and sale of securities in the applicable prospectus supplement. We have reserved the right to sell or exchange securities directly to
investors on our own behalf in jurisdictions where we are authorized to do so. We may distribute the securities from time to time in one or more transactions:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices; or
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We may directly solicit offers to purchase the securities being offered
by this prospectus. We may also designate agents to solicit offers to purchase the securities from time to time. We will name in a prospectus supplement any agent involved in the offer or sale of our securities. Unless otherwise indicated in a
prospectus supplement, an agent will be acting on a best efforts basis, and a dealer will purchase securities as a principal for resale at varying prices to be determined by the dealer.
If we utilize an underwriter in the sale of the securities being offered by this prospectus, we will execute an underwriting agreement with
the underwriter at the time of sale and we will provide the name of any underwriter in the prospectus supplement that the underwriter will use to make resales of the securities to the public. In connection with the sale of the securities, we, or the
purchasers of securities for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter may sell the securities to or through dealers, and those 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 any compensation we pay to underwriters, dealers, or agents in connection with the
offering of the securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers. Underwriters, dealers and agents participating in the distribution of the securities may be deemed to be underwriters within
the meaning of the Securities Act of 1933 (the Securities Act), and any discounts and commissions received by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions. We may enter
into agreements to indemnify underwriters, dealers and agents against civil liabilities, including liabilities under the Securities Act, and to reimburse them for certain expenses. We may grant underwriters who participate in the distribution of our
securities under this prospectus an option to purchase additional securities to cover any over-allotments in connection with the distribution.
The securities we offer under this prospectus may or may not be listed through The Nasdaq Capital Market or any other securities exchange. To
facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price of the securities. This may include short sales of the securities, which involves
the sale by persons participating in the offering of more securities than we sold to them. In these circumstances, these persons would cover such short positions by making purchases in the open market or by exercising their option to purchase
additional securities. In addition, these persons may stabilize or maintain the price of the securities by bidding for or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers
participating in the offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level
above that which might otherwise prevail in the open market. These transactions may be discontinued at any time.
We may engage in at the
market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to
third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement,
including short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and they may use securities received from us in
settlement of those derivatives to close out any related open borrowings of stock. The third party in these sale transactions will be an underwriter and will be identified in the applicable prospectus supplement. In addition, we may otherwise loan
or pledge securities to a financial institution or other third party that in turn may sell the securities short using this prospectus. The financial institution or other third party may transfer its economic short position to investors in our
securities or in connection with a concurrent offering of other securities.
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We will file a prospectus supplement to describe the terms of any offering of our securities
covered by this prospectus. The prospectus supplement will disclose:
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the terms of the offer;
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the names of any underwriters, including any managing underwriters, as well as any dealers or agents;
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the purchase price of the securities from us;
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the net proceeds to us from the sale of the securities;
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any delayed delivery arrangements;
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any over-allotment or other options under which underwriters, if any, may purchase additional securities from us;
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any underwriting discounts, commissions or other items constituting underwriters’ compensation, and any commissions paid to agents;
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in a subscription rights offering, whether we have engaged dealer-managers to facilitate the offering or subscription, including their name or names and compensation;
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any public offering price; and
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other facts material to the transaction.
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We will bear all or substantially all of the costs,
expenses and fees in connection with the registration of our securities under this prospectus. The underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business.
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DES
CRIPTION OF CAPITAL STOCK
General
We are authorized to issue
105,000,000 shares of all classes of capital stock, of which 100,000,000 shares are common stock, $0.0001 par value per share, and 5,000,000 shares are preferred stock, $0.0001 par value per share. Our capital is stated in U.S. dollars. As of April
4, 2017, we had 15,733,875 outstanding shares of common stock and no outstanding shares of preferred stock.
Common Stock
Dividends
We have never declared
or paid any cash dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any cash dividends on our common stock for the foreseeable future. Any determination to pay dividends in the future will be
at the discretion of our board of directors. In addition, the terms of our $18.0 million term loan facility and our $2.0 million line of credit currently prohibit us from paying dividends.
Voting
Holders of our common
stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. We have not provided for cumulative voting for the election of directors in our restated certificate of incorporation. Our restated certificate of
incorporation establishes a classified board of directors, to be divided into three classes with staggered three-year terms. Only the directors in one class will be subject to election by a plurality of the votes cast at each annual meeting of our
stockholders, with the directors in the other classes continuing for the remainder of their respective three-year terms.
No Preemptive or Similar
Rights
Our common stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund
provisions.
Right to Receive Liquidation Distributions
Upon our liquidation, dissolution
or winding-up, the
assets legally available for
distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the
preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.
Fully Paid and
Non-Assessable
All of the outstanding shares of our common stock are, and the shares of our
common stock to be issued pursuant to this offering will be, fully paid
and non-assessable.
Transfer
Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer
agent’s address is 250 Royall Street, Canton, Massachusetts 02021.
Listing
Our common stock is listed on The Nasdaq Capital Market under the symbol “IOTS.”
Preferred Stock
Under the terms of our
restated certificate of incorporation, our board of directors have the authority, subject to limitations prescribed by Delaware law, to issue up to 5,000,000 shares of preferred stock in one or more series, to establish from time to time the number
of shares to be included in each series, and to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case without further vote or action by our
stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by our stockholders. Our
board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing
flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control of our company and might adversely affect the market price of
our common stock and the voting and other rights of the holders of our common stock.
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Registration Rights
Pursuant to the terms of the terms of an amended and restated investors’ rights agreement entered into in August 2013, certain of our
common stockholders are entitled to demand, piggyback and
Form S-3
registration rights.
Demand
Registration Rights
The holders of at least 40% of the then-outstanding shares subject to registration rights can request that we
file a registration statement covering registrable securities with an anticipated aggregate offering price of at least $5.0 million. We are only required to file two registration statements that are declared effective pursuant to these demand
registration rights. We may postpone the filing of a registration statement for up to 90 days once in a
12-month
period if our board of directors determines that the filing would be materially detrimental to
us and our stockholders.
Piggyback Registration Rights
If we register any of our securities for public sale, holders of shares having registration rights will have the right to include their shares
in the registration statement. However, this right does not apply to a registration relating to sales of shares of participants in one of our stock plans, a registration on any form that does not include substantially the same information as would
be required to be included in a registration statement covering the sale of the shares having registration rights or a registration in which the only common stock being registered is common stock issuable upon conversion of debt securities that are
also being registered. The underwriters of any underwritten offering will have the right, in their sole discretion, to limit, because of marketing reasons, the number of shares registered by these holders, in which case the number of shares to be
registered will be apportioned pro rata among these holders, according to the total amount of securities entitled to be included by each holder, or in a manner mutually agreed upon by the holders. However, the number of shares to be registered by
these holders cannot be reduced below 33% of the total shares covered by the registration statement.
Form
S-3
Registration Rights
The holders of then-outstanding shares having registration rights
can request that we register all or part of their shares on
Form S-3
if we are eligible to file a registration statement on Form
S-3
and if the aggregate price to
the public, net of underwriters’ discounts and commissions, of the shares offered is at least $1 million. The stockholders may only require us to effect two registration statements on
Form S-3
in a
12-month
period. We may postpone the filing of a registration statement on
Form S-3
for up to 90 days once in a
12-month
period if our board of directors determines that the filing would be materially detrimental to us and our stockholders.
Expenses of Registration Rights
We generally will pay all expenses, other than underwriting discounts and commissions and the reasonable fees and disbursements of more than
one counsel for the selling stockholders, incurred in connection with the registrations described above.
Expiration of Registration Rights
The registration rights described above will expire, with respect to any particular holder of these rights, on the earlier of
October 30, 2022 and when that holder can sell all of its registrable securities in any three month period without restriction under Rule 144 of the Securities Act.
Anti-Takeover Effects of Provisions
The
provisions of Delaware law, our restated certificate of incorporation and our amended and restated bylaws may have the effect of delaying or discouraging another person from acquiring control of our company. These provisions, which are summarized
below, may have the effect of discouraging takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of
our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us.
Delaware Law
We are subject to
the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder”
for a three-year
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period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes,
among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own
within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock.
Under
Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions: before the stockholder became interested, the board of directors approved either the
business combination or the transaction which resulted in the stockholder becoming an interested stockholder; upon closing of the transaction which 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 voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock
plans, in some instances; or at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the
affirmative vote of at least
two-thirds
of the outstanding voting stock which is not owned by the interested stockholder.
A Delaware corporation may “opt out” of these provisions with an express provision in its original certificate of incorporation or
an express provision in its certificate of incorporation or bylaws resulting from a stockholders’ amendment approved by at least a majority of the outstanding voting shares. We have not opted out of these provisions. As a result, mergers or
other takeover or change in control attempts of us may be discouraged or prevented.
Restated Certificate of Incorporation and Amended and Restated
Bylaw Provisions
Our restated certificate of incorporation and our amended and restated bylaws include a number of provisions that
could deter hostile takeovers or delay or prevent changes in control of our management team, including the following:
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Board of Directors Vacancies
. Our restated certificate of incorporation and amended and restated bylaws authorize only our board of directors to fill vacant directorships, including newly created seats. In
addition, the number of directors constituting our board of directors is permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of
our board of directors and then gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of
management.
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Classified Board
. Our restated certificate of incorporation and amended and restated bylaws provide that our board is classified into three classes of directors. A third party may be discouraged from making a
tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for stockholders to replace a majority of the directors on a classified board of directors.
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Stockholder Action; Special Meeting of Stockholders
. Our restated certificate of incorporation provides that our stockholders may not take action by written consent, but may only take action at annual or special
meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our amended and
restated bylaws. Our amended and restated bylaws further provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our
president, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any
action, including the removal of directors.
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Advance Notice Requirements for Stockholder Proposals and Director Nominations
. Our amended and restated bylaws provide advance notice procedures for stockholders seeking to bring business before our annual
meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our amended and restated bylaws also specify certain requirements regarding the form and content of a stockholder’s notice. These
provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these
provisions might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
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No Cumulative Voting
. The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless a corporation’s certificate of
incorporation provides otherwise. Our amended and restated certificate of incorporation and amended and restated bylaws do not provide for cumulative voting.
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Directors Removed Only for Cause
. Our restated certificate of incorporation provides that stockholders may remove directors only for cause and only with the approval of holders of at least
two-thirds
of our outstanding common stock.
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Amendment of Charter Provisions
. Any amendment of the above provisions in our restated certificate of incorporation would require approval by holders of at least
two-thirds
of our outstanding common stock.
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Issuance of Undesignated Preferred Stock
. Our board of directors has the authority, without further action by the stockholders, to issue up to 5,000,000 shares of undesignated preferred stock with rights and
preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt
to obtain control of us by means of a merger, tender offer, proxy contest or other means.
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Choice of Forum
. Our restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our
behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our restated certificate of incorporation or our amended and restated bylaws; or any action
asserting a claim against us that is governed by the internal affairs doctrine.
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DESCRIPTION OF DEBT SECURITIES
General
We will issue the debt
securities offered by this prospectus and any accompanying prospectus supplement under an indenture to be entered into between us and the trustee identified in the applicable prospectus supplement. The terms of the debt securities will include
those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as in effect on the date of the indenture. We have filed a copy of the form of indenture as an exhibit to the registration
statement in which this prospectus is included. The indenture will be subject to and governed by the terms of the Trust Indenture Act of 1939.
We may offer under this prospectus up to an aggregate principal amount of $20,000,000 in debt securities, or if debt securities are issued at
a discount, or in a foreign currency, foreign currency units or composite currency, the principal amount as may be sold for an aggregate public offering price of up to $20,000,000. Unless otherwise specified in the applicable prospectus
supplement, the debt securities will represent our direct, unsecured obligations and will rank equally with all of our other unsecured indebtedness.
We may issue the debt securities in one or more series with the same or various maturities, at par, at a premium, or at a discount. We
will describe the particular terms of each series of debt securities in a prospectus supplement relating to that series, which we will file with the SEC. The prospectus supplement relating to the particular series of debt securities being offered
will specify the particular amounts, prices and terms of those debt securities. These terms may include:
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the title of the series;
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the aggregate principal amount, and, if a series, the total amount authorized and the total amount outstanding;
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the issue price or prices, expressed as a percentage of the aggregate principal amount of the debt securities;
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any limit on the aggregate principal amount;
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the date or dates on which principal is payable;
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the interest rate or rates (which may be fixed or variable) or, if applicable, the method used to determine such rate or rates;
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the date or dates from which interest, if any, will be payable and any regular record date for the interest payable;
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the place or places where principal and, if applicable, premium and interest, is payable;
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the terms and conditions upon which we may, or the holders may require us to, redeem or repurchase the debt securities;
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the denominations in which such debt securities may be issuable, if other than denominations of $1,000 or any integral multiple of that number;
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whether the debt securities are to be issuable in the form of certificated securities (as described below) or global securities (as described below);
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the portion of principal amount that will be payable upon declaration of acceleration of the maturity date if other than the principal amount of the debt securities;
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the currency of denomination;
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the designation of the currency, currencies or currency units in which payment of principal and, if applicable, premium and interest, will be made;
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if payments of principal and, if applicable, premium or interest, on the debt securities are to be made in one or more currencies or currency units other than the currency of denomination, the manner in which the
exchange rate with respect to such payments will be determined;
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if amounts of principal and, if applicable, premium and interest may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or
financial index, then the manner in which such amounts will be determined;
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the provisions, if any, relating to any collateral provided for such debt securities;
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any addition to or change in the covenants and/or the acceleration provisions described in this prospectus or in the indenture;
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any events of default, if not otherwise described below under “Events of Default”;
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the terms and conditions, if any, for conversion into or exchange for shares of our common stock or preferred stock;
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any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents; and
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the terms and conditions, if any, upon which the debt securities shall be subordinated in right of payment to our other indebtedness.
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We may issue discount debt securities that provide for an amount less than the stated principal amount to be due and payable upon acceleration
of the maturity of such debt securities in accordance with the terms of the indenture. We may also issue debt securities in bearer form, with or without coupons. If we issue discount debt securities or debt securities in bearer form, we
will describe material U.S. federal income tax considerations and other material special considerations which apply to these debt securities in the applicable prospectus supplement.
We may issue debt securities denominated in or payable in a foreign currency or currencies or a foreign currency unit or units. If we do,
we will describe the restrictions, elections, and general tax considerations relating to the debt securities and the foreign currency or currencies or foreign currency unit or units in the applicable prospectus supplement.
Debt securities offered under this prospectus and any prospectus supplement will be subordinated in right of payment to certain of our
outstanding senior indebtedness. In addition, we will seek the consent of the holders of any such senior indebtedness prior to issuing any debt securities under this prospectus to the extent required by the agreements evidencing such senior
indebtedness.
Registrar and Paying Agent
The debt securities may be presented for registration of transfer or for exchange at the corporate trust office of the security registrar or at
any other office or agency that we maintain for those purposes. In addition, the debt securities may be presented for payment of principal, interest and any premium at the office of the paying agent or at any office or agency that we maintain for
those purposes.
Conversion or Exchange Rights
Debt securities may be convertible into or exchangeable for shares of our common stock. The terms and conditions of conversion or exchange will
be stated in the applicable prospectus supplement. The terms will include, among others, the following:
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the conversion or exchange price;
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the conversion or exchange period;
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provisions regarding the convertibility or exchangeability of the debt securities, including who may convert or exchange;
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events requiring adjustment to the conversion or exchange price;
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provisions affecting conversion or exchange in the event of our redemption of the debt securities; and
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any anti-dilution provisions, if applicable.
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Registered Global Securities
If we decide to issue debt securities in the form of one or more global securities, then we will register the global securities in the name of
the depositary for the global securities or the nominee of the depositary, and the global securities will be delivered by the trustee to the depositary for credit to the accounts of the holders of beneficial interests in the debt securities.
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The prospectus supplement will describe the specific terms of the depositary arrangement for debt
securities of a series that are issued in global form. None of us, the trustee, any payment agent or the security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial
ownership interests in a global debt security or for maintaining, supervising or reviewing any records relating to these beneficial ownership interests.
No Protection in the Event of Change of Control
The indenture does not have any covenants or other provisions providing for a put or increased interest or otherwise that would afford holders
of our debt securities additional protection in the event of a recapitalization transaction, a change of control or a highly leveraged transaction. If we offer any covenants or provisions of this type with respect to any debt securities covered
by this prospectus, we will describe them in the applicable prospectus supplement.
Covenants
Unless otherwise indicated in this prospectus or the applicable prospectus supplement, our debt securities will not have the benefit of any
covenants that limit or restrict our business or operations, the pledging of our assets or the incurrence by us of indebtedness. We will describe in the applicable prospectus supplement any material covenants in respect of a series of debt
securities.
Merger, Consolidation or Sale of Assets
The form of indenture provides that we will not consolidate with or merge into any other person or convey, transfer, sell or lease our
properties and assets substantially as an entirety to any person, unless:
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we are the surviving person of such merger or consolidation, or if we are not the surviving person, the person formed by the consolidation or into or with which we are merged or the person to which our properties and
assets are conveyed, transferred, sold or leased, is a corporation organized and existing under the laws of the U.S., any state or the District of Columbia or a corporation or comparable legal entity organized under the laws of a foreign
jurisdiction and has expressly assumed all of our obligations, including the payment of the principal of and, premium, if any, and interest on the debt securities and the performance of the other covenants under the indenture; and
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immediately before and immediately after giving effect to the transaction on a pro forma basis, no event of default, and no event which, after notice or lapse of time or both, would become an event of default, has
occurred and is continuing under the indenture.
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Events of Default
Unless otherwise specified in the applicable prospectus supplement, the following events will be events of default under the indenture with
respect to debt securities of any series:
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we fail to pay any principal or premium, if any, when it becomes due;
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we fail to pay any interest within 30 days after it becomes due;
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we fail to observe or perform any other covenant in the debt securities or the indenture for 60 days after written notice specifying the failure from the trustee or the holders of not less than 25% in aggregate
principal amount of the outstanding debt securities of that series; and
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certain events involving bankruptcy, insolvency or reorganization of us or any of our significant subsidiaries.
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The trustee may withhold notice to the holders of the debt securities of any series of any default, except in payment of principal of or
premium, if any, or interest on the debt securities of a series, if the trustee considers it to be in the best interest of the holders of the debt securities of that series to do so.
If an event of default (other than an event of default resulting from certain events of bankruptcy, insolvency or reorganization) occurs, and
is continuing, then the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding debt securities of any series may accelerate the maturity of the debt securities. If this happens, the entire principal amount, plus
the premium, if any, of all the outstanding debt securities of the affected series plus accrued interest to the date of acceleration
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will be immediately due and payable. At any time after the acceleration, but before a judgment or decree based on such acceleration is obtained by the trustee, the holders of a majority in
aggregate principal amount of outstanding debt securities of such series may rescind and annul such acceleration if:
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all events of default (other than nonpayment of accelerated principal, premium or interest) have been cured or waived;
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all lawful interest on overdue interest and overdue principal has been paid; and
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the rescission would not conflict with any judgment or decree.
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In addition, if the
acceleration occurs at any time when we have outstanding indebtedness that is senior to the debt securities, the payment of the principal amount of outstanding debt securities may be subordinated in right of payment to the prior payment of any
amounts due under the senior indebtedness, in which case the holders of debt securities will be entitled to payment under the terms prescribed in the instruments evidencing the senior indebtedness and the indenture.
If an event of default resulting from certain events of bankruptcy, insolvency or reorganization occurs, the principal, premium and interest
amount with respect to all of the debt securities of any series will be due and payable immediately without any declaration or other act on the part of the trustee or the holders of the debt securities of that series.
The holders of a majority in principal amount of the outstanding debt securities of a series will have the right to waive any existing default
or compliance with any provision of the indenture or the debt securities of that series and to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, subject to certain limitations specified in the
indenture.
No holder of any debt security of a series will have any right to institute any proceeding with respect to the indenture or
for any remedy under the indenture, unless:
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the holder gives to the trustee written notice of a continuing event of default;
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the holders of at least 25% in aggregate principal amount of the outstanding debt securities of the affected series make a written request and offer reasonable indemnity to the trustee to institute a proceeding as
trustee;
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the trustee fails to institute a proceeding within 60 days after such request; and
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the holders of a majority in aggregate principal amount of the outstanding debt securities of the affected series do not give the trustee a direction inconsistent with such request during such 60-day period.
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These limitations do not, however, apply to a suit instituted for payment on debt securities of any series on or after the
due dates expressed in the debt securities.
We will periodically deliver certificates to the trustee regarding our compliance with our
obligations under the indenture.
Modification and Waiver
From time to time, we and the trustee may, without the consent of holders of the debt securities of one or more series, amend the indenture or
the debt securities of one or more series, or supplement the indenture, for certain specified purposes, including:
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to provide that the surviving entity following a change of control permitted under the indenture will assume all of our obligations under the indenture and debt securities;
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to provide for certificated debt securities in addition to uncertificated debt securities;
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to comply with any requirements of the SEC under the Trust Indenture Act of 1939;
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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 cure any ambiguity, defect or inconsistency, or make any other change that does not materially and adversely affect the rights of any holder; and
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to appoint a successor trustee under the indenture with respect to one or more series.
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From
time to time we and the trustee may, with the consent of holders of at least a majority in principal amount of an outstanding series of debt securities, amend or supplement the indenture or the debt securities series, or waive compliance in a
particular instance by us with any provision of the indenture or the debt securities. We may not, however, without the consent of each holder affected by such action, modify or supplement the indenture or the debt securities or waive compliance
with any provision of the indenture or the debt securities in order to:
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reduce the amount of debt securities whose holders must consent to an amendment, supplement, or waiver to the indenture or such debt security;
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reduce the rate of or change the time for payment of interest or reduce the amount of or postpone the date for payment of sinking fund or analogous obligations;
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reduce the principal of or change the stated maturity of the debt securities;
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make any debt security payable in money other than that stated in the debt security;
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change the amount or time of any payment required or reduce the premium payable upon any redemption, or change the time before which no such redemption may be made;
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waive a default in the payment of the principal of, premium, if any, or interest on the debt securities or a redemption payment;
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waive a redemption payment with respect to any debt securities or change any provision with respect to redemption of debt securities; or
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take any other action otherwise prohibited by the indenture to be taken without the consent of each holder affected by the action.
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Defeasance of Debt Securities and Certain Covenants in Certain Circumstances
The indenture permits us, at any time, to elect to discharge our obligations with respect to one or more series of debt securities by following
certain procedures described in the indenture. These procedures will allow us either:
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to defease and be discharged from any and all of our obligations with respect to any debt securities except for the following obligations (which discharge is referred to as “legal defeasance”):
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to register the transfer or exchange of such debt securities;
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to replace temporary or mutilated, destroyed, lost or stolen debt securities;
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to compensate and indemnify the trustee; or
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to maintain an office or agency in respect of the debt securities and to hold monies for payment in trust; or
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to be released from our obligations with respect to the debt securities under certain covenants contained in the indenture, as well as any additional covenants which may be contained in the applicable supplemental
indenture (which release is referred to as “covenant defeasance”).
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In order to exercise either defeasance option,
we must irrevocably deposit with the trustee or other qualifying trustee, in trust for that purpose:
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U.S. Government Obligations (as described below) or Foreign Government Obligations (as described below) that through the scheduled payment of principal and interest in accordance with their terms will provide money; or
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a combination of money and/or U.S. Government Obligations and/or Foreign Government Obligations sufficient in the written opinion of a nationally-recognized firm of independent accountants to provide money;
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that, in each case specified above, provides a sufficient amount to pay the principal of, premium, if any, and interest, if any, on the
debt securities of the series, on the scheduled due dates or on a selected date of redemption in accordance with the terms of the indenture.
In addition, defeasance may be effected only if, among other things:
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in the case of either legal or covenant defeasance, we deliver to the trustee an opinion of counsel, as specified in the indenture, stating that as a result of the defeasance neither the trust nor the trustee will be
required to register as an investment company under the Investment Company Act of 1940;
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in the case of legal defeasance, we deliver to the trustee an opinion of counsel stating that we have received from, or there has been published by, the Internal Revenue Service a ruling to the effect that, or there has
been a change in any applicable federal income tax law with the effect that (and the opinion shall confirm that), the holders of outstanding debt securities will not recognize income, gain or loss for U.S. federal income tax purposes solely as a
result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner, including as a result of prepayment, and at the same times as would have been the case if legal defeasance had not occurred;
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in the case of covenant defeasance, we deliver to the trustee an opinion of counsel to the effect that the holders of the outstanding debt securities will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if covenant defeasance had not occurred; and
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certain other conditions described in the indenture are satisfied.
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If we fail to comply with
our remaining obligations under the indenture and applicable supplemental indenture after a covenant defeasance of the indenture and applicable supplemental indenture, and the debt securities are declared due and payable because of the occurrence of
any undefeased event of default, the amount of money and/or U.S. Government Obligations and/or Foreign Government Obligations on deposit with the trustee could be insufficient to pay amounts due under the debt securities of the affected series at
the time of acceleration. We will, however, remain liable in respect of these payments.
The term “U.S. Government
Obligations” as used in the above discussion means securities that are direct obligations of or non-callable obligations guaranteed by the United States of America for the payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
The term “Foreign Government Obligations” as used in the above discussion means, with
respect to debt securities of any series that are denominated in a currency other than U.S. dollars, (1) direct obligations of the government that issued or caused to be issued such currency for the payment of which obligations its full faith
and credit is pledged or (2) obligations of a person controlled or supervised by or acting as an agent or instrumentality of such government the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by that
government, which in either case under clauses (1) or (2), are not callable or redeemable at the option of the issuer.
Regarding the Trustee
We will identify the trustee with respect to any series of debt securities in the prospectus supplement relating to the applicable
debt securities. You should note that if the trustee becomes a creditor of ours, the indenture and the Trust Indenture Act of 1939 limit the rights of the trustee to obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim, as security or otherwise. The trustee and its affiliates may engage in, and will be permitted to continue to engage in, other transactions with us and our affiliates. If, however, the trustee acquires
any “conflicting interest” within the meaning of the Trust Indenture Act of 1939, it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding debt securities of any series may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the trustee. If an event of default occurs and is
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continuing, the trustee, in the exercise of its rights and powers, must use the degree of care and skill of a prudent person in the conduct of his or her own affairs. Subject to that
provision, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any of the holders of the debt securities, unless they have offered to the trustee reasonable indemnity or security.
No Individual Liability of Incorporators, Stockholders, Officers or Directors
Each indenture provides that no incorporator and no past, present or future stockholder, officer or director of our company or any successor
corporation in those capacities will have any individual liability for any of our obligations, covenants or agreements under the debt securities or such indenture.
Governing Law
The indentures and the
debt securities will be governed by, and construed in accordance with, the laws of the New York.
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DESCRIPTION OF WARRANTS
General
We may issue warrants for the
purchase of our debt securities, preferred stock, common stock, or any 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 summary of certain provisions of the warrants is not complete. For the terms of a particular
series of warrants, you should refer to the prospectus supplement for that series of warrants and the warrant agreement for that particular series.
Debt Warrants
The prospectus supplement
relating to a particular issue of warrants to purchase debt securities will describe the terms of the debt warrants, including the following:
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the title of the debt warrants;
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the offering price for the debt warrants, if any;
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the aggregate number of the debt warrants;
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the designation and terms of the debt securities, including any conversion rights, purchasable upon exercise of the debt warrants;
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if applicable, the date from and after which the debt warrants and any debt securities issued with them will be separately transferable;
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the principal amount of debt securities that may be purchased upon exercise of a debt warrant and the exercise price for the warrants, which may be payable in cash, securities or other property;
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the dates on which the right to exercise the debt warrants will commence and expire;
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if applicable, the minimum or maximum amount of the debt warrants that may be exercised at any one time;
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whether the debt warrants represented by the debt warrant certificates or debt securities that may be issued upon exercise of the debt warrants will be issued in registered or bearer form;
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information with respect to book-entry procedures, if any;
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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 debt warrants, if any;
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the redemption or call provisions, if any, applicable to the debt warrants;
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any provisions with respect to the holder’s right to require us to repurchase the debt warrants upon a change in control or similar event; and
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any additional terms of the debt warrants, including procedures and limitations relating to the exchange, exercise, and settlement of the debt warrants.
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Debt warrant certificates will be exchangeable for new debt warrant certificates of different denominations. Debt warrants may be exercised at
the corporate trust office of the warrant agent or any other office indicated in the prospectus supplement. Prior to the exercise of their debt warrants, holders of debt warrants will not have any of the rights of holders of the debt securities
purchasable upon exercise and will not be entitled to payment of principal or any premium, if any, or interest on the debt securities purchasable upon exercise.
Equity Warrants
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 a 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.
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DESCRIPTION OF SUBSCRIPTION RIGHTS
We may issue subscription rights to purchase our common stock, preferred stock or debt securities. These subscription rights may be offered
independently or together with any other security offered hereby and may or may not be transferable by the stockholder receiving the subscription rights in such offering. In connection with any offering of subscription rights, we may enter into a
standby arrangement with one or more underwriters or other purchasers pursuant to which the underwriters or other purchasers may be required to purchase any securities remaining unsubscribed for after such offering.
The prospectus supplement relating to any subscription rights we offer, if any, will, to the extent applicable, include specific terms
relating to the offering, including some or all of the following:
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the price, if any, for the subscription rights;
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the exercise price payable for our common stock, preferred stock or debt securities upon the exercise of the subscription rights;
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the number of subscription rights to be issued to each stockholder;
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the number and terms of our common stock, preferred stock or debt securities which may be purchased per each subscription right;
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the extent to which the subscription rights are transferable;
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any other terms of the subscription rights, including the terms, procedures and limitations relating to the exchange and exercise of the subscription rights;
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the date on which the right to exercise the subscription rights shall commence, and the date on which the subscription rights shall expire;
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the extent to which the subscription rights may include an over-subscription privilege with respect to unsubscribed securities or an over-allotment privilege to the extent the securities are fully subscribed; and
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if applicable, the material terms of any standby underwriting or purchase arrangement which may be entered into by us in connection with the offering of subscription rights.
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The description in the applicable prospectus supplement of any subscription rights we offer will not necessarily be complete and will be
qualified in its entirety by reference to the applicable subscription rights certificate, which will be filed with the SEC if we offer subscription rights. We urge you to read the applicable subscription rights certificate and any applicable
prospectus supplement in their entirety.
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DESCRIPTION OF UNITS
We may issue units consisting of some or all of the securities described above, in any combination, including common stock, preferred stock,
warrants and/or debt securities. The terms of these units will be set forth in a prospectus supplement. The description of the terms of these units in the related prospectus supplement will not be complete. You should refer to the applicable form of
unit and unit agreement for complete information with respect to these units.
LEGAL MATTERS
Fenwick & West LLP, Mountain View, California, will issue an opinion about certain legal matters with respect to the securities. Any
underwriters or agents will be advised about legal matters relating to any offering by their own counsel.
EXPERTS
The consolidated financial statements of Adesto Technologies Corporation as of December 31, 2016 and 2015 and for each of the three years
in the period ended December 31, 2016, incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2016, have been so incorporated in reliance on the report of BPM LLP, an independent
registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
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4,375,000 Shares
Common Stock
PROSPECTUS
SUPPLEMENT
Sole Book-Running Manager
Needham & Company
Co-Manager
The Benchmark
Company
June 15, 2017
Adesto Technologies (NASDAQ:IOTS)
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