Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-238757
This
preliminary prospectus supplement relates to an effective registration statement under the Securities Act of 1933, as amended,
but the information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold
until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is
not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
PRELIMINARY
PROSPECTUS
SUPPLEMENT
(To
prospectus dated June 4, 2020)
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SUBJECT
TO COMPLETION
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DATED
FEBRUARY 3, 2021
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Shares
Common
Stock
Ballantyne
Strong, Inc.
We
are offering shares of our
common stock, $0.01 par value per share, at a purchase price of $ per share, pursuant
to this prospectus supplement and the accompanying prospectus. Our common stock is listed on the NYSE American under the symbol
“BTN.” The last reported sale price of our common stock on NYSE American on February 3, 2021 was $2.94
per share.
As
of February 3, 2021, the aggregate market value of our outstanding common stock held by non-affiliates, or our public float,
was $22,706,381.46, based on 14,913,172 shares of common stock outstanding on February 2, 2021, of which 7,723,259
shares are held by non-affiliates (using information on the holdings of affiliates on various dates within the 60-day window permitted
by General Instruction I.B.6 of Form S-3), and a per share value of $2.94, based on the closing price of our common stock
on the NYSE American on February 3, 2021. During the 12 calendar month period that ends on, and includes, the date of this
prospectus supplement (excluding this offering), we have not offered and sold any shares of our common stock pursuant to General
Instruction I.B.6. of Form S-3. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities registered
on the registration statement, of which this prospectus supplement is a part, in a public primary offering with a value exceeding
more than one-third of our public float in any 12-calendar-month period so long as our public float remains below $75.0 million.
INVESTING
IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. BEFORE MAKING ANY INVESTMENT DECISION, YOU SHOULD CAREFULLY REVIEW AND CONSIDER
ALL THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN
AND THEREIN, INCLUDING THE RISKS AND UNCERTAINTIES DESCRIBED UNDER “RISK FACTORS” BEGINNING ON PAGE S-10 OF THIS PROSPECTUS
SUPPLEMENT AND THE RISK FACTORS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
Neither
the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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Per
Share
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Total
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Public
offering price
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$
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$
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Underwriting
discounts and commissions(1)
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$
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$
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Proceeds
to us, before expenses
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$
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$
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(1)
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The
underwriters will also be reimbursed for certain expenses incurred in this offering. In addition, we have agreed to issue
to the representative of the underwriters warrants to purchase a number of shares of our common stock equal to 5% of the total
number of shares sold in this public offering at an exercise price of $ per share, which
represents 125% of the public offering price per share, or the Representative Warrants. Neither these Representative
Warrants nor the shares issuable upon exercise of the Representative Warrants are being registered hereby. See
the section of this prospectus supplement entitled “Underwriting” for a description of the compensation payable
to the underwriters.
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We
have granted the underwriters a 45-day option to purchase up to an additional shares of our common stock from us at the public
offering price per share, less underwriting discounts and commissions discount, solely to cover over-allotments, if any. If the
underwriters exercise their option in full, the total underwriting discounts and commissions payable by us will be $ , and the
total proceeds to us, before expenses, will be $ .
The
underwriters expect to deliver the shares of common stock pursuant to this prospectus supplement to the purchasers on or about
, 2021.
ThinkEquity
a
division of Fordham Financial Management, Inc.
The
date of this prospectus supplement is , 2021
TABLE
OF CONTENTS
Prospectus
Supplement
Prospectus
ABOUT
THIS PROSPECTUS SUPPLEMENT
On
May 28, 2020, we filed with the Securities and Exchange Commission, or the SEC, a registration statement on Form S-3 (File No.
333-238757) utilizing a shelf registration process relating to the securities described in this prospectus supplement, which registration
statement became effective on June 4, 2020. Under this shelf registration, we may, from time to time, sell common stock and other
securities, including in this offering.
This
document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of
common stock and also adds to and updates information contained in the accompanying prospectus and the documents incorporated
by reference into the prospectus and this prospectus supplement. The second part is the accompanying prospectus dated June 4,
2020, which provides more general information, some of which does not apply to this offering. Generally, when we refer to this
prospectus, we are referring to both parts of this document combined.
If
the description of the offering varies between this prospectus supplement and the accompanying prospectus, you should rely on
the information contained in this prospectus supplement. To the extent there is any other conflict between the information contained
in this prospectus supplement, on the one hand, and the information contained in the accompanying prospectus or in any document
incorporated by reference that was filed with the SEC before the date of this prospectus supplement, on the other hand, you should
rely on the information in this prospectus supplement. 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 the accompanying prospectus) the
statement in the document having the later date modifies or supersedes the earlier statement. It is important for you to read
and consider all information contained in this prospectus supplement and the accompanying prospectus, including the documents
we have referred you to in the section entitled “Where You Can Find More Information” below in this prospectus supplement.
You
should rely only on the information incorporated by reference or provided in this prospectus supplement and the accompanying prospectus.
Neither we nor the underwriters have authorized anyone to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. This prospectus supplement and the accompanying prospectus do
not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this prospectus supplement
and the accompanying prospectus in any jurisdiction where it is unlawful to make such offer or solicitation. You should assume
that the information contained in this prospectus supplement or the accompanying prospectus, or any document incorporated by reference
in this prospectus supplement or the accompanying prospectus, is accurate only as of the date of those respective documents. Neither
the delivery of this prospectus supplement nor any distribution of securities pursuant to this prospectus supplement shall, under
any circumstances, create any implication that there has been no change in the information set forth or incorporated by reference
into this prospectus supplement or in our affairs since the date of this prospectus supplement. Our business, financial condition,
results of operations and prospects may have changed since that date.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in this prospectus supplement or the accompanying prospectus were made solely for the
benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such
agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties
or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not
be relied on as accurately representing the current state of our affairs.
This
prospectus supplement and the accompanying prospectus do not constitute an offer to sell or the solicitation of an offer to buy
any securities other than the shares of common stock to which it relates, nor do this prospectus supplement and the accompanying
prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to
whom it is unlawful to make such offer or solicitation in such jurisdiction.
Unless
otherwise indicated, information contained in or incorporated by reference into this prospectus concerning our industry and the
markets in which we operate, including market position and market opportunity, is based on information from our management’s
estimates, as well as from industry publications and research, surveys and studies conducted by third parties. Management estimates
are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge,
which we believe to be reasonable. However, assumptions and estimates of our future performance, and the future performance of
our industry are subject to numerous known and unknown risks and uncertainties, including those described under the heading “Risk
Factors” beginning on page S-10 of this prospectus supplement. These and other important factors could result in our estimates
and assumptions being materially different from future results. You should read the information contained in, or incorporated
by reference into, this prospectus completely and with the understanding that future results may be materially different and worse
from what we expect. See the information included under the heading “Cautionary Statement Regarding Forward-Looking Statements.”
Unless
the context otherwise requires, “Ballantyne,” “the Company,” “we,” “us,” “our”
and similar terms refer to Ballantyne Strong, Inc, a Delaware corporation, together with our consolidated subsidiaries.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement, the accompanying prospectus, and the information incorporated by reference herein and therein and any free
writing prospectus that we have authorized for use in connection with this offering contain or may include “forward-looking
statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and
Section 27A of the Securities Act of 1933, as amended, or the Securities Act. These forward-looking statements are intended to
be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.
For these purposes, any statements contained or incorporated by reference herein regarding our strategy, future operations, financial
position, future revenues, projected costs, prospects, plans and objectives of management, other than statements of historical
facts, are forward-looking statements. The forward-looking statements included herein or incorporated herein by reference include
or may include, but are not limited to, (and you should read carefully) statements that are predictive in nature, depend upon
or refer to future events or conditions, or use or contain words, terms, phrases, or expressions such as “achieve,”
“forecast,” “plan,” “propose,” “strategy,” “envision,” “hope,”
“will,” “continue,” “potential,” “expect,” “believe,” “anticipate,”
“project,” “estimate,” “predict,” “intend,” “should,” “could,”
“may,” “might,” or similar words, terms, phrases, or expressions or the negative of any of these terms.
Any statements in this prospectus or incorporated herein by reference that are not based upon historical fact are forward-looking
statements and represent our best judgment as to what may occur in the future. Forward-looking statements involve a number of
known and unknown risks and uncertainties, including, but not limited to, those discussed in the “Risk Factors” sections
contained in Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Part II, Item 1A
of our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 and in the documents incorporated by reference
herein and the following risks and uncertainties: the negative impact that the COVID-19 pandemic has already had, and may continue
to have, on the Company’s business and financial condition; the Company’s ability to maintain and expand its revenue
streams to compensate for the lower demand for the Company’s digital cinema products and installation services; potential
interruptions of supplier relationships or higher prices charged by suppliers; the Company’s ability to successfully compete
and introduce enhancements and new features that achieve market acceptance and that keep pace with technological developments;
the Company’s ability to successfully execute its capital allocation strategy or achieve the returns it expects from
these investments; the Company’s ability to maintain its brand and reputation and retain or replace its significant
customers; challenges associated with the Company’s long sales cycles; the impact of a challenging global economic environment
or a downturn in the markets (such as the current economic disruption and market volatility generated by the ongoing COVID-19
pandemic); economic and political risks of selling products in foreign countries (including tariffs); risks of non-compliance
with U.S. and foreign laws and regulations; potential sales tax collections and claims for uncollected amounts; cybersecurity
risks and risks of damage and interruptions of information technology systems; the Company’s ability to retain key members
of management and successfully integrate new executives; the Company’s ability to complete acquisitions, strategic investments,
entry into new lines of business, divestitures (including the recent divestiture of Convergent Media Systems LLC), mergers or
other transactions on acceptable terms, or at all; the Company’s ability to utilize or assert its intellectual property
rights; the impact of natural disasters and other catastrophic events (such as the ongoing COVID-19 pandemic); the adequacy of
insurance; the impact of having a controlling stockholder and vulnerability to fluctuation in the market price of the Company’s
common stock. Given the risks and uncertainties, readers should not place undue reliance on any forward-looking statement and
should recognize that the statements are predictions of future results which may not occur as anticipated. Many of the risks listed
above have been, and may further be, exacerbated by the COVID-19 pandemic, its impact on the cinema and entertainment industry,
and the worsening economic environment.
Although
we believe the expectations reflected in our forward-looking statements are reasonable, in reading this prospectus and the documents
incorporated into this prospectus by reference, you should consider the factors discussed above and under the heading “Risk
Factors” contained in this prospectus in evaluating any forward-looking statements, and you are cautioned not to place undue
reliance on any forward-looking statements. Each forward-looking statement is made and applies only as of the date of the particular
statement, and except as required by U.S. federal securities laws or other applicable law, we do not intend to update, withdraw,
or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should consider
these risks when reading any forward-looking statements. All forward-looking statements attributed or attributable to us or to
persons acting on our behalf are expressly qualified in their entirety by this section entitled “Cautionary Statement Regarding
Forward-Looking Statements.”
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights information contained in other parts of this prospectus supplement, the accompanying prospectus or information
incorporated by reference herein or therein from our filings with the SEC, listed in the section of the prospectus entitled “Incorporation
by Reference.” Because it is only a summary, it does not contain all of the information that you should consider before
purchasing our securities in this offering and it is qualified in its entirety by, and should be read in conjunction with, the
more detailed information appearing elsewhere or incorporated by reference into this prospectus supplement and the accompanying
prospectus. You should read the entire prospectus, the registration statement of which this prospectus supplement and the accompanying
prospectus are a part, and the information incorporated by reference herein in their entirety, including the “Risk Factors”
and our financial statements and the related notes incorporated by reference into this prospectus supplement and the accompanying
prospectus, before purchasing our securities in this offering.
Company
Overview
We
are a leader in the entertainment business as one of the largest manufacturers of premium projection screens and managed services.
As of the date of this prospectus, we have approximately 65% of the market share based on sales of projection screens in North
America and our managed services team provides coverage across all 50 states of the United States. We manufacture
and distribute customized screens, screen support systems, audio visual equipment and provide technical support services to the
cinema, amusement park and other markets. We have exclusive relationships to supply large format screens to IMAX and Cinemark
theaters and supply many of the other major cinema operators worldwide. We support cinema operators upgrading from digital
lamp-based projectors to laser projectors, which provide a superior image quality and consistent long-lasting brightness and result
in lower operating costs for the user. We also manufacture and distribute curvilinear screens to theme parks and the U.S. military
for flight simulators and immersive experiences.
We
also own non-controlling investments in three operating businesses: GreenFirst Forest Products, Inc, a pure play operator in the
Canadian lumber industry listed on the TSX under the ticker “GFP.V”; FG Financial Group, Inc., a diversified reinsurance
and investment management company listed on the Nasdaq Stock Market (“Nasdaq”) under the ticker “FGF,”
which recently invested in the sponsor of FG New America Acquisition Corp. (NYSE: FGNA), a blank-check company formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses, and wrote its first reinsurance contract; and Firefly Systems, Inc, a private venture backed, street
level mobile media platform operating digital signage on rideshare and taxis.
We
are a Delaware corporation. Our principal executive offices are located at 4201 Congress Street, Suite 175, Charlotte, North Carolina
28209, and our telephone number at this address is (704) 994-8279. Our website is www.ballantynestrong.com. Information contained
on, or that may be accessible through, our website is not a part of, and is not incorporated into, this prospectus.
RECENT
DEVELOPMENTS
Preliminary Results for the Three
Months Ended December 31, 2020
Our fourth quarter 2020 net revenues are
estimated to be approximately $5.9 to $6.1 million, compared to $10.6 million for the three months ended December 31, 2019, primarily
due to the impact of COVID-19 on our Strong Entertainment businesses. Our operating loss during the three months ended December
31, 2020 is estimated to be approximately $0.6 to $0.9 million, compared to $0.2 million for the three months ended December 31,
2019.
In August 2020, we completed the sale of
our Strong Outdoor business segment and in February 2021, we completed the sale of our Convergent business segment. As a result
of these divestitures, Strong Outdoor and Convergent are classified as discontinued operations and are excluded from the preliminary
fourth quarter 2020 estimates and the fourth quarter 2019 financial results included above.
The
above estimated financial results are preliminary, based upon our estimates and subject to completion of financial and operating
closing procedures for the three months ended December 31, 2020. They also represent only a summary of our financial results for
such period and are not a comprehensive statement of such results. Final results reflected in our unaudited condensed consolidated
financial statements as of and for the three months and year ended December 31, 2020 may differ materially from our estimated
results, including as a result of the quarter-end and year-end closing procedures, audit adjustments and other related
developments that may arise between now and the time our financial results for the three months and year ended December 31, 2020
are finalized. Our independent registered public accounting firm has not audited, reviewed or performed any procedures with respect
to these preliminary results and, accordingly, does not express an opinion or any other form of assurance with respect to these
estimates. In addition, these estimates as of and for the three months and year ended December 31, 2020 are not necessarily indicative
of the results to be achieved for any future period.
Sale
of Convergent for $23 million
On
February 1, 2021, we completed the sale of 100% of the issued and outstanding limited liability company membership interests of
Convergent (the “Equity Interests”), one of our indirect wholly-owned subsidiaries that operated our Digital Signage
Solutions segment, for a total enterprise value of approximately $23.2 million. The purchase price was (i) $15.0 million in
cash and (ii) $2.5 million in the form of a subordinated promissory note, in each case, subject to adjustment pursuant to the
terms of the purchase agreement. As further consideration for the Equity Interests, the buyer also assumed approximately $5.7
million of third-party debt. We will continue to conduct our Strong Entertainment business segment through our other subsidiaries.
Reseller
Agreement with Blink Charging Co.
On
February 2, 2021, we entered into a reseller agreement with Blink Charging Co. (Nasdaq: BLNK) to allow the Company to
distribute Blink electronic vehicle charging stations to cinemas, theme parks and other venues across the United
States.
IPIC
Projection and Audio Installation in Atlanta
On
December 22, 2020, we announced that our Strong Technical Services, Inc. (“STS”) subsidiary had completed the installation
of projection equipment for IPIC Theater’s newest location in Midtown Atlanta at the reimagined Colony Square. STS installed
state-of-the-art projection systems complete with an advanced load balanced and fault tolerant network to support projection booth
equipment, a streaming content library and a large QSC Q-SYS ecosystem across the entire complex.
Partnership
with INDY Cinema Group to Provide Managed Services in Europe
On
December 2, 2020, we announced that STS will offer INDY Cinema Group customers in Europe with a complete managed service offering,
including 24x7x365 support, STRONG Management System access, field service dispatch, equipment discounts, and STRONG MDI screens.
The STRONG Management System includes equipment monitoring, digital signage, remote access, and reporting.
THE
OFFERING
Common
stock outstanding prior to offering
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14,913,172
shares
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Common
stock offered by us pursuant to this prospectus supplement
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Shares
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Offering
price
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$
per share
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Common
stock to be outstanding immediately after this offering
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shares
(or shares if the
underwriters exercise their option in full to purchase additional shares of our common stock)(1)
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Underwriters’
option to purchase additional shares of common stock
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We
have granted the underwriters an option, exercisable for 45 days from the date of this prospectus supplement, to purchase
up to an additional shares of our common stock from us, solely to cover over-allotments, if any.
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Use
of proceeds
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We
estimate the net proceeds from this offering will be approximately $ , after deducting underwriting discounts and commissions
and estimated offering expenses payable by us. We intend to use the net proceeds for and general corporate
purposes, which may include working capital, capital expenditures, operational purposes and potential acquisitions in complementary
businesses. See “Use of Proceeds” on page S-14 of this prospectus supplement.
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Risk
factors
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Investing
in our common stock involves a high degree of risk. Before making any investment decision, you should carefully review and
consider all the information in this prospectus supplement, the accompanying prospectus and the documents incorporated by
reference herein and therein, including the risks and uncertainties described under “Risk Factors” beginning on
page S-10 of this prospectus supplement and the risk factors incorporated by reference into this prospectus supplement and
the accompanying prospectus.
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NYSE
American symbol
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“BTN”
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Except
as otherwise indicated, the number of shares of common stock to be outstanding after this offering is based on an aggregate of
14,913,172 shares outstanding as of February 2, 2021, and excludes, as of that date, the following:
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1,009,500
shares of common stock issuable upon the exercise of outstanding options having a weighted average exercise price of $3.99
per share;
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568,853
shares of common stock issuable upon the vesting of outstanding restricted stock units, or RSUs;
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100,000
shares of common stock issuable upon the exercise of outstanding warrants having a weighted average exercise price of $13.00
per share; and
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2,190,349
shares of common stock reserved for future grants under the Company’s 2017 Omnibus Equity Compensation Plan, amended
and restated effective October 28, 2019, or the 2017 Plan.
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Except
as otherwise indicated, all information in this prospectus supplement assumes (i) no exercise or vesting of the securities listed
above; (ii) no exercise by the representative of the underwriters of the option to purchase up to an additional shares of our
common stock; and (iii) no exercise of the Representative’s
Warrants.
RISK
FACTORS
Investing
in our securities involves a high degree of risk. You should consider carefully the risks and uncertainties described below together
with the other information included in this prospectus supplement, the accompanying prospectus, and other information included
in our securities filings, including our Annual Report on Form 10-K for the year ended December 31, 2019, as amended by Amendment
No. 1 thereto, and any subsequent updates described in our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K (other
than, in each case, information “furnished” rather than “filed” under Section 18 of the Exchange Act),
and other information in our consolidated financial statements incorporated by reference herein, before deciding to purchase our
common stock. These risks and uncertainties are not the only risks and uncertainties we face. Additional risks and uncertainties
not currently known to us, or that we currently view as immaterial, may also impair our business. If any of the risks or uncertainties
described in our SEC filings or any additional risks and uncertainties actually occur, our business, financial condition, results
of operations and cash flow could be materially and adversely affected. In that case, the trading price of our common stock could
decline, and you might lose all or part of your investment. Certain statements below are forward-looking statements. See the information
included under the heading “Cautionary Statement Regarding Forward-Looking Statements.”
Risks
Related to our Business
The
COVID-19 pandemic and ensuing governmental responses have materially negatively impacted, and could further materially adversely
affect, our business, financial condition, results of operations and cash flows.
The
COVID-19 pandemic has had a widespread and detrimental effect on the global economy as a result of the continued increase in the
number of cases, particularly in the United States, and actions by public health and governmental authorities, businesses, other
organizations and individuals to address the outbreak, including travel bans and restrictions, quarantines, shelter in place,
stay at home or total lock-down orders and business limitations and shutdowns. The COVID-19 pandemic and ensuing governmental
responses have materially negatively impacted, and could further materially adversely affect, our business, financial condition,
results of operations and cash flows. The ultimate impact of the COVID-19 pandemic on our business and results of operations remains
unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including
the duration and severity of the COVID-19 pandemic, including repeat or cyclical outbreaks, and any additional preventative and
protective actions that governments, or we or our customers, may direct, which may result in an extended period of continued business
disruption and reduced operations. For instance, some areas of the United States are experiencing new surges in COVID-19 cases,
which has, in some cases, led to the closure of recently re-opened businesses and further postponed opening other businesses,
including movie theaters. Any resulting financial impact cannot be reasonably estimated at this time, but we expect it will continue
to have a material impact on our business, financial condition and results of operations.
The
repercussions of the COVID-19 global pandemic resulted in a significant impact to our customers, specifically those in the entertainment
and advertising industries, and their ability and willingness to purchase our products and services, which continues to negatively
impact us. A significant number of our customers temporarily ceased operations during the pandemic, some of which continue to
be suspended; as such, we have experienced, and anticipate that we will continue to experience at least until our customers have
resumed normal operations, a significant decline in our results of operations. For instance, during this time, many movie theaters
and other entertainment centers were forced to close or curtail their hours and, correspondingly, have terminated or deferred
their non-essential capital expenditures; many advertisers began to reduce, postpone, or cancel their advertising campaigns as
social distancing measures, including closures of schools and non-essential businesses, and restrictions around the free movement
of people were implemented; and a number of events during which our experiential marketing services may have been provided, such
as Coachella, have been postponed, cancelled or shifted to virtual venues. While some movie theaters and chains have begun to
re-open, or announced plans to re-open in the near future, theater operators may continue to experience reduced revenues for an
extended period due to, among other things, consumer concerns over safety and social distancing, depressed consumer sentiment
due to adverse economic conditions, including job losses, capacity restrictions, and postponed release dates, shortened “release
windows” between the release of motion pictures in theaters and an alternative delivery method, or the release of motion
pictures directly to alternative delivery methods, bypassing the theater entirely, for certain movies, and continued COVID-19
outbreaks could cause these theaters to suspend operations again. The COVID-19 pandemic has also adversely affected film production
and may adversely affect the pipeline of feature films available in the short- or long-term. In addition to decreased business
spending by our customers and prospective customers and reduced demand for our products, lower renewal rates by our customers,
increased customer losses/churn, increased challenges in or cost of acquiring new customers and increased risk in collectability
of accounts receivable may have a material adverse effect on our business and results of operations. We have also experienced
other negative impacts; among other actions, we were required to temporarily close our screen manufacturing facility in Canada
due to the governmental response to COVID-19, which we were able to re-open on May 11, 2020, and have experienced lower revenues
from field services and a reduction in non-recurring time and materials-based services. The completion of our outsourced screen
finishing facility in China was also delayed by the COVID-19 pandemic, and we are currently evaluating the timing of when we will
be able to commence operations at the facility in light of current travel restrictions. We may also experience one or more of
the following conditions that could have a material adverse impact on our business operations and financial condition: adverse
effects on our strategic partners’ businesses or on the businesses of companies in which we hold investments; impairment
charges; extreme currency exchange-rate fluctuations; inability to recover costs from insurance carriers; and business continuity
concerns for us, our customers and our third-party vendors.
In
response to uncertainties associated with the COVID-19 pandemic, we have taken, and are continuing to take, significant steps
to preserve cash and remain in a strong competitive position when the current crisis subsides by eliminating non-essential costs,
reducing employee hours and deferring all non-essential capital expenditures to minimum levels. Among other mitigating actions,
we implemented targeted furloughs, temporarily curtailed our service and distribution activities in the United States and temporarily
reduced compensation of our executive officers and certain other employees, and our board of directors waived its cash compensation
for 2020. We have also implemented remote work policies for many employees, and the resources available to such employees may
not enable them to maintain the same level of productivity and efficiency. In addition, these and other employees may face additional
demands on their time, such as increased responsibilities resulting from school and childcare closures or illness of family members.
Our increased reliance on remote access to our information systems also increases our exposures to potential cybersecurity breaches.
We cannot provide any assurance that these actions, or any other mitigating actions we may take, will help mitigate the impact
of the COVID-19 pandemic on us.
In
addition, we have undertaken new initiatives as a result of the COVID-19 pandemic, including our BrightNight program, which converts
movie theater and other parking lots into temporary drive-in theaters, and a Theatre Readiness Program, which includes an auditorium
quality assurance service visit in advance of customers returning to movie theaters. While we believe these programs will provide
an additional source of revenue during the COVID-19 pandemic, we cannot provide any assurance that these programs will provide
the anticipated benefits to our business.
We
cannot provide any assurance that our assumptions used to estimate our liquidity requirements will remain accurate due to the
unprecedented nature of the disruption to our operations and the unpredictability of the COVID-19 global pandemic. As a consequence,
our estimates of the duration of the pandemic and the severity of the impact on our future earnings and cash flows could change
and have a material impact on our results of operations and financial condition. In the second quarter of 2020, management decided
to draw down CDN$2.9 million, or approximately $2.1 million, under Strong/MDI’s credit facility, all of which was repaid
prior to September 30, 2020. Furthermore, we have applied for and received wage subsidies, and are in the process of reviewing
tax credits and other financial support under the newly enacted COVID-19 relief legislation in the U.S. and Canada. However, the
legislation and guidance from the authorities continues to evolve; as such, the amount and timing of support, if any, that we
could receive is not determinable at this time, and there can be no guarantees that we will receive financial support through
these programs. In addition, certain government benefits that we seek to access have not previously been administered on the present
scale or at all. Government or third-party program administrators may be unable to cope with the volume of applications in the
near term, and any benefits we receive may not be as extensive as we currently estimate, may impose additional conditions and
restrictions on our operations or may otherwise provide less relief than we contemplate. In the event of a sustained market deterioration,
and continued declines in net sales, including the impact of such events on the borrowing base under the Strong/MDI credit facility,
we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions. We cannot
provide any assurance that we will be able to obtain additional sources of financing or liquidity on acceptable terms, or at all.
The
ultimate duration and impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows
is dependent on future developments, the duration of the pandemic, including repeat or cyclical outbreaks, additional “waves”
and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time due to the
daily evolution of the COVID-19 pandemic and the global responses to curb its spread. Furthermore, the extent to which our mitigation
efforts are successful, if at all, is not presently ascertainable. However, we expect that our results of operations, including
revenues, in future periods will continue to be adversely impacted by the COVID-19 pandemic and its negative effects on global
economic conditions, which include a global recession, and that, as result of such effects, we may continue to be adversely affected
even after the COVID-19 pandemic has subsided.
Risks
Related to the Offering or an Investment in our Common Stock
Purchasers
of common stock in this offering will experience immediate and substantial dilution in the book value of their investment. You
may experience further dilution upon exercise of our outstanding options and warrants.
If
you purchase shares of our common stock in this offering, you will experience immediate and substantial dilution, as the public
offering price of our common stock will be substantially greater than the net tangible book value per share of our common stock
before giving effect to this offering. Accordingly, if you purchase our common stock in this offering, you will incur immediate
substantial dilution of approximately $ per share, representing the difference between the public offering price per share of
common stock and our pro forma as adjusted net tangible book value as of September 30, 2020. For a further description of the
dilution that you will experience immediately after this offering, see the section in this prospectus supplement entitled “Dilution.”
Future
sales of our common stock, or the perception that such future sales may occur, may cause our stock price to decline.
Sales
of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, following
this offering could cause the market price of our common stock to decline. As of February 1, 2021, there were 3,868,702 shares
available for future issuance under our 2017 Plan and 2010 Long-Term Incentive Plan or the 2010 Plan, including 1,009,500 shares
issuable upon the exercise of outstanding options having a weighted average exercise price of $3.99 per share, 568,853 shares
issuable upon the vesting of outstanding RSUs and 2,190,349 shares available for future grant under the 2017 Plan. As of February
1, 2021, there were also 100,000 shares issuable upon the exercise of outstanding warrants having a weighted average exercise
price of $13.00 per share. Upon the closing of this offering, we have agreed to issue the representative of the Representative’s
Warrants to purchase a number of shares of common stock equal to 5% of the total number of shares sold in this public offering.
The majority of the shares under the 2017 Plan and 2010 Plan are, and the shares of common stock sold in this offering upon issuance
will be, freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities
Act. With respect to certain shares under the 2017 Plan and 2010 Plan, the Representative’s Warrants and our outstanding
warrants, there may be certain restrictions on the holders to sell the underlying shares to the extent they are restricted securities,
held by “affiliates” or subject to ownership thresholds.
We
have broad discretion in the use of the net proceeds from this offering and we may not use them effectively.
Our
management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes
described in the section titled “Use of Proceeds,” and you will be relying on the judgment of our management regarding
the application of these proceeds. You will not have the opportunity, as part of your investment decision, to assess whether the
proceeds are being used appropriately. Our management might not apply the net proceeds or our existing cash in ways that ultimately
increase the value of your investment. If we do not invest or apply the net proceeds from this offering or our existing cash in
ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.
We intend to use the net proceeds from the offering for general corporate purposes, which may include
working capital, capital expenditures, operational purposes and potential acquisitions in complementary businesses. Such use of
the net proceeds from the offering may not yield a favorable return to our stockholders. See “Use of Proceeds.”
Raising
additional capital, including as a result of this offering, may cause dilution to our stockholders, or restrict our operations.
To
the extent that we raise additional capital through the sale of equity securities, including from this offering, or convertible
debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences
that adversely affect your rights as a common stockholder. Additionally, pursuant to the rules of Form S-3, in no event will we
sell securities registered on a Form S-3 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. During the 12 calendar month period that
ends on, and includes, the date of this prospectus supplement (excluding this offering), we have not offered and sold any shares
of our common stock. To raise additional capital in the public markets, including taking into account limitations on use of our
Form S-3, we may be required to seek other methods, such as a registration statement on Form S-1, the preparation of which tends
to be more time-consuming and costly. We may also conduct fundraising transactions in the form of private placements, potentially
with registration rights or priced at a discount to the market value of our shares, which could require stockholder approval under
the rules of the NYSE American, or other equity raise transactions. In addition to entailing increased capital costs, any such
transactions could result in substantial dilution of our stockholders’ interests, transfer control to a new investor and
diminish the value of an investment in our shares.
Debt
financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting
our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. In
addition, if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be senior to
the rights of stockholders until the debt is paid. Interest on these debt securities would increase costs and negatively impact
operating results. If the issuance of new securities results in diminished rights to holders of our common stock, the market price
of our common stock could be negatively impacted.
We
do not currently intend to pay dividends on our common stock, and any return to investors is expected to come, if at all, only
from potential increases in the price of our common stock.
At
the present time, we intend to use available funds to finance our operations. Accordingly, while payment of dividends rests within
the discretion of our board of directors, we have no intention of paying any such dividends in the foreseeable future. Any return
to investors is expected to come, if at all, only from potential increases in the price of our common stock.
We
are subject to the continued listing requirements of the NYSE American. If we are unable to comply with such requirements, our
common stock would be delisted from the NYSE American, which would limit investors’ ability to effect transactions in our
common shares and subject us to additional trading restrictions.
Our
common stock is currently listed on the NYSE American. In order to maintain our listing, we must maintain certain share prices,
financial and share distribution targets, including maintaining a minimum amount of shareholders’ equity and a minimum number
of public shareholders. In addition to these objective standards, the NYSE American may delist the securities of any issuer if,
in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; if it appears that the
extent of public distribution or the aggregate market value of the security has become so reduced as to make continued listing
on the NYSE American inadvisable; if the issuer sells or disposes of principal operating assets or ceases to be an operating company;
if an issuer fails to comply with the NYSE American’s listing requirements; if an issuer’s common stock sells at what
the NYSE American considers a “low selling price” (generally trading below $0.20 per share for an extended period
of time); or if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion,
inadvisable.
While
we currently do not believe we are at risk of delisting, there can be no assurance that we will continue to satisfy the continued
listing rules of the NYSE American. If the NYSE American delists our common shares from trading on its exchange and we are not
able to list our securities on another national securities exchange, we expect our common shares would qualify to be quoted on
an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including: limited
availability of market quotations for our securities; reduced liquidity for our securities; a determination that our common stock
is a “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules and possibly
result in a reduction of trading activity in the secondary trading market for our securities; a limited degree of news and analyst
coverage; decreased ability to issue additional securities or obtain additional financing in the future; and potential breaches
under or terminations of our agreements with current or prospective large shareholders, strategic investors and banks.
USE
OF PROCEEDS
We
estimate the net proceeds to us in this offering will be approximately $ million (or $ million if the underwriters exercise their
option to purchase additional shares of our common stock in full), after deducting the underwriting discounts and commissions
and estimated offering expenses payable by us.
We
intend to use the net proceeds for general corporate purposes, which may include working capital, capital
expenditures, operational purposes and potential acquisitions in complementary businesses. We do not currently have any agreement
or understanding with respect to an acquisition in which we plan to invest the proceeds of the offering.
Due
to the uncertainties inherent in the Company’s business, we cannot estimate with certainty the exact amounts of the net
proceeds from this offering that may be used for any purpose. As a result, our management will have broad discretion in applying
the net proceeds from this offering.
DIVIDEND
POLICY
We
intend to retain our earnings to assist in financing our business and making investments and do not anticipate paying cash dividends
on our common stock in the foreseeable future. The declaration and payment of dividends by the Company are also subject to the
discretion of the board of directors, or the Board. Any determination by the Board as to the payment of dividends in the future
will depend upon, among other things, business conditions, our financial condition and capital requirements, as well as any other
factors deemed relevant by the Board. We have not paid cash dividends since we went public in 1995.
DILUTION
If
you invest in our common stock in this offering, you will experience dilution to the extent of the difference between the public
offering price per share and the net tangible book value per share of our common stock immediately after this offering.
Our
net tangible book value on September 30, 2020 was approximately $26.5 million, or $1.79 per share of our common stock. “Net
tangible book value” is total assets minus the sum of liabilities and intangible assets. “Net tangible book value
per share” is net tangible book value divided by the total number of shares outstanding. Dilution in 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 shares of our common stock in this offering at the public offering price of $ per share and after
deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value
as of September 30, 2020 would have been approximately $ million, or $ per share. This represents an immediate increase in net
tangible book value of $ per share to existing stockholders and immediate dilution in net tangible book value of $ per share to
new investors purchasing our common stock in this offering at the public offering price. The following table illustrates this
dilution on a per share basis:
Public
offering price per share of common stock
|
|
|
|
|
|
$
|
|
|
Net
tangible book value per share as of September 30, 2020
|
|
$
|
1.79
|
|
|
|
|
|
Increase
in net tangible book value per share attributable to new investors
|
|
|
|
|
|
|
|
|
As
adjusted net tangible book value per share as of September 30, 2020, after giving effect to this offering
|
|
|
|
|
|
$
|
|
|
Dilution
in net tangible book value per share to investors in this offering
|
|
|
|
|
|
$
|
|
|
The
information above assumes that the underwriters do not exercise their option to purchase additional shares of our common stock.
If the underwriters exercise their option in full to purchase additional shares of our common stock in this offering at the public
offering price of $ per share, the net tangible book value per share after this offering would be $ per share, the immediate increase
in the net tangible book value per share to existing stockholders would be $ per share and the immediate dilution to investors
participating in this offering would be $ per share.
The
above discussion and table are based on 14,789,100 shares outstanding as of September 30, 2020, and excludes, as of that date,
the following:
●
|
884,500
shares of common stock issuable upon the exercise of outstanding options having a weighted average exercise price of $4.33
per share;
|
|
|
●
|
544,725
shares of common stock issuable upon the vesting of outstanding RSUs;
|
|
|
●
|
100,000
shares of common stock issuable upon the exercise of outstanding warrants having a weighted average exercise price of $13.00
per share; and
|
|
|
●
|
2,589,278
shares of common stock reserved for future grants under the 2017 Plan.
|
The
above illustration of dilution per share to the investors participating in this offering assumes no exercise of outstanding options
to purchase our common stock or warrants to purchase shares of our common stock that will be outstanding after this offering,
including the Representative’s Warrants. The exercise, if any, of outstanding options and warrants that will be outstanding
after this offering having an exercise price less than the offering price will increase dilution to the new investors.
UNDERWRITING
ThinkEquity,
a division of Fordham Financial Management, Inc., is acting as the representative of the underwriters of the offering. We have
entered into an underwriting agreement dated , 2021 with the representative. Subject to the terms and conditions of the underwriting
agreement, we have agreed to sell to each underwriter named below, and each underwriter named below has severally agreed to purchase,
at the public offering price less the underwriting discounts set forth on the cover page of this prospectus supplement, the number
of shares of common stock at the public offering price, less the underwriting discounts and commissions, as set forth on the cover
page of this prospectus supplement, the number of shares of common stock listed next to its name in the following table:
Underwriter
|
|
Number
of
Shares
|
|
ThinkEquity,
a division of Fordham Financial Management, Inc.
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
The
underwriters are committed to purchase all the shares of common stock offered by the Company. The obligations of the underwriters
may be terminated upon the occurrence of certain events specified in the underwriting agreement. Furthermore, the underwriting
agreement provides that the obligations of the underwriters to pay for and accept delivery of the shares offered by us in this
prospectus supplement are subject to various representations and warranties and other customary conditions specified in the underwriting
agreement, such as receipt by the underwriters of officers’ certificates and legal opinions.
We
have agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act, and to
contribute to payments the underwriters may be required to make in respect thereof.
The
underwriters are offering the shares of common stock subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of legal matters by their counsel and other conditions specified in the underwriting agreement. The underwriters reserve
the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
We
have granted the underwriters an option to purchase additional shares of our common stock. This option, which is exercisable for
up to 45 days after the date of this prospectus, permits the underwriters to purchase up to an aggregate of additional shares
of common stock (equal to 15% of the total number of shares sold in this offering) at the public offering price per share, less
underwriting discounts and commissions, solely to cover over-allotments, if any. If the underwriters exercise this option in whole
or in part, then the underwriters will be severally committed, subject to the conditions described in the underwriting agreement,
to purchase the additional shares of common stock in proportion to their respective commitments set forth in the prior table.
Discounts,
Commissions and Reimbursement
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. The underwriters may offer shares to securities dealers at that
price less a concession of not more than $ per share. After the initial offering to the public, the public offering price and
other selling terms may be changed by the representative.
The
following table summarizes the underwriting discounts and commissions and proceeds, before expenses, to us assuming both no exercise
and full exercise by the underwriters of their over-allotment option:
|
|
|
|
|
Total
|
|
|
|
Per
Share
|
|
|
Without
Option
|
|
|
With
Option
|
|
Public
offering price
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Underwriting
discounts and commissions (7%)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Proceeds,
before expenses, to us
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
We
have paid an expense deposit of $35,000 to the representative, which will be applied against the actual out-of-pocket accountable
expenses that will be paid by us to the underwriters in connection with this offering, and will be reimbursed to us to the extent
not incurred.
In
addition, we have also agreed to pay up to an aggregate of $159,500 of the underwriters’ reasonable out-of-pocket expenses
in connection with the offering, including the following expenses: (a) all fees, expenses and disbursements relating to background
checks of our officers and directors in an amount not to exceed $7,000 in the aggregate; (b) all filing fees and communication
expenses associated with the review of this offering by FINRA and relating to the listing of the offered shares on NYSE American;
(c) all fees, expenses and disbursements relating to the registration, qualification or exemption of securities offered under
the securities laws of foreign jurisdictions reasonably designated by the underwriters, including the reasonable fees and expenses
of the underwriters’ blue sky counsel; (d) $29,500 for the underwriters’ use of Ipreo’s book-building, prospectus
tracking and compliance software for this offering; (e) the costs associated with bound volumes of the public offering materials
as well as commemorative mementos and lucite tombstones, in an amount not to exceed $3,000 in aggregate; (f) the fees and expenses
of the underwriters’ legal counsel incurred in connection with this offering in an amount up to $100,000; (g) the $10,000
cost for data services and communications expenses; and (h) up to $10,000 of the underwriters’ actual accountable “road
show” expenses for the offering.
We
estimate the expenses of this offering payable by us, not including underwriting discounts and commissions, will be approximately
$ .
Representative’s
Warrants
Upon
the closing of this offering, we have agreed to issue to the representative the Representative’s Warrants, to purchase a
number of shares of common stock equal to 5% of the total number of shares sold in this public offering. The Representative’s
Warrants will be exercisable at a per share exercise price equal to 125% of the public offering price per share of common stock
sold in this offering. The Representative’s Warrants are exercisable at any time and from time to time, in whole or in part,
during the four- and one-half-year period commencing six months from the effective date of this prospectus supplement.
The Representative’s Warrants also provide for one “piggyback” registration right with respect to the registration
of the shares of common stock underlying the Representative’s Warrants and customary antidilution provisions. The piggyback
registration right provided will not be greater than four- and one-half years from the date of the underwriting agreement related
to this offering in compliance with FINRA Rule 5110(g)(8)(C).
The
Representative’s Warrants and the shares of common stock underlying the Representative’s Warrants have been deemed
compensation by the Financial Industry Regulatory Authority, or FINRA, and are therefore subject to a 180-day lock-up pursuant
to Rule 5110(e)(1) of FINRA. Except as permitted by Rule 5110(e)(2), the representative, or permitted assignees
under such rule, may not sell, transfer, assign, pledge, or hypothecate the Representative’s Warrants or the securities
underlying the Representative’s Warrants, nor will the representative engage in any hedging, short sale, derivative, put,
or call transaction that would result in the effective economic disposition of the Representative’s Warrants or the underlying
shares for a period of 180 days from the effective date of this prospectus supplement, except in the case of certain limited
transfers to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. The Representative’s
Warrants will provide for adjustment in the number and price of the Representative’s Warrants and the shares of common stock
underlying such Representative’s Warrants in the event of a rights offering, non-cash distribution, recapitalization, merger,
stock split or other structural transaction.
Right
of First Refusal
Until
, 2022 (twelve (12) months from the date of the underwriting agreement) the representative shall have an irrevocable right of
first refusal to act as sole investment banker, sole book-runner and/or sole placement agent, at the representative sole discretion,
for each and every future public and private equity and debt offering, including all equity linked financings, for the Company,
or any successor to or any subsidiary of the Company, using an investment banker, placement agent or broker on terms customary
to the representative. The representative shall have the sole right to determine whether or not any other broker-dealer shall
have the right to participate in any such offering and the economic terms of any such participation. The representative will not
have more than one opportunity to waive or terminate the right of first refusal in consideration of any payment or fee.
Lock-Up
Agreements
Subject
to certain customary exceptions, we and each of our directors and officers have agreed for a period of 90 days after the date
of this prospectus supplement, without the prior written consent of the representative, not to directly or indirectly:
|
●
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issue
(in the case of us), offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any shares of common
stock or other capital stock or any securities convertible into or exercisable or exchangeable for our common stock or other
capital stock;
|
|
●
|
in
the case of us, file or cause the filing of any registration statement under the Securities Act with respect to any shares
of common stock or other capital stock or any securities convertible into or exercisable or exchangeable for our common stock
or other capital stock;
|
|
●
|
in
the case of our directors and officers, make any demand for or exercise any right with respect to the registration of any
shares of common stock or other capital stock or any securities convertible into or exercisable or exchangeable for our common
stock or other capital stock;
|
|
●
|
in
the case of us, complete any offering of debt securities of the Company, other than entering into a line of credit, term loan
arrangement or other debt instrument with a traditional bank; or
|
|
●
|
enter
into any swap or other agreement or arrangement that transfers to another, in whole or in part, directly or indirectly, any
of the economic consequences of ownership of our common stock or other capital stock or any securities convertible into or
exercisable or exchangeable for our common stock or other capital stock, whether any transaction described in any of the foregoing
bullet points is to be settled by delivery of our common stock or other capital stock, other securities, in cash or otherwise,
or publicly announce an intention to do any of the foregoing.
|
Electronic
Offer, Sale and Distribution of Securities
A
prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters or selling
group members. The representative may agree to allocate a number of securities to underwriters and selling group members for sale
to its online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members
that will make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format,
the information on these websites is not part of, nor incorporated by reference into, this prospectus or the registration statement
of which this prospectus forms a part, has not been approved or endorsed by us, and should not be relied upon by investors.
Stabilization
In
connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate-covering
transactions, penalty bids and purchases to cover positions created by short sales.
Stabilizing
transactions permit bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum, and are engaged
in for the purpose of preventing or retarding a decline in the market price of the shares while the offering is in progress.
Over-allotment
transactions involve sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase.
This creates a syndicate short position which may be either a covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase
in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in
the over-allotment option. The underwriters may close out any short position by exercising their over-allotment option and/or
purchasing shares in the open market.
Syndicate
covering transactions involve purchases of shares in the open market after the distribution has been completed in order to cover
syndicate short positions. 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 with the price at which they may
purchase shares through exercise of the over-allotment option. If the underwriters sell more shares than could be covered by exercise
of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying shares
in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there
could be downward pressure on the price of the shares in the open market that could adversely affect investors who purchase in
the offering.
Penalty
bids permit the representative to reclaim a selling concession from a syndicate member when the shares originally sold by that
syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.
These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market
price of our shares of common stock or preventing or retarding a decline in the market price of our shares of common stock. As
a result, the price of our common stock in the open market may be higher than it would otherwise be in the absence of these transactions.
Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may
have on the price of our common stock. These transactions may be effected in the over-the-counter market or otherwise and, if
commenced, may be discontinued at any time.
Other
Relationships
Certain
of the underwriters and their affiliates may in the future provide various investment banking, commercial banking and other financial
services for us and our affiliates for which they may in the future receive customary fees.
Offer
Restrictions Outside the United States
Other
than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Australia
This
prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian
Securities and Investments Commission and does not purport to include the information required of a disclosure document under
Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made
to persons to whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act
under one or more exemptions set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available
in Australia only to those persons as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance
that by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (i) above, and,
unless permitted under the Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities
sold to the offeree within 12 months after its transfer to the offeree under this prospectus.
China
The
information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in
the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau
Special Administrative Region and Taiwan). The securities may not be offered or sold directly or indirectly in the PRC to legal
or natural persons other than directly to “qualified domestic institutional investors.”
European
Economic Area—Belgium, Germany, Luxembourg and Netherlands
The
information in this document has been prepared on the basis that all offers of securities will be made pursuant to an exemption
under the Directive 2003/71/EC (“Prospectus Directive”), as implemented in Member States of the European Economic
Area (each, a “Relevant Member State”), from the requirement to produce a prospectus for offers of securities.
An
offer to the public of securities has not been made, and may not be made, in a Relevant Member State except pursuant to one of
the following exemptions under the Prospectus Directive as implemented in that Relevant Member State:
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to
legal entities that 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;
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to
any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total
balance sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements)
and (iii) an annual net turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated
financial statements);
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to
fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)(e) of the Prospectus
Directive) subject to obtaining the prior consent of the Company or any underwriter for any such offer; or
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in
any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of securities
shall result in a requirement for the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.
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France
This
document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers)
in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code Monétaire et Financier)
and Articles 211-1 et seq. of the General Regulation of the French Autorité des marchés financiers (“AMF”).
The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.
This
document and any other offering material relating to the securities have not been, and will not be, submitted to the AMF for approval
in France and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in France.
Such
offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés)
acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3, D.744-1,
D.754-1 ;and D.764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number
of non-qualified investors (cercle restreint d’investisseurs) acting for their own account, as defined in and in accordance
with Articles L.411-2-II-2° and D.411-4, D.744-1, D.754-1; and D.764-1 of the French Monetary and Financial Code and any implementing
regulation.
Pursuant
to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the securities cannot be distributed
(directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and
L.621-8 to L.621-8-3 of the French Monetary and Financial Code.
Ireland
The
information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been
filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering
of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the “Prospectus
Regulations”). The securities have not been offered or sold, and will not be offered, sold or delivered directly or indirectly
in Ireland by way of a public offering, except to (i) qualified investors as defined in Regulation 2(l) of the Prospectus Regulations
and (ii) fewer than 100 natural or legal persons who are not qualified investors.
Israel
The
securities offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority (the ISA), or
ISA, nor have such securities been registered for sale in Israel. The shares may not be offered or sold, directly or indirectly,
to the public in Israel, absent the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection
with the offering or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability
or completeness, or rendered an opinion as to the quality of the securities being offered. Any resale in Israel, directly or indirectly,
to the public of the securities offered by this prospectus is subject to restrictions on transferability and must be effected
only in compliance with the Israeli securities laws and regulations.
Italy
The
offering of the securities in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission
(Commissione Nazionale per le Societ—$$—Aga e la Borsa, “CONSOB” pursuant to the Italian securities legislation
and, accordingly, no offering material relating to the securities may be distributed in Italy and such securities may not be offered
or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998 (“Decree
No. 58”), other than:
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to
Italian qualified investors, as defined in Article 100 of Decree no.58 by reference to Article 34-ter of CONSOB Regulation
no. 11971 of 14 May 1999 (“Regulation no. 1197l”) as amended (“Qualified Investors”); and
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in
other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter
of Regulation No. 11971 as amended.
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Any
offer, sale or delivery of the securities or distribution of any offer document relating to the securities in Italy (excluding
placements where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:
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made
by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with Legislative
Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and any other
applicable laws; and
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in
compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws.
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Any
subsequent distribution of the securities in Italy must be made in compliance with the public offer and prospectus requirement
rules provided under Decree No. 58 and the Regulation No. 11971 as amended, unless an exception from those rules applies. Failure
to comply with such rules may result in the sale of such securities being declared null and void and in the liability of the entity
transferring the securities for any damages suffered by the investors.
Japan
The
securities have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law
of Japan (Law No. 25 of 1948), as amended (the “FIEL”) pursuant to an exemption from the registration requirements
applicable to a private placement of securities to Qualified Institutional Investors (as defined in and in accordance with Article
2, paragraph 3 of the FIEL and the regulations promulgated thereunder). Accordingly, the securities may not be offered or sold,
directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan other than Qualified Institutional Investors.
Any Qualified Institutional Investor who acquires securities may not resell them to any person in Japan that is not a Qualified
Institutional Investor, and acquisition by any such person of securities is conditional upon the execution of an agreement to
that effect.
Portugal
This
document is not being distributed in the context of a public offer of financial securities (oferta pública de valores mobiliários)
in Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Código dos Valores Mobiliários).
The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal.
This document and any other offering material relating to the securities have not been, and will not be, submitted to the Portuguese
Securities Market Commission (Comissăo do Mercado de Valores Mobiliários) for approval in Portugal and, accordingly,
may not be distributed or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances
that are deemed not to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of
securities in Portugal are limited to persons who are “qualified investors” (as defined in the Portuguese Securities
Code). Only such investors may receive this document and they may not distribute it or the information contained in it to any
other person.
Sweden
This
document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority).
Accordingly, this document may not be made available, nor may the securities be offered for sale in Sweden, other than under circumstances
that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980)
om handel med finansiella instrument). Any offering of securities in Sweden is limited to persons who are “qualified investors”
(as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute
it or the information contained in it to any other person.
Switzerland
The
securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or
on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the
disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange
or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the securities
may be publicly distributed or otherwise made publicly available in Switzerland.
Neither
this document nor any other offering material relating to the securities have been or will be filed with or approved by any Swiss
regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised
by, the Swiss Financial Market Supervisory Authority (FINMA).
This
document is personal to the recipient only and not for general circulation in Switzerland.
United
Arab Emirates
Neither
this document nor the securities have been approved, disapproved or passed on in any way by the Central Bank of the United Arab
Emirates or any other governmental authority in the United Arab Emirates, nor has the Company received authorization or licensing
from the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates to market or
sell the securities within the United Arab Emirates.
This
document does not constitute and may not be used for the purpose of an offer or invitation. No services relating to the securities,
including the receipt of applications and/or the allotment or redemption of such shares, may be rendered within the United Arab
Emirates by the Company.
No
offer or invitation to subscribe for securities is valid or permitted in the Dubai International Financial Centre.
United
Kingdom
Neither
the information in this document nor any other document relating to the offer has been delivered for approval to the Financial
Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets
Act 2000, as amended (“FSMA”) has been published or is intended to be published in respect of the securities. This
document is issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of FSMA)
in the United Kingdom, and the securities may not be offered or sold in the United Kingdom by means of this document, any accompanying
letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section
86(1) FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed
by recipients to any other person in the United Kingdom.
Any
invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with
the issue or sale of the securities has only been communicated or caused to be communicated and will only be communicated or caused
to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to the Company.
In
the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience
in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets
Act 2000 (Financial Promotions) Order 2005 (“FPO”), (ii) who fall within the categories of persons referred to in
Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise
be lawfully communicated (together “relevant persons”). The investments to which this document relates are available
only to, and any invitation, offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is
not a relevant person should not act or rely on this document or any of its contents.
Canada
The
securities may be sold in Canada 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 securities 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 (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 NI33-105 regarding underwriter conflicts of interest in connection with this offering.
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF OUR COMMON STOCK
The
following discussion is a summary of the material U.S. federal income tax consequences to Non-U.S. Holders (as defined below)
of the purchase, ownership and disposition of our common stock issued pursuant to this offering, but does not purport to be a
complete analysis of all potential tax consequences. The consequences of other U.S. federal tax laws, such as estate and gift
tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the U.S. Internal
Revenue Code of 1986, as amended, or the Code, Treasury Regulations promulgated under the Code, judicial decisions, and published
rulings and administrative pronouncements of the U.S. Internal Revenue Service, or the IRS, in each case in effect as of the date
of this prospectus. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation
may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder of our common stock. We have not sought
and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court
will not take a contrary position to that discussed below regarding the tax consequences of the purchase, ownership and disposition
of our common stock.
This
discussion is limited to Non-U.S. Holders that hold our common stock as a “capital asset” within the meaning of Section
1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences
relevant to a Non-U.S. Holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment
income. In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without
limitation:
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U.S.
expatriates and former citizens or long-term residents of the United States;
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persons
subject to the alternative minimum tax;
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persons
holding our common stock as part of a hedge, straddle, or other risk reduction strategy or as part of a conversion transaction
or other integrated investment;
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banks,
insurance companies, and other financial institutions;
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brokers,
dealers, or traders in securities;
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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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partnerships
or other entities or arrangements treated as partnerships for U.S. federal income tax purposes and other pass-through entities
(and investors in such entities);
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tax-exempt
organizations or governmental organizations;
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persons
deemed to sell our common stock under the constructive sale provisions of the Code;
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persons
who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation;
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persons
that own, or are deemed to own, more than 5% of our common stock (except to the extent specifically set forth below);
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tax-qualified
retirement plans;
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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; and
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persons
subject to special tax accounting rules as a result of any item of gross income with respect to the common stock being taken
into account in an applicable financial statement.
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If
an entity treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner
in the partnership will depend on the status of the partner, the activities of the partnership, and certain determinations made
at the partner level. Accordingly, partnerships holding our common stock and the partners in such partnerships should consult
their tax advisors regarding the U.S. federal income tax consequences to them.
THIS
DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP, AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY
STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Definition
of a Non-U.S. Holder
For
purposes of this discussion, a “Non-U.S. Holder” is any beneficial owner of our common stock that is neither a “U.S.
person” nor an entity treated as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for
U.S. federal income tax purposes, is or is treated as any of the following:
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an
individual who is a citizen or resident of the United States;
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a
corporation (or an entity treated as a corporation) created or organized under the laws of the United States, any state thereof,
or the District of Columbia;
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an
estate, the income of which is subject to U.S. federal income tax regardless of its source; or
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a
trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons”
(within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a United States
person for U.S. federal income tax purposes.
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Distributions
As
described in the section entitled “Dividend Policy,” we do not anticipate paying cash dividends to holders of our
common stock in the foreseeable future. However, if we do make distributions of cash or property on our common stock, such distributions
will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax
purposes will constitute a return of capital and first be applied against and reduce a Non-U.S. Holder’s adjusted tax basis
in its common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described below under
“— Sale or Other Taxable Disposition.”
Subject
to the discussion below on effectively connected dividends and under “—Information Reporting and Backup Withholding”
and “—Additional Withholding Tax on Payments Made to Foreign Accounts”, dividends paid to a Non-U.S. Holder
will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified
by an applicable income tax treaty, provided the Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable
documentation) certifying qualification for the lower treaty rate). If a Non-U.S. Holder holds the stock through a financial institution
or other intermediary, the Non-U.S. Holder will be required to provide appropriate documentation to the intermediary, which then
will be required to provide appropriate documentation to the applicable withholding agent, either directly or through other intermediaries.
A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain
a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should
consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.
If
dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business
within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment
in the United States to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding
tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS
Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business
within the United States.
Any
such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated
rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate
specified by an applicable income tax treaty) on such effectively connected dividends, as adjusted for certain items. Non-U.S.
Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.
Sale
or Other Taxable Disposition
Subject
to the discussion below under “—Information Reporting and Backup Withholding” and “—Additional Withholding
Tax on Payments Made to Foreign Accounts”, a Non-U.S. Holder will not be subject to U.S. federal income tax on any gain
realized upon the sale or other taxable disposition of our common stock unless:
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the
gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and,
if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States
to which such gain is attributable);
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the
Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year
of the disposition and certain other requirements are met; or
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our
common stock constitutes a U.S. real property interest, or a USRPI, by reason of our status as a U.S. real property holding
corporation, or a USRPHC, for U.S. federal income tax purposes at any applicable time within the shorter of the five year
period preceding the Non-U.S. Holder’s disposition of, or the Non-U.S. Holder’s holding period for, our common
stock.
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Gain
described in the first bullet point above generally will be subject to U.S. federal income tax in the same manner as if the Non-U.S.
Holder were a U.S. person and be taxed on the net gain derived from the sale or other taxable disposition under regular graduated
U.S. federal income tax rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of
30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain
items.
Gain
described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified
by an applicable income tax treaty), which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though the
individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income
tax returns with respect to such losses.
With
respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. Because the
determination of whether we are a USRPHC depends, however, on the fair market value of our USRPIs relative to the fair market
value of our non-U.S. real property interests and our other business assets, there can be no assurance that we currently are not
a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other
taxable disposition of our common stock by a Non-U.S. Holder will not be subject to U.S. federal income tax if our common stock
is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, and such
Non-U.S. Holder owned, actually or constructively, 5% or less of our common stock throughout the shorter of the five-year period
ending on the date of the sale or other taxable disposition of our common stock, or the Non-U.S. Holder’s holding period
for our common stock.
Non-U.S.
Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different
rules.
Information
Reporting and Backup Withholding
Payments
of dividends on our common stock will not be subject to backup withholding, provided the applicable withholding agent does not
have actual knowledge or reason to know the holder is a United States person and the holder either certifies its non-U.S. status,
such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or other applicable documentation, or otherwise establishes
an exemption. However, information returns are required to be filed with the IRS in connection with any dividends on our common
stock paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other
taxable disposition of our common stock within the United States or conducted through certain U.S.-related brokers generally will
not be subject to backup withholding or information reporting, if the applicable withholding agent receives the certification
described above and does not have actual knowledge or reason to know that such holder is a United States person, or the holder
otherwise establishes an exemption. Proceeds of a disposition of our common stock conducted through a non-U.S. office of a non-U.S.
broker generally will not be subject to backup withholding or information reporting.
Copies
of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or
agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a
credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished
to the IRS.
Additional
Withholding Tax on Payments Made to Foreign Accounts
Withholding
taxes may be imposed under Sections 1471 to 1474 of the Code (such sections commonly referred to as the Foreign Account Tax Compliance
Act, or “FATCA”) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities.
Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed
below) gross proceeds from the sale or other disposition of, our common stock paid to a “foreign financial institution”
or a “non-financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes
certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any “substantial
United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States
owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these
rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above,
it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify
accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each
as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant
foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that
have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under
the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends
on our common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other
disposition of stock on or after January 1, 2019, recently proposed Treasury Regulations eliminate FATCA withholding on payments
of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations
are issued.
Prospective
investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment
in our common stock.
LEGAL
MATTERS
The
validity of the common stock being offered under this prospectus supplement by us will be passed upon for us by White & Case
LLP, New York, New York. Sullivan & Worcester LLP, New York, New York, is acting as counsel for the underwriters in connection
with this offering.
EXPERTS
The
consolidated financial statements of the Company as of December 31, 2019 and for the year ended December 31, 2019, incorporated
in this prospectus by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, have been
so incorporated in reliance on the report of Haskell & White LLP, an independent registered public accounting firm, incorporated
herein by reference, given on the authority of said firm as experts in accounting and auditing.
The
consolidated financial statements as of December 31, 2018 and for the year then ended incorporated by reference in this prospectus
have been so incorporated in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, incorporated
herein by reference, given on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-3 (File No. 333-238757) with the SEC for the securities we are offering
by this prospectus supplement. This prospectus supplement does not include all of the information contained in the registration
statement. You should refer to the registration statement and its exhibits for additional information. Whenever a reference is
made in this prospectus supplement or the accompanying prospectus to a contract or other document, the reference is only a summary
and you should refer to the exhibits that are a part of the registration statement for a copy of the contract or other document.
You may review a copy of the registration statement through the SEC’s website.
We
are subject to the information reporting requirements of the Exchange Act and, in accordance with these requirements, we file
annual, quarterly and current reports, proxy statements, information statements, and other information with the SEC. Our SEC filings
are available to the public over the Internet at the SEC’s website at www.sec.gov. In addition, we provide free access to
these materials through our website, www.ballantynestrong.com, as soon as reasonably practicable after they are filed with or
furnished to the SEC. Information contained on, or that may be accessible through, our website is not a part of, and is not incorporated
into, this prospectus supplement.
INCORPORATION
BY REFERENCE
The
SEC allows us to incorporate by reference information in this document. This means that we can disclose important information
to you by referring you to documents that we have previously filed with the SEC or documents that we will file with the SEC in
the future. The information incorporated by reference is considered to be an important part of this prospectus supplement and
the accompanying prospectus, except for any information that is superseded by information that is included directly in this document.
We filed a registration statement on Form S-3 under the Securities Act of 1933, as amended, with the SEC with respect to the securities
being offered pursuant to this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying
prospectus omit certain information contained in the registration statement, as permitted by the SEC. You should refer to the
registration statement, including the exhibits, for further information about us and the securities being offered pursuant to
this prospectus supplement and the accompanying prospectus. Statements in this prospectus supplement and the accompanying prospectus
regarding the provisions of certain documents filed with, or incorporated by reference in, the registration statement are not
necessarily complete and each statement is qualified in all respects by that reference. Copies of all or any part of the registration
statement, including the documents incorporated by reference or the exhibits, may be obtained upon payment of the prescribed rates
at the offices of the SEC listed above in “Where You Can Find More Information.”
We
are incorporating by reference in this prospectus supplement the following documents which we have previously filed with the SEC
(other than any portions of the Current Reports on Form 8-K that were furnished pursuant to Item 2.02 or 7.01 of Form 8-K or other
applicable SEC rules):
(1)
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our
Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020 (File No. 001-13906) and Amendment
No. 1 to the Annual Report on Form 10-K for the year ended December 31, 2019, filed on April 20, 2020 (File No. 001-13906),
or, collectively, the 2019 Annual Report;
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(2)
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our
Quarterly Reports on Form 10-Q for the quarter ended March 31, 2020, filed on May 12, 2020, for the quarter ended June 30,
2020, filed on August 12, 2020, and for the quarter ended September 30, 2020 filed on November 12, 2020 (Files Nos.
001-13906);
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(3)
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our
Current Reports on Form 8-K filed on March
16, 2020, April
16, 2020, April
24, 2020, April
30, 2020, June
18, 2020, July
8, 2020, August
4, 2020, August
18, 2020, September
3, 2020, September
15, 2020, October 7, 2020, November 30, 2020, and February 2, 2021 (File Nos. 001-13906); and
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(4)
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the
description of our shares of common stock contained in our Registration Statement on Form 8-A, as filed with the SEC on September 22, 2004 (File No. 001-13906), including Exhibit 4.1 to our 2019 Annual Report and any amendment or report filed for the purpose
of updating such description.
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In
addition, we incorporate by reference into this prospectus supplement and the accompanying prospectus any filings we make with
the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this prospectus supplement until the
termination of the offering under this prospectus supplement. Notwithstanding the foregoing, no information is incorporated by
reference into this prospectus supplement or the accompanying prospectus where such information under applicable forms and regulations
of the SEC is not deemed to be “filed” under Section 18 of the Exchange Act or otherwise subject to the liabilities
of that section (such as under Item 2.02 or 7.01 of Form 8-K), unless we indicate in the report or filing containing such information
that the information is to be considered “filed” under the Exchange Act or is to be incorporated by reference into
this prospectus supplement or the accompanying prospectus.
Certain
statements in and portions of this prospectus supplement and the accompanying prospectus update and replace information in the
above-listed documents incorporated by reference. Likewise, statements in or portions of a future document incorporated by reference
in this prospectus supplement and the accompanying prospectus may update and replace statements in and portions of this prospectus
supplement and the accompanying prospectus or the above-listed documents.
You
may request, without charge, a copy of any incorporated document (excluding exhibits, unless we have specifically incorporated
an exhibit in an incorporated document) by writing or telephoning us at our principal executive offices at the following address:
Ballantyne
Strong, Inc.
Attention:
Investor Relations
4201
Congress Street, Suite 175
Charlotte,
North Carolina 28209
(704)
994-8279
PROSPECTUS
Ballantyne
Strong, Inc.
Common
Stock
Preferred
Stock
Senior
Debt Securities
Subordinated
Debt Securities
Depositary
Shares
Units
Warrants
We
may from time to time offer up to $50,000,000 of the securities listed above in one or more offerings in amounts, at prices and
on terms determined at the time of such offering or offerings. When we use the term “securities” in this prospectus,
we mean any of the securities we may offer with this prospectus, unless we say otherwise.
This
prospectus provides you with a general description of the securities and the general manner in which such securities may be offered.
The specific terms of any securities to be offered, and the specific manner in which they may be offered, will be described in
a supplement to this prospectus or incorporated into this prospectus by reference. You should read this prospectus and any supplement
carefully before you invest. Each prospectus supplement will indicate if the securities offered thereby will be listed or quoted
on a securities exchange or quotation system.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents
are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount
arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus
supplement. See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution”
for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing
the method and terms of the offering of such securities.
INVESTING
IN OUR SECURITIES INVOLVES RISKS. WE STRONGLY RECOMMEND THAT YOU READ CAREFULLY THE RISKS WE DESCRIBE IN THIS PROSPECTUS AND IN
ANY ACCOMPANYING PROSPECTUS SUPPLEMENT, AS WELL AS THE RISK FACTORS THAT ARE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS FROM
OUR FILINGS MADE WITH THE SECURITIES AND EXCHANGE COMMISSION. SEE “RISK FACTORS” ON PAGE 5 OF THIS PROSPECTUS.
Our
common stock is listed on the NYSE American under the symbol “BTN.” On May 27, 2020 the last reported sale price of
our common stock on the NYSE American was $1.57 per share.
As
of May 27, 2020, the aggregate market value of our outstanding common stock held by non-affiliates was $13,042,488, based on 14,651,253
shares of outstanding common stock, of which 8,307,317 shares were held by affiliates, and a per share price of $1.57, based on
the closing sale price of our common stock on May 27, 2020. Pursuant to General Instruction I.B.6 of Form S-3, in no event will
we sell securities pursuant to this registration statement in a public primary offering with a value of 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 $75,000,000. In the event that subsequent to the effective date
of this registration statement, the aggregate market value of our outstanding common stock held by non-affiliates equals or exceeds
$75,000,000, then the one-third limitation on sales shall not apply to additional sales made pursuant to this registration statement.
We have not sold any securities pursuant to General Instruction I.B.6 of Form S-3 during the 12 calendar months prior to, and
including, the date of this registration statement.
You
should carefully read this prospectus, any applicable prospectus supplement and the information described under the headings “Where
You Can Find More Information” and “Incorporation by Reference” before you invest in any of these securities.
This prospectus may not be used to sell securities in a primary offering by us unless it is accompanied by a prospectus supplement
that describes the securities being offered.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved the securities we may be
offering or determined that this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is June 4, 2020
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission, or the SEC, using
a “shelf” registration process. By using a shelf registration statement, we may sell securities from time to time
and in one or more offerings up to a total dollar amount of $50,000,000 as described in this prospectus. Each time that we offer
and sell securities, we will provide a prospectus supplement to this prospectus that contains specific information about the securities
being offered and sold and the specific terms of that offering. We may also authorize one or more free writing prospectuses to
be provided to you that may contain material information relating to these offerings. The prospectus supplement or free writing
prospectus may also add, update or change information contained in this prospectus with respect to that offering. If there is
any inconsistency between the information in this prospectus and the applicable prospectus supplement or free writing prospectus,
you should rely on the prospectus supplement or free writing prospectus, as applicable. Before purchasing any securities, you
should carefully read both this prospectus and the applicable prospectus supplement (and any applicable free writing prospectuses),
together with the additional information described under the heading “Where You Can Find More Information; Incorporation
by Reference.”
We
have not authorized any other person to provide you with any information or to make any representations other than those contained
in this prospectus, any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to
which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information
that others may give you. We will not make an offer to sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus and the applicable prospectus supplement to this
prospectus is accurate only as of the date on its respective cover, that the information appearing in any applicable free writing
prospectus is accurate only as of the date of that free writing prospectus, and that any information incorporated by reference
is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial
condition, results of operations and prospects may have changed since those dates. This prospectus incorporates by reference,
and any prospectus supplement or free writing prospectus may contain and incorporate by reference, market data and industry statistics
and forecasts that are based on independent industry publications and other publicly available information. Although we believe
these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not independently
verified this information. In addition, the market and industry data and forecasts that may be included or incorporated by reference
in this prospectus, any prospectus supplement or any applicable free writing prospectus may involve estimates, assumptions and
other risks and uncertainties and are subject to change based on various factors, including those discussed under the heading
“Risk Factors” contained in this prospectus, the applicable prospectus supplement and any applicable free writing
prospectus, and under similar headings in other documents that are incorporated by reference into this prospectus. Accordingly,
investors should not place undue reliance on this information.
Unless
we state otherwise or the context otherwise requires, references in this prospectus to “we,” “our,” “us,”
or “the Company” are to Ballantyne Strong, Inc., a Delaware corporation, together with our consolidated subsidiaries.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference into it contains forward-looking statements regarding the Company and represents
our expectations and beliefs concerning future events that are, or may be considered to be, “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are intended to be covered by the safe
harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. The forward-looking statements
included herein or incorporated herein by reference include or may include, but are not limited to, (and you should read carefully)
statements that are predictive in nature, depend upon or refer to future events or conditions, or use or contain words, terms,
phrases, or expressions such as “achieve,” “forecast,” “plan,” “propose,” “strategy,”
“envision,” “hope,” “will,” “continue,” “potential,” “expect,”
“believe,” “anticipate,” “project,” “estimate,” “predict,” “intend,”
“should,” “could,” “may,” “might,” or similar words, terms, phrases, or expressions
or the negative of any of these terms. Any statements in this prospectus or incorporated herein by reference that are not based
upon historical fact are forward-looking statements and represent our best judgment as to what may occur in the future. Forward-looking
statements involve a number of known and unknown risks and uncertainties, including but not limited to those discussed in the
“Risk Factors” section contained in Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31,
2019 and the following risks and uncertainties: the Company’s ability to maintain and expand its revenue streams, potential
interruptions of supplier relationships or higher prices charged by suppliers, the Company’s ability to successfully compete
and introduce enhancements and new features that achieve market acceptance and that keep pace with technological developments,
the Company’s access to capital, the Company’s ability to successfully execute its capital allocation strategy, the
Company’s ability to maintain its brand and reputation and retain or replace its significant customers, the impact of a
challenging global economic environment or a downturn in the markets (such as the current economic disruption and market volatility
generated by the ongoing COVID-19 pandemic), economic and political risks of selling products in foreign countries (including
tariffs), risks of non-compliance with U.S. and foreign laws and regulations, potential sales tax collections and claims for uncollected
amounts, cybersecurity risks and risks of damage and interruptions of information technology systems, the Company’s ability
to retain key members of management and successfully integrate new executives, the Company’s ability to complete acquisitions,
strategic investments, entry into new lines of business, divestitures, mergers or other transactions on acceptable terms or at
all, the Company’s ability to utilize or assert its intellectual property rights, the impact of natural disasters and other
catastrophic events (such as the ongoing COVID-19 pandemic), the adequacy of insurance and the impact of having a controlling
stockholder. Given the risks and uncertainties, readers should not place undue reliance on any forward-looking statement and should
recognize that the statements are predictions of future results which may not occur as anticipated. Many of the risks listed above
have been, and may be further be, exacerbated by the COVID-19 pandemic, its impact on the cinema and entertainment industry, and
the worsening economic environment.
Although
we believe the expectations reflected in our forward-looking statements are reasonable, in reading this prospectus and the documents
incorporated into this prospectus by reference, you should consider the factors discussed under the heading “Risk Factors”
contained in this prospectus in evaluating any forward-looking statements and you are cautioned not to place undue reliance on
any forward-looking statements. Each forward-looking statement is made and applies only as of the date of the particular statement,
and we are not obligated to update, withdraw, or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. You should consider these risks when reading any forward-looking statements. All forward-looking statements
attributed or attributable to us or to persons acting on our behalf are expressly qualified in their entirety by this section
entitled “Cautionary Statement Regarding Forward-Looking Statements.”
BALLANTYNE
STRONG, INC.
We
are a holding company with diverse business activities focused on serving the entertainment, retail and advertising markets. The
Company and its wholly owned subsidiaries design, integrate and install technology solutions for a broad range of applications;
develop and deliver out-of-home messaging, advertising and communications; manufacture projection screens; and provide managed
services including monitoring of networked equipment to our customers. We add value through our design, engineering, manufacturing
excellence and customer service.
We
conduct our operations through three operating segments: Strong Entertainment, Convergent and Strong Outdoor. Our Strong Entertainment
business is one of the largest manufacturers of premium projection screens. We also manufacture customized screen support systems,
distribute other products and provide technical support services to the cinema, amusement park and other markets. Convergent delivers
digital signage solutions and related services to large multi-location organizations in the United States and Canada. Strong Outdoor
provides outdoor advertising and experiential marketing to advertising agencies and corporate accounts, primarily in New York
City.
We
are a Delaware corporation. Our principal executive offices are located at 4201 Congress Street, Suite 175, Charlotte, North Carolina
28209, and our telephone number at this address is (704) 994-8279. Our website is www.ballantynestrong.com. Information
contained on, or that may be accessible through, our website is not a part of, and is not incorporated into, this prospectus.
RISK
FACTORS
An
investment in our securities involves various risks. Before making an investment in our securities, you should carefully consider
the risks discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K, as amended, our
most recent Quarterly Report on Form 10-Q and any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form
8-K (other than, in each case, information furnished rather than filed), which are incorporated herein by reference, as well as
the information contained in this prospectus and in any prospectus supplements relating to particular offers of securities. Any
of those risk factors could significantly and adversely affect our business, prospects, financial condition and results of operations,
and the trading price of our securities. Although we describe, and will describe, what we believe to be the principal risks related
to our Company and the securities we offer, we can also be affected by risks we do not anticipate or do not think will have a
material effect upon us.
USE
OF PROCEEDS
Unless
otherwise indicated in a prospectus supplement relating to a specific offering, we intend to use the net proceeds from the sale
of securities by us under this prospectus for general corporate purposes, which may include working capital, capital expenditures,
operational purposes and potential acquisitions.
The
intended application of proceeds from the sale of any particular offering of securities using this prospectus will be described
in the accompanying prospectus supplement relating to such offering. The precise amount and timing of the application of these
proceeds will depend on our funding requirements and the availability and costs of other funds.
DESCRIPTION
OF CAPITAL STOCK
The
following summary of the material terms of our securities is not intended to be a complete summary of the rights and preferences
of such securities. We urge you to read our certificate of incorporation, or the Certificate of Incorporation, and bylaws, or
the Bylaws, in their entirety for a complete description of the rights and preferences of our securities, copies of which have
been filed with the SEC. These documents are also incorporated by reference into the registration statement of which this prospectus
forms a part.
Authorized
Capital
The
Company’s authorized capital stock consists of 25,000,000 shares of common stock, $0.01 par value per share, or the Common
Stock, and 1,000,000 shares of preferred stock, $0.01 par value per share, or the Preferred Stock.
Under
Delaware law, stockholders generally are not personally liable for a corporation’s acts or debts.
Exchange
and Trading Symbol
The
Common Stock is listed for trading on the NYSE American under the trading symbol “BTN.”
Rights
and Preferences
All
outstanding shares of Common Stock are duly authorized, fully paid and nonassessable. Holders of shares of Common Stock have no
conversion, preemptive or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common
Stock. The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by,
the rights of the holders of shares of any series of Preferred Stock that the Company may designate and issue in the future.
In
the event of the Company’s liquidation, dissolution or winding up, the holders of Common Stock are entitled to share ratably
in the assets legally available for distribution to stockholders after the payment of all of the Company’s known debts and
liabilities and after adequate provision has been made for each class of stock having preference over the Common Stock, if any.
Voting
Rights
Holders
of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by the stockholders. There
is no cumulative voting with respect to the election of directors. Directors are elected by a plurality of the votes cast by the
holders of Common Stock. Except as otherwise required by law, all other matters brought to a vote of the holders of Common Stock
are determined by a majority of the votes cast and, except as may be provided with respect to any other outstanding class or series
of the Company’s stock, the holders of shares of Common Stock possess the exclusive voting power.
Dividends
Subject
to preferences that may be applicable to any then outstanding shares of Preferred Stock, the holders of Common Stock are entitled
to receive dividends, if any, as may be declared from time to time by the Company’s Board of Directors out of legally available
funds.
Preferred
Stock
The
Board of Directors of the Company is authorized, subject to any limitations prescribed by applicable law and without further approval
or action by the holders of Common Stock, to issue shares of Preferred Stock in one or more series. The Board of Directors may
fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions
thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and sinking
fund terms. The Company has no outstanding shares of Preferred Stock.
The
rights of the holders of Common Stock will generally be subject to the prior rights of the holders of any outstanding shares of
Preferred Stock with respect to dividends, liquidation preferences and other matters.
Anti-Takeover
Effects of Provisions of Delaware Law and the Company’s Certificate of Incorporation and Bylaws
Delaware
Anti-Takeover Law
The
Company is subject to Section 203 of the Delaware General Corporation Law (“Section 203”). Section 203 generally prohibits
a public Delaware corporation from engaging in a “business combination” with an “interested stockholder”
for a period of three years after the date of the transaction in which the person became an interested stockholder unless:
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prior
to the date of the transaction, the board of directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested stockholder;
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upon
consummation 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 number of shares outstanding (but not the outstanding voting stock owned by the interested stockholder)
those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants
do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or
exchange offer; or
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at
or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
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Section
203 defines a “business combination” to generally include:
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any
merger or consolidation of the corporation or any direct or indirect majority-owned subsidiary of the corporation with the
interested stockholder;
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any
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except
proportionately as a stockholder of such corporation, to or with the interested stockholder of assets of the corporation or
of any direct or indirect majority-owned subsidiary of the corporation which assets have an aggregate market value equal to
10% or more of either the aggregate market value of all the assets of the corporation determined on a consolidated basis or
the aggregate market value of all the outstanding stock of the corporation;
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subject
to certain exceptions, any transaction which results in the issuance or transfer by the corporation or by any direct or indirect
majority-owned subsidiary of the corporation of any stock of the corporation or of such subsidiary to the interested stockholder;
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subject
to certain exceptions, any transaction involving the corporation or any direct or indirect majority-owned subsidiary of the
corporation that has the effect, directly or indirectly, of increasing the interested stockholder’s proportionate share
of the stock of any class or series of securities, or securities convertible into the stock of any class or series, of the
corporation or of any such subsidiary; and
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any
receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of such
corporation), of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation
or any direct or indirect majority-owned subsidiary.
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In
general, Section 203 defines an interested stockholder as any entity or person that (i) is the owner of 15% or more of the outstanding
voting stock of the corporation, or (ii) is an affiliate or associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it
is sought to be determined whether such person is an interested stockholder, and the affiliates and associates of such person.
Certificate
of Incorporation and Bylaws
The
Company’s Certificate of Incorporation and Bylaws include anti-takeover provisions that:
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authorize
the Board of Directors, without further action by the stockholders, to issue shares of Preferred Stock in one or more series,
and with respect to each series, to fix the number of shares constituting that series, and establish the rights and terms
of that series;
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establish
advance notice procedures for stockholders to submit nominations of candidates for election to the Board of Directors to be
brought before a stockholders meeting;
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allow
the Company’s directors to establish the size of the Board of Directors and fill vacancies on the Board created by an
increase in the number of directors (subject to the rights of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances);
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require
the affirmative vote of the holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of capital
stock of the Company entitled to vote generally in the election of directors in order to remove a director or the entire Board
of Directors for cause;
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do
not provide stockholders cumulative voting rights with respect to director elections; and
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provide
that the Company’s Bylaws may be amended by the Board of Directors without stockholder approval; provided, however,
that the stockholders may amend the Bylaws only with the affirmative vote of the holders of at least 66 2/3% of the voting
power of all of the then-outstanding shares of capital stock of the Company entitled to vote generally in the election of
directors.
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Provisions
of the Company’s Certificate of Incorporation and Bylaws may delay or discourage transactions involving an actual or potential
change in the Company’s control or change in the Company’s Board of Directors or management, including transactions
in which stockholders might otherwise receive a premium for their shares or transactions that the Company’s stockholders
might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of the Common
Stock.
Authorized
and Unissued Shares
The
Company’s authorized and unissued shares of Common Stock are available for future issuance without stockholder approval
except as may otherwise be required by applicable stock exchange rules or Delaware law. The Company may issue additional shares
for a variety of purposes, including future offerings to raise additional capital, to fund acquisitions and as employee and consultant
compensation. The existence of authorized but unissued shares of Common Stock could render more difficult, or discourage an attempt,
to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.
The
issuance of shares of Preferred Stock by the Company could have certain anti-takeover effects under certain circumstances, and
could enable the Board of Directors to render more difficult or discourage an attempt to obtain control of the Company by means
of a merger, tender offer, or other business combination transaction directed at the Company by, among other things, placing shares
of Preferred Stock with investors who might align themselves with the Board of Directors.
Transfer
Agent and Registrar
The
transfer agent for the shares of the Company’s common stock is Broadridge Financial Solutions, Inc.
DESCRIPTION
OF DEPOSITARY SHARES
We
may issue depositary receipts representing interests, which are called depositary shares, in shares of our common stock or of
particular series of preferred stock. If we did that, we would deposit the common or preferred stock which is the subject of depositary
shares with a depositary, which would hold that common or preferred stock for the benefit of the holders of the depositary shares,
in accordance with a deposit agreement between the depositary and us. The holders of depositary shares would be entitled to all
the rights and preferences of the common or preferred stock to which the depositary shares relate, including dividend, voting,
conversion, redemption and liquidation rights, to the extent of their interests in that common or preferred stock.
While
the deposit agreement relating to common stock or a particular series of preferred stock may have provisions applicable solely
to common stock or that series of preferred stock, all deposit agreements relating to common or preferred stock we issue would
include the following provisions:
Dividends
and Other Distributions. Each time we pay a cash dividend or make any other type of cash distribution with regard to the common
stock or to the preferred stock of a series, the depositary will distribute to the holder of record of each depositary share relating
to that common stock or to that series of preferred stock, an amount equal to the dividend or other distribution per depositary
share the depositary receives. If there is a distribution of property other than cash, the depositary either will distribute the
property to the holders of depositary shares in proportion to the depositary shares held by each of them, or the depositary will,
if we approve, sell the property and distribute the net proceeds to the holders of the depositary shares in proportion to the
depositary shares held by them.
Withdrawal
of Common or Preferred Stock. A holder of depositary shares will be entitled to receive, upon surrender of depositary receipts
representing depositary shares, the number of shares of the applicable common stock or series of preferred stock, and any money
or other property, to which the depositary shares relate.
Redemption
of Depositary Shares. Whenever we redeem shares of a series of preferred stock held by a depositary, the depositary will be
required to redeem, on the same redemption date, depositary shares relating, in total, to the number of shares of that series
held by the depositary which we redeem, subject to the depositary’s receiving the redemption price of those shares. If fewer
than all the depositary shares relating to a series are to be redeemed, the depositary shares to be redeemed will be selected
by lot or by another method we determine to be equitable.
Voting.
Any time we send a notice of meeting or other materials relating to a meeting to the holders of common stock or a series of
preferred stock to which depositary shares relate, we will provide the depositary with sufficient copies of those materials so
they can be sent to all holders of record of the applicable depositary shares, and the depositary will send those materials to
the holders of record of the depositary shares on the record date for the meeting. The depositary will solicit voting instructions
from holders of depositary shares and will vote or not vote the common or preferred stock to which the depositary shares relate
in accordance with those instructions.
Liquidating
Distributions. Upon our liquidation, dissolution or winding up, the holder of each depositary share will be entitled to what
the holder of the depositary share would have received if the holder had owned the number of shares of common stock or of the
series of preferred stock which is represented by the depositary share.
Conversion.
If shares of a series of preferred stock are convertible into common stock or other of our securities or property, holders
of depositary shares relating to that series of preferred stock will, if they surrender depositary receipts representing depositary
shares with appropriate instructions to convert them, receive the shares of common stock or other securities or property into
which the number of shares of the series of preferred stock to which the depositary shares relate could at the time be converted.
Amendment
and Termination of a Deposit Agreement. We and the depositary may amend a deposit agreement, except that an amendment which
materially and adversely affects the rights of holders of depositary shares, or would be materially and adversely inconsistent
with the rights granted to the holders of common stock or the series of preferred stock to which they relate, will have to be
approved by holders of at least two-thirds of the applicable depositary shares. No amendment will impair the right of a holder
of depositary shares to surrender the depositary receipts evidencing those depositary shares and receive the common or preferred
stock to which they relate, except as required to comply with law. We may terminate a deposit agreement with the consent of holders
of a majority of the depositary shares to which it relates. Upon termination of a deposit agreement, the depositary will make
the shares of common or preferred stock to which the depositary shares issued under the deposit agreement relate available to
the holders of those depositary shares. A deposit agreement will automatically terminate if:
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all
outstanding depositary shares to which it relates have been withdrawn, redeemed or converted, or
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the
depositary has made a final distribution to the holders of the depositary shares issued under the deposit agreement upon our
liquidation, dissolution or winding up.
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Miscellaneous.
There will be provisions (i) requiring the depositary to forward to holders of record of depositary shares any reports or
communications from us which the depositary receives with respect to the common or preferred stock to which the depositary shares
relate, (ii) regarding compensation of the depositary, (iii) regarding resignation of the depositary, (iv) limiting our liability
and the liability of the depositary under the deposit agreement (usually to failure to act in good faith, gross negligence or
willful misconduct) and (v) indemnifying the depositary against certain possible liabilities.
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 $50,000,000 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 $50,000,000. 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.
The
debt securities, if and when issued, will be direct, unsecured obligations of our company and may be either senior debt securities
or subordinated debt securities. We may issue debt securities in one or more issuances or series. An indenture, or a supplemental
indenture, will set forth specific terms of each issue or series of debt securities. There will be prospectus supplements relating
to particular issues or series of debt securities. Each prospectus supplement will describe:
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the
title of the debt securities and whether the debt securities are senior or subordinated debt securities;
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the
total principal amount of the debt securities we are offering by that prospectus supplement;
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the
date or dates on which principal of the debt securities will be payable and the amount of principal which will be payable;
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the
rate or rates (which may be fixed or variable) at which the debt securities will bear interest, if any, or contingent interest,
if any, as well as the dates from which interest will accrue, the dates on which interest will be payable, the persons to
whom interest will be payable, if other than the registered holders on the record date, and the record date for the interest
payable on any payment date;
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the
currency in which principal and interest, and any premium, will be payable;
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the
place or places where principal, premium, if any, and interest, if any, on the debt securities will be payable and where debt
securities which are in registered form can be presented for registration of transfer or exchange;
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any
provisions regarding our right to prepay debt securities or of holders to require us to prepay debt securities;
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the
right, if any, of holders of the debt securities to convert them into common stock or other securities, including any contingent
conversion provisions;
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any
provisions requiring or permitting us to make payments to a sinking fund which will be used to redeem debt securities or a
purchase fund which will be used to purchase debt securities;
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the
percentage of the principal amount of the debt securities which is payable if maturity of the debt securities is accelerated
because of a default;
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any
special or modified events of default or covenants with respect to the debt securities; and
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any
other material terms of the debt securities.
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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.
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.
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 a 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 Asset
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 and Remedies
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
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
of an Indenture
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;
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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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money;
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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 or U.S. Government Obligations 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 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 State of New York.
DESCRIPTION
OF WARRANTS
We
may issue warrants to purchase common stock, preferred stock, depositary shares, debt securities or units. Each issue of warrants
will be the subject of a warrant agreement which will contain the terms of the warrants. In the event that we issue warrants,
we will distribute a prospectus supplement with regard to each issue of warrants. Each prospectus supplement will describe, as
to the warrants to which it relates:
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the
securities which may be purchased by exercising the warrants (which may be common stock, preferred stock, depositary shares,
debt securities or units consisting of two or more of those types of securities);
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the
exercise price of the warrants (which may be wholly or partly payable in cash or wholly or partly payable with other types
of consideration);
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the
period during which the warrants may be exercised;
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any
provision adjusting the securities which may be purchased on exercise of the warrants and the exercise price of the warrants
in order to prevent dilution or otherwise;
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the
place or places where warrants can be presented for exercise or for registration of transfer or exchange; and
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any
other material terms of the warrants.
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Exercise
of Warrants
Each
warrant will entitle the holder of the warrant to purchase for cash the amount of common stock, preferred stock, depositary shares,
debt securities or units at the exercise price stated or determinable in the applicable prospectus supplement for the warrants.
Warrants may be exercised at any time up to the close of business on the expiration date shown in the applicable prospectus supplement,
unless otherwise specified in such prospectus supplement. After the close of business on the expiration date, unexercised warrants
will become void. Warrants may be exercised as described in the applicable prospectus supplement.
Until
a holder exercises the warrants to purchase any securities underlying the warrants, the holder will not have any rights as a holder
of the underlying securities by virtue of ownership of warrants.
DESCRIPTION
OF UNITS
We
may issue securities in units, each consisting of two or more types of securities. For example, we might issue units consisting
of a combination of debt securities and warrants to purchase common stock. If we issue units, the prospectus supplement relating
to the units will contain the information described above with regard to each of the securities that is a component of the units.
In addition, each prospectus supplement relating to units will:
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state
how long, if at all, the securities that are components of the units must be traded in units, and when they can be traded
separately;
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state
whether we will apply to have the units traded on a securities exchange or securities quotation system; and
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describe
how, for U.S. federal income tax purposes, the purchase price paid for the units is to be allocated among the component securities.
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PLAN
OF DISTRIBUTION
We
may sell the securities offered through this prospectus and applicable prospectus supplements in one or more of the following
ways from time to time: (i) to or through underwriters or dealers, (ii) directly to one or more purchasers, including our affiliates,
(iii) through agents, (iv) through a combination of any these methods, or (v) through any other method permitted by applicable
law.
In
addition, the manner in which we may sell some or all of the securities covered by this prospectus, includes, without limitation,
through:
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an
“at the market” offering, within the meaning of Rule 415(a)(4) of the Securities Act of 1933, as amended, or the
“Securities Act,” to or through a market maker or into an existing trading market on an exchange or otherwise;
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a
block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as
principal, in order to facilitate the transaction;
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purchases
by a broker-dealer, as principal, and resale by the broker-dealer for its account;
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ordinary
brokerage transactions and transactions in which a broker solicits purchasers; or
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privately
negotiated transactions.
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The
securities may be distributed at a fixed price or prices, which may be changed, based on market prices prevailing at the time
of sale, prices related to the prevailing market prices, or negotiated prices. The prospectus supplement relating to an offering
of securities will set forth the terms of such offering, including:
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the
name or names of any underwriters or agents;
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the
name or names of any managing underwriter or underwriters;
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the
name or names of any broker/dealers or placement agents;
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the
purchase price of the securities;
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any
over-allotment options under which underwriters may purchase additional securities;
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the
net proceeds from the sale of the securities;
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any
delayed delivery arrangements;
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any
underwriting discounts, commissions and other items constituting underwriters’ compensation;
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any
initial public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers;
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any
commissions paid to agents; and
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any
securities exchange or market on which the securities may be listed.
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Sale
Through Underwriters or Dealers
Only
underwriters named in a prospectus supplement are underwriters of the securities offered by such prospectus supplement.
If
underwriters are used in the sale, the underwriters will acquire the securities for their own account, including through underwriting,
purchase, security lending or repurchase agreements with us. The underwriters may resell the securities from time to time in one
or more transactions, including negotiated transactions. Underwriters may sell the securities in order to facilitate transactions
in any of our other securities (described in this prospectus or otherwise), including other public or private transactions and
short sales. Underwriters may offer securities to the public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as underwriters without a syndicate. Unless otherwise indicated
in a prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to certain conditions,
and the underwriters will be obligated to purchase all the offered securities if they purchase any of them. The underwriters may
change from time to time any public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
If
dealers are used in the sale of securities offered through this prospectus, we will sell the securities to them as principals.
The dealers may then resell those securities to the public at varying prices determined by the dealers at the time of resale.
The prospectus supplement will include the names of the dealers and the terms of the transaction.
The
maximum compensation or discount to be received by any FINRA member or independent broker-dealer will not be greater than 8% for
the sale of any securities being registered hereunder pursuant to Rule 415 of the Securities Act.
Direct
Sales and Sales Through Agents
We
may sell the securities offered through this prospectus directly. In this case, no underwriters or agents would be involved. Such
securities may also be sold through agents designated from time to time. Any applicable prospectus supplement will name any agent
involved in the offer or sale of the offered securities and will describe any commissions payable to the agent. Unless otherwise
indicated in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period
of its appointment.
We
may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any sale of those securities. The terms of any such sales will be described in a prospectus
supplement.
Delayed
Delivery Contracts
If
an applicable prospectus supplement indicates, we may authorize agents, underwriters or dealers to solicit offers from certain
types of institutions to purchase securities at the public offering price under delayed delivery contracts. These contracts would
provide for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described
in the prospectus supplement. The applicable prospectus supplement will describe the commission payable for solicitation of those
contracts.
Market
Making, Stabilization and Other Transactions
We
may elect to list offered securities on an exchange or in the over-the-counter market. Any underwriters that we use in the sale
of offered securities may make a market in such securities, but may discontinue such market making at any time without notice.
Therefore, we cannot assure you that the securities will have a liquid trading market.
Certain
persons participating in an offering may engage in overallotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with rules and regulations under the Exchange Act. Overallotment involves the sale in excess of the
offering size, which create a short position. Stabilizing transactions involve bids to purchase the underlying security in the
open market for the purpose of pegging, fixing or maintaining the price of the securities. Syndicate covering transactions involve
purchases of the securities in the open market after the distribution has been completed in order to cover syndicate short positions.
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the
syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions. Stabilizing transactions,
syndicate covering transactions and penalty bids may cause the price of the securities to be higher than it would be in the absence
of the transactions. The underwriters may, if they commence these transactions, discontinue them at any time.
General
Information
Agents,
underwriters, and dealers may be entitled, under agreements entered into with us, to indemnification by us against certain liabilities,
including liabilities under the Securities Act. Our agents, underwriters, and dealers, or their affiliates, may be customers of,
engage in transactions with or perform services for us in the ordinary course of business.
LEGAL
MATTERS
Winston
& Strawn LLP, New York, New York, or other counsel selected by the Company with regard to a particular offering, who will
be named in the prospectus supplement relating to that offering, will pass upon the validity of any securities we offer by this
prospectus. If the validity of any securities is also passed upon by counsel for the underwriters of an offering of those securities,
that counsel will be named in the prospectus supplement relating to that offering.
EXPERTS
The
consolidated financial statements of the Company as of December 31, 2019 and for the year ended December 31, 2019, incorporated
in this prospectus by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, have been
so incorporated in reliance on the report of Haskell & White LLP, an independent registered public accounting firm, incorporated
herein by reference, given on the authority of said firm as experts in accounting and auditing.
The
consolidated financial statements as of December 31, 2018 and for the year then ended incorporated by reference in this prospectus
have been so incorporated in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, incorporated
herein by reference, given on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
are subject to the information reporting requirements of the Exchange Act and, in accordance with these requirements, we file
annual, quarterly and current reports, proxy statements, information statements, and other information with the SEC. Our SEC filings
are available to the public over the Internet at the SEC’s website at www.sec.gov. In addition, we provide free access to
these materials through our website, www.ballantynestrong.com, as soon as reasonably practicable after they are filed with or
furnished to the SEC. Information contained on, or that may be accessible through, our website is not a part of, and is not incorporated
into, this prospectus.
We
have filed with the SEC a registration statement on Form S-3 relating to the securities covered by this prospectus and any prospectus
supplement. This prospectus is a part of the registration statement and does not contain all the information in the registration
statement. Whenever a reference is made in this prospectus or any prospectus supplement to a contract or other document, the reference
is only a summary and you should refer to the exhibits that are a part of the registration statement for a copy of the contract
or other document. You may review a copy of the registration statement through the SEC’s website.
INCORPORATION
BY REFERENCE
The
SEC allows us to incorporate by reference information in this document. This means that we can disclose important information
to you by referring you to documents that we have previously filed with the SEC or documents that we will file with the SEC in
the future. The information incorporated by reference is considered to be an important part of this prospectus, except for any
information that is superseded by information that is included directly in this document.
We
are incorporating by reference in this prospectus the following documents which we have previously filed with the SEC (other than
any portions of the Current Reports on Form 8-K that were furnished pursuant to Item 2.02 or 7.01 of Form 8-K or other applicable
SEC rules):
(1)
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Annual
Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020 (File No. 001-13906) and Amendment No. 1
to the Annual Report on Form 10-K for the year ended December 31, 2019, filed on April 20, 2020 (File No. 001-13906);
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(2)
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Quarterly
Report on Form 10-Q for the quarter ended March 31, 2020, filed on May 12, 2020 (File No. 001-13906);
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(3)
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Current
Reports on Form 8-K filed on March 16, 2020, April 16, 2020, April 24, 2020 and April 30, 2020 (File Nos. 001-13906); and
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(4)
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the
description of our shares of common stock contained in our Registration Statement on Form 8-A, as filed with the SEC on September 22, 2004 (File No. 001-13906), including any amendment or report filed for the purpose of updating such description.
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Whenever
after the date of filing the registration statement of which this prospectus is a part, and until all of the securities to which
this prospectus relates have been sold or the offering is otherwise terminated, we file reports or documents under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, those reports and documents will be deemed to be part of this prospectus from the time
they are filed. Any statements made in this prospectus or in a document incorporated or deemed to be incorporated by reference
in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any subsequently filed document that is also incorporated or deemed to be incorporated by reference
in this prospectus modifies or supersedes the statement. Nothing in this prospectus will be deemed to incorporate information
furnished by us on Form 8-K that under the rules of the SEC, is not deemed “filed” for purposes of the Exchange Act.
You
may request, without charge, a copy of any incorporated document (excluding exhibits, unless we have specifically incorporated
an exhibit in an incorporated document) by writing or telephoning us at our principal executive offices at the following address:
Ballantyne
Strong, Inc.
Attention:
Investor Relations
4201
Congress Street, Suite 175
Charlotte,
North Carolina 28209
(704)
994-8279
Shares
of Common Stock
Ballantyne
Strong, Inc.
PROSPECTUS
SUPPLEMENT
ThinkEquity
a
division of Fordham Financial Management, Inc.
,
2021
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