As
filed with the U.S. Securities and Exchange Commission on November 1, 2019
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
Akers
Biosciences, Inc.
(Exact
name of registrant as specified in its charter)
New
Jersey
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22-2983783
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
Number)
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201
Grove Road
Thorofare,
NJ 08086
(856)
848-8698
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Christopher
C. Schreiber
Executive
Chairman
Akers
Biosciences, Inc.
201
Grove Road
Thorofare,
New Jersey USA 08086
(856)
848-8698
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Barry
I. Grossman, Esq.
Sarah
E. Williams, Esq.
Ellenoff
Grossman & Schole LLP
1345
Avenue of Americas
New
York, NY 10105
(212)
370-1300
Fax:
(212) 370-7889
Approximate
date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.
If
the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please
check the following box: [ ]
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, as amended, other than securities offered only in connection with dividend or interest reinvestment
plans, check the following box: [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. [ ]
If
this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following
box. [ ]
Indicate
by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[X]
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Smaller
reporting company
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[X]
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Emerging
growth company
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[X]
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. [ ]
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of
Securities to be Registered (1)
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Amount
to be
Registered
(2) (3)
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Proposed
Maximum Aggregate Offering Price per Security (2) (3)
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Proposed
Maximum Aggregate Offering Price (2) (3)
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Amount
of Registration Fee (4)
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Common Stock, no par value
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—
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—
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—
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—
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Preferred Stock, no par value
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—
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—
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—
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—
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Purchase Contracts
(5)
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—
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—
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—
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—
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Warrants to Purchase
common stock, Preferred Stock or other Securities (6)
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—
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—
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—
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—
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Subscription Rights
to Purchase common stock or Preferred Stock
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—
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—
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—
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—
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Depositary Shares
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—
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—
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—
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—
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Debt Securities (which
may be senior or subordinated, convertible or non-convertible, secured or unsecured)
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Units (7)
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—
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—
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—
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—
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TOTAL
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—
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—
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$
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25,000,000
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$
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3,245
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(1)
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Securities
registered hereunder may be sold separately, together or as units with other securities registered hereunder.
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(2)
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Not
specified as to each class of securities to be registered pursuant to Form S-3 General Instruction II.D.
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(3)
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The
Registrant is registering an indeterminate aggregate principal amount and number of securities of each identified class of
securities up to a proposed aggregate offering price of $25,000,000, which may be offered from time to time in unspecified
numbers and at indeterminate prices, and as may be issuable upon conversion, redemption, repurchase, exchange, or exercise
of any securities registered hereunder, including under any applicable anti-dilution provisions. In addition, pursuant to
Rule 416 under the Securities Act of 1933, as amended, the shares being registered hereunder include such indeterminate number
of shares of common stock and preferred stock as may be issuable with respect to the shares being registered hereunder as
a result of stock splits, stock dividends or similar transactions.
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(4)
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The
registration fee is calculated in accordance with Rule 457(o) under the Securities Act of 1933, as amended.
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(5)
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Includes
purchase contracts issuable upon conversion or exchange of securities registered hereunder to the extent any such securities
are by their terms convertible into or exchangeable for purchase contracts. Each purchase contract obligates the registrant
to sell, and the holder thereof to purchase, an indeterminate number of debt securities, shares of common stock, shares of
preferred stock or other securities registered hereunder.
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(6)
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Warrants
may represent rights to purchase debt securities, common stock, preferred stock or other securities registered hereunder.
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(7)
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Each
Unit consists of any combination of two or more of the securities being registered hereby.
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The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell the securities until the Registration Statement
filed with the Securities and Exchange Commission, of which this prospectus is a part, is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is
not permitted.
SUBJECT
TO COMPLETION, DATED NOVEMBER 1, 2019
Prospectus
$25,000,000
COMMON
STOCK
PREFERRED
STOCK
PURCHASE
CONTRACTS
WARRANTS
SUBSCRIPTION
RIGHTS
DESPOSITARY
SHARES
DEBT
SECURITIES
UNITS
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common
stock;
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preferred
stock;
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purchase
contracts;
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warrants
to purchase our securities;
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subscription
rights to purchase any of the foregoing securities;
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depositary
shares;
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secured
or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities,
senior subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities;
or
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units
comprised of, or other combinations of, the foregoing securities.
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We
may offer and sell these securities separately or together, in one or more series or classes and in amounts, at prices and on
terms described in one or more offerings. We may offer securities through underwriting syndicates managed or co-managed by one
or more underwriters or dealers, through agents or directly to purchasers. The prospectus supplement for each offering of securities
will describe in detail the plan of distribution for that offering. For general information about the distribution of securities
offered, please see “Plan of Distribution” in this prospectus.
Each
time our securities are offered, we will provide a prospectus supplement containing more specific information about the particular
offering and attach it to this prospectus. The prospectus supplements may also add, update or change information contained in
this prospectus. This prospectus may not be used to offer or sell securities without a prospectus supplement which includes
a description of the method and terms of this offering.
Our
common stock is quoted on the NASDAQ Capital Market under the symbol “AKER.” The last reported sale price of our common
stock on the NASDAQ Capital Market on October 31, 2019 was $0.39 per share. The aggregate market value of our outstanding
common stock held by non-affiliates is $6,219,515 based on 12,508,958 shares of outstanding common stock, of which 12,463,458
shares are held by non-affiliates, and a per share price of $0.499 which was the closing sale price of our common stock as
quoted on the NASDAQ Capital Market on September 19, 2019. During the 12 calendar month period that ends on, and includes, the
date of this prospectus, we have not offered and sold any of our securities pursuant to General Instruction I.B.6 of Form S-3.
If
we decide to seek a listing of any preferred stock, purchase contracts, warrants, subscriptions rights, depositary shares, debt
securities or units offered by this prospectus, the related prospectus supplement will disclose the exchange or market on which
the securities will be listed, if any, or where we have made an application for listing, if any.
Investing
in our securities involves certain risks. See “Risk Factors” beginning on page 5 and the risk factors in our most
recent Annual Report on Form 10-K, which is incorporated by reference herein, as well as in any other recently filed quarterly
or current reports and, if any, in the relevant prospectus supplement. We urge you to carefully read this prospectus and the accompanying
prospectus supplement, together with the documents we incorporate by reference, describing the terms of these securities before
investing.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this Prospectus is ___________, 2019
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC,
utilizing a “shelf” registration process. Under this shelf registration process, we may offer and sell, either individually
or in combination, in one or more offerings, any of the securities described in this prospectus, for total gross proceeds of up
to $25,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we offer securities
under this prospectus, we will provide a prospectus supplement to this prospectus that will contain more specific information
about the 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 and any related free writing prospectus that we may
authorize to be provided to you may also add, update or change any of the information contained in this prospectus or in the documents
that we have incorporated by reference into this prospectus.
We
urge you to read carefully this prospectus, any applicable prospectus supplement and any free writing prospectuses we have authorized
for use in connection with a specific offering, together with the information incorporated herein by reference as described under
the heading “Incorporation of Documents by Reference,” before investing in any of the securities being offered. You
should rely only on the information contained in, or incorporated by reference into, this prospectus and any applicable prospectus
supplement, along with the information contained in any free writing prospectuses we have authorized for use in connection with
a specific offering. We have not authorized anyone to provide you with different or additional information. This prospectus is
an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do
so.
The
information appearing in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate
only as of the date on the front of the document and any information we have incorporated by reference is accurate only as of
the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, any applicable prospectus
supplement or any related free writing prospectus, or any sale of a security.
This
prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made
to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents.
Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits
to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below
under the section entitled “Where You Can Find Additional Information.”
This
prospectus contains, or incorporates by reference, trademarks, tradenames, service marks and service names of Akers Biosciences,
Inc.
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
This
prospectus and any accompanying prospectus supplement and the documents we have filed or will file with the SEC that are or will
be incorporated by reference into this prospectus and the accompanying prospectus supplement contain forward-looking statements,
within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), that involve risks and uncertainties. Any statements contained, or incorporated by reference, in
this prospectus and any accompanying prospectus that are not statements of historical fact may be forward-looking statements.
When we use the words “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “predict,” “project,” “will”
and other similar terms and phrases, including references to assumptions, we are identifying forward-looking statements. Forward-looking
statements involve risks and uncertainties which may cause our actual results, performance or achievements to be materially different
from those expressed or implied by forward-looking statements.
A
variety of factors, some of which are outside our control, may cause our operating results to fluctuate significantly. They include:
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changes
in the market acceptance of our products and services;
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increased
levels of competition;
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changes
in political, economic or regulatory conditions generally and in the markets in which we operate;
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our
relationships with our key customers;
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adverse
conditions in the industries in which our customers operate;
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our
ability to retain and attract senior management and other key employees;
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our
ability to quickly and effectively respond to new technological developments;
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delisting
of our common stock from the NASDAQ Capital Market;
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our
ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of
others and prevent others from infringing on the proprietary rights of the Company; and
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other
risks, including those described in the “Risk Factors” discussion of this prospectus
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The
foregoing does not represent an exhaustive list of risks that may impact upon the forward-looking statements used herein or in
the documents incorporated by reference herein. Please see “Risk Factors” in our reports filed with the SEC or in
a prospectus supplement related to this prospectus for additional risks which could adversely impact our business and financial
performance. Moreover, new risks regularly emerge and it is not possible for our management to predict all risks, nor can we assess
the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to
differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus and
any accompanying prospectus supplement are based on information available to us on the date hereof or thereof. Except to the extent
required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable
to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout
(or incorporated by reference in) this prospectus, any accompanying prospectus and the documents we have filed with the SEC.
PROSPECTUS
SUMMARY
This
summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information
that you should consider before investing in our Company. You should carefully read the entire prospectus, including all documents
incorporated by reference herein. In particular, attention should be directed to our “Risk Factors,” “Information
With Respect to the Company,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and the financial statements and related notes thereto contained herein or otherwise incorporated by reference hereto, before
making an investment decision.
As
used herein, and any amendment or supplement hereto, unless otherwise indicated, “we,” “us,” “our,”
the “Company,” “Akers” or similar terminology means Akers Biosciences, Inc.
Overview
We
develop, manufacture, and supply rapid, point-of-care screening and testing products designed to bring health-related information
directly to the patient or clinician in a timely and cost-efficient manner. We believe that we have advanced the science of diagnostics
through the development of several proprietary platform technologies. The Company’s current product offerings focus on delivering
diagnostic assistance in a variety of healthcare fields/specialties, including diagnostic rapid manual point-of-care tests for
the detection of allergic reactions to Heparin and for on- and off-the-job alcohol safety initiatives.
All
of our rapid, single-use tests are performed in vitro (outside the body) and are designed to enhance patient well-being and
reduce the cost of healthcare. The Company’s current product offerings focus primarily on the commercialization of its
Particle Immuno-Filtration Assay (PIFA®) Technology platform. PIFA® technology is a patented immunoassay method which
rapidly and accurately detects target antigens or antibodies. It is the technology platform utilized in the Company’s
core commercialized products, the PIFA® Heparin/PF4 and PIFA® Pluss/PF4 rapid assays, which test for an allergic
reaction to Heparin. Furthermore, we have determined that it is not economically appropriate to further develop or pursue
approval of the PIFA PLUSS Chlamydia Rapid Assay device. As of September 30, 2019, the Company’s marketed products
consist only of its PIFA® Heparin/PF4, PIFA® Pluss/PF4 and BreathScan Alcohol Detectors.
We
believe that low-cost, single-use testing not only saves time and money, but allows for more frequent, near-patient testing which
may save lives. We believe that our FDA-cleared rapid diagnostic tests help facilitate targeted diagnoses and real-time treatment.
We
believe the use of rapid tests, which can be performed at the point-of-care when and where the patient is being consulted, can
result in immediate diagnostic decisions and subsequent treatment regimens and is an important development in the practice of
medicine. Point-of-care testing addresses today’s challenges in the healthcare industry, such as:
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cost
pressures/efficiency of healthcare delivery; and
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need
for easy to use, accurate at-home tests for individuals to monitor their personal health and wellness
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Strategy
Akers’
strategy for the medical device business is to leverage where possible its distributor relationships, while exploring strategies
for further reducing its costs.
Akers
has developed and currently maintains strategic relationships with established companies in the following key market segments:
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Clinical
Laboratories;
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Physicians’
Office and Urgent Care Clinics; and
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Retail.
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Risks
Associated with Our Business
Our
business is subject to many significant risks, as more fully described in the section entitled “Risk Factors”. You
should read and carefully consider these risks, together with all of the other information in this prospectus, including the financial
statements and the related notes included elsewhere in this prospectus, before deciding whether to invest in our securities. If
any of the risks discussed in this prospectus actually occur, our business, financial condition or operating results could be
materially and adversely affected. These risks include, but are not limited to, the following:
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we
have a history of operating losses and we cannot guarantee that we can ever achieve sustained profitability;
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due
to our dependence on a limited number of customers and the loss of any such customer would have a material adverse effect
on our operating results and prospects;
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because
we may not be able to maintain necessary regulatory clearances for some of our products, we may not generate revenue in the
amounts we expect, or in the amounts necessary to continue our business;
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we
are subject to regulations of various government agencies and if we are unable to comply with such regulations it would materially
affect our business;
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modifications
to our devices may require additional FDA approval which could force us to cease marketing and/or recall the modified device
until we obtain new approvals;
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the
Company’s business would suffer if the Company were unable to acquire adequate sources of supply;
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our
failure to regain and maintain compliance with the continued listing requirements of the NASDAQ Capital Market could result
in a delisting of our common stock, which could adversely affect the market liquidity of our common stock and the market price
of our common stock could decrease.; and
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we
are currently subject to a number of litigations and we may be subject to similar other litigation in the future.
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Implications
of Being an Emerging Growth Company
We
qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS
Act. For as long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies. These provisions include, but are not limited to:
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being
permitted to have only two years of audited financial statements and only two years of related selected financial data and
management’s discussion and analysis of financial condition and results of operations disclosure;
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an
exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial
reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;
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reduced
disclosure about executive compensation arrangements in our periodic reports, registration statements and proxy statements;
and
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exemptions
from the requirements to seek non-binding advisory votes on executive compensation or golden parachute arrangements.
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In
addition, the JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new
or revised accounting standards applicable to public companies. We chose to “opt out” of this provision. We will remain
an emerging growth company until the earliest of (i) the end of the fiscal year following the fifth anniversary of the completion
of our initial public offering, (ii) the first fiscal year after our annual gross revenues exceed $1.07 billion, (iii) the date
on which we have, during the immediately preceding three-year period, issued more than $1.0 billion in non-convertible debt securities
or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as
of the end of the second quarter of that fiscal year.
Corporate
Information
We
were incorporated in 1989 in the state of New Jersey. Our principal executive offices are located at 201 Grove Road, Thorofare,
New Jersey USA 08086 and our telephone number is (856) 848-8698. Our corporate website address is www.akersbio.com. The
information contained on or accessible through our website is not a part of this prospectus, and the inclusion of our website
address in this prospectus is an inactive textual reference only.
RISK
FACTORS
An
investment in our securities involves a high degree
of risk. Before deciding whether to invest in our securities, you should consider carefully the risks described
below, together with other information in this prospectus, the information and documents incorporated by reference,
and in any free writing prospectus that we have authorized for use in connection with this offering. The occurrence
of any of the following risks could have a material and adverse effect on our business, reputation, financial condition, results
of operations and future growth prospects, as well as our ability to accomplish our strategic objectives. As a result, the trading
price of our common stock could decline and you could lose all or part of your investment. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also impair our business operations and stock price.
Risks
Related to Our Business
We
have a history of operating losses and we cannot guarantee that we can ever achieve sustained profitability.
We
have recorded a net loss attributable to common stockholders in most reporting periods since our inception. Our net losses
for the six months ended June 30, 2019 and 2018 were $1,711,849 and $3,927,444, respectively. Our accumulated deficit at December
31, 2018 was $115,694,881. Our strategy for the medical device business is to leverage where possible its distributor relationships,
while exploring strategies for further reducing its costs. Overall, we are working to reduce our cash burn in order to have sufficient
cash funds available to execute on a transaction which would result from our pursuit of strategic alternatives. There can be no
assurance of success in reducing our loss, becoming profitable, or having sufficient cash to complete a strategic alternative
transaction.
Due
to our dependence on a limited number of customers and the loss of any such customer would have a material adverse effect on our
operating results and prospects.
As
of June 30, 2019, we had two principal U.S. customers; Cardinal Health, Inc. (“Cardinal Health”) and Fisher Healthcare
(“Fisher”) each has the non-exclusive right to distribute PIFA Heparin/PF4 Rapid Assays within the U.S. For the six
months ended June 30, 2019, Cardinal Health and Fisher accounted for approximately 78% of the Company’s product revenue.
Because
of our dependence on a limited number of key customers, the loss of a major customer (or loss of a key program with a major customer),
or any significant reduction in orders by a major customer or termination of the any of their distribution agreements would materially
affect our business, our results of operations and our financial condition. We expect that sales to relatively few customers will
continue to account for a significant percentage of our net sales for the foreseeable future, however there can be no assurance
that any of these customers or any of our other customers will continue to utilize our products or our services at current levels.
Due
to our dependence on a limited number of customers, we are subject to a concentration of credit risk.
As
of June 30, 2019, two customers accounted for 76% of our trade receivables as compared to December 31, 2018, where 73% of trade
receivables are attributed to these customers. In the case of insolvency by one of our significant customers, a trade receivable
with respect to that customer might not be collectible, might not be fully collectible, or might be collectible over longer than
normal terms, each of which could adversely affect our financial position.
The
Company’s business would suffer if the Company were unable to acquire adequate sources of supply.
We
use a diverse and broad range of raw materials in the manufacturing of our products. We purchase all of our raw materials and
select items, such as packaging, from external suppliers. In addition, we purchase some supplies from single sources for reasons
of proprietary know-how, quality assurance, sole source availability, or due to regulatory qualification requirements and disruption
of these sources could have, at a minimum, a temporary adverse effect on shipments and the financial results of the Company. We
work closely with our suppliers to ensure continuity of supply while maintaining high quality and reliability. Any prolonged inability
to obtain certain materials or components could have an adverse effect on the Company’s financial condition or results of
operations and could result in damage to its relationships with its customers and, accordingly, adversely affect the Company’s
business.
During
the first half of 2018, we experienced lower yields in the process of extracting antigen from the supplier provided platelets
used to produce our PIFA Heparin product. At these yield levels, our production of this product was under target levels, which
had resulted in backorders.
We will require additional capital
in the future to support our operations or to pursue strategic alternative transactions. If we do not obtain any such additional
financing, our business prospects, financial condition and results of operations will be adversely affected.
We expect cash flows
from our current operations to be inadequate to cover our anticipated expenses and we believe that our existing capital
resources will only be sufficient to fund our current operations for the next ten to twelve months. As such, we will need
to obtain significant additional financing, both in the short and long-term to cover operating expenses and to fund potential
acquisitions. We may not be able to secure adequate additional financing when needed on acceptable terms, or at all. To
execute our business strategy, we may issue additional equity securities in public or private offerings. If we cannot secure
sufficient additional funding on a timely basis, we may be forced to forego strategic opportunities, delay, scale back
or eliminate future product development, and/or be forced to sell assets, perhaps on unfavorable terms, which would harm our
business and our ability to generate positive cash flows from operations needed to stay in business in the future, and
ultimately could be forced to discontinue our operations and liquidate, in which event it is unlikely that stockholders would
receive any distribution on their shares.
Any additional capital
raised through the sale of equity or equity-backed securities may dilute our stockholders’ ownership percentages and could
also result in a decrease in the market value of our equity securities.
The terms of any securities
issued by us in future capital transactions may be more favorable to new investors, and may include preferences, superior voting
rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect on the holders of
any of our securities then outstanding.
In addition, we may
incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees,
securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash
expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our
financial condition.
Because
we may not be able to maintain or obtain necessary regulatory clearances for some of our products, we may not generate
revenue in the amounts we expect, or in the amounts necessary to continue our business.
All
of our existing products are subject to regulation in the U.S. by the U.S. Food and Drug Administration and/or other domestic
and international governmental, public health agencies, regulatory bodies or non-governmental organizations. In particular, we
are subject to strict governmental controls on the development, manufacture, labeling, distribution and marketing of our products
and may not be able to maintain the necessary regulatory clearances for some of our products.
The
process of obtaining required approvals or clearances for a potential new product varies according to the nature of and uses for
a specific product. These processes can involve lengthy and detailed laboratory testing, human clinical trials, sampling activities,
and other costly, time-consuming procedures. The submission of an application to a regulatory authority does not guarantee that
the authority will grant an approval or clearance for the product. Each authority may impose its own requirements and can delay
or refuse to grant approval or clearance, even though a product has been approved in another country.
The
time taken to obtain approval or clearance varies depending on the nature of the application and may result in the passage of
a significant period of time from the date of submission of the application. Delays in the approval or clearance processes increase
the risk that we will not succeed in introducing or selling the subject products, and we may be required to abandon a proposed
product after devoting substantial time and resources to its development.
Changes
in domestic and foreign government regulations could increase our costs and could require us to undergo additional trials or procedures,
or could make it impractical or impossible for us to market our products for certain uses, in certain markets, or at all.
Changes
in government regulations may adversely affect our financial condition and results of operations because we may have to incur
additional expenses if we are required to change or implement new testing, manufacturing and control procedures. If we are required
to devote resources to develop such new procedures, we may not have sufficient resources to devote to research and development,
marketing, or other activities that are critical to our business.
We
are subject to ongoing regulations of various government agencies and if we are unable to comply with such regulations,
our products could be subject to restrictions or withdrawal from the market, which would materially affect our business.
We
can manufacture and sell our products only if we comply with certain regulations of government agencies. As a U.S. manufacturer,
we must operate our production facility in accordance with the requirements established by the FDA under the Federal Food, Drug,
and Cosmetic Act (FD&C Act). As such, we have implemented a quality system that is intended to comply with applicable regulations.
Our manufacturing plant is subject to periodic inspections by the FDA, and at last inspection, the facility was found to be in
substantial compliance with current good manufacturing practice (cGMP) requirements. Although the Company is dedicated to remaining
in compliance with such practices, the cGMP requirements could change and negatively impact our ability to manufacture our products
without modifications to our operating procedures or changes to our equipment or human resource allocations which may materially
affect our business.
If
we fail to obtain regulatory approval in foreign jurisdictions, then we cannot market our products in those jurisdictions.
Many
foreign countries in which we market or may market our products have regulatory bodies and restrictions similar to those of the
FDA. International sales are subject to foreign government regulation, the requirements of which vary substantially from country
to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval
and the requirements may differ. Companies are now required to obtain a CE Mark, which shows conformance with the requirements
of applicable European Conformity directives, prior to the sale of some medical devices within the European Union. Some of our
current products that require CE Markings have them. We may be required to conduct additional testing or to provide additional
information, resulting in additional expenses, to obtain necessary approvals. If we fail to obtain approval in such foreign jurisdictions,
we would not be able to sell our products in such jurisdictions, thereby reducing the potential revenue from the sale of our products.
We
may be unable to market our products outside the United States if our products cannot meet certain requirements of the Federal
Food, Drug and Cosmetic Act requirements for exporting medical devices.
Any
medical device that is legally marketed in the U.S. may be exported anywhere in the world without prior FDA notification or approval.
Medical devices that are not FDA-cleared for marketing legally in the U.S. may be exported under section 801(e)(1) of the FD&C
Act, provided that they are intended for export only, they are class I or class II devices, and they are:
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In accordance with
the specifications of the foreign purchaser;
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Not in conflict
with the laws of the country to which they are intended for export;
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Labeled on the outside
of the shipping package that they are intended for export; and
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Not sold or distributed
in the U.S.
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We
cannot guarantee that certain current and future products will meet all of the aforementioned specifications for export which
could adversely impact our ability to market our products outside the U.S.
Modifications
to our devices may require additional FDA approval which could force us to cease marketing and/or recall the modified device until
we obtain new approvals.
After
a device receives a 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would
constitute a major change in its intended use, requires a new 510(k) clearance or could require a Premarket approval (“PMA”).
PMA is the FDA process of scientific and regulatory review to evaluate the safety and effectiveness of Class III medical devices.
Class III devices are those that support or sustain human life, are of substantial importance in preventing impairment of human
health, or which present a potential, unreasonable risk of illness or injury. Currently the Company does not market devices within
this Class III category nor does it intend to in the foreseeable future. However, the FDA requires each manufacturer to make this
determination in the first instance, but the FDA can review any decision. If the FDA disagrees with a manufacturer’s decision
not to seek a new 510(k) clearance, the agency may retroactively require the manufacturer to seek 510(k) clearance or PMA approval.
The FDA also can require the manufacturer to cease marketing and/or recall the modified devices until 510(k) clearance or PMA
approval is obtained. We have modified one of our prescription use, 510(k)-cleared devices, specifically the PIFA Heparin/PF4
Rapid Assay to include our seraSTAT device. However, we determined that, in our view, based on FDA guidance as to when to submit
a 510(k) notification for changes to a cleared device, new 510(k) clearances or PMA approvals were not required. We cannot assure
you that the FDA would agree with any of our decisions not to seek 510(k) clearance or PMA approval. If the FDA requires us to
seek 510(k) clearance or PMA approval for any modification, we also may be required to cease marketing and/or recall the modified
device until we obtain a new 510(k) clearance or PMA approval.
We
are subject to inspection and market surveillance by the FDA to determine compliance with regulatory requirements. If the FDA
finds that we have failed to comply, the agency can institute a wide variety of enforcement actions which may materially affect
our business operations.
We
are subject to inspection and market surveillance by the FDA to determine compliance with regulatory requirements. If the FDA
finds that we have failed to comply, the agency can institute a wide variety of enforcement actions, ranging from a public warning
letter to more severe sanctions such as:
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fines, injunctions
and civil penalties;
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recall, detention
or seizure of our products;
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the issuance of
public notices or warnings;
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operating restrictions,
partial suspension or total shutdown of production;
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refusing our requests
for a 510(k) clearance of new products;
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withdrawing a 510(k)
clearance already granted; and
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criminal prosecution.
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The
FDA also has the authority to request repair, replacement or refund of the cost of any medical device manufactured or distributed
by us. Our failure to comply with applicable requirements could lead to an enforcement action that may have an adverse effect
on our financial condition and results of operations.
We
may not have the resources to conduct clinical protocols sufficient to yield data suitable for publication in peer-reviewed journals
and our inability to do so in the future could have an adverse effect on marketing our products effectively.
In
order for our products targeted for use by hospital laboratory professionals and healthcare providers to be widely adopted, we
would have to conduct clinical protocols that are designed to yield data suitable for publication in peer-reviewed journals. These studies are often time-consuming, labor-intensive and expensive to execute. The Company has not had
the resources to effectively implement such clinical programs within its clinical development activities and may not be able to
do so in the future. In addition, if a protocol is initiated, the results of which may ultimately not support the anticipated
positioning and benefit proposition for the product. Either of these scenarios could hinder our ability to market our products
and revenue may decline.
If
we fail to establish, maintain and expand relationships with distributors, sales of our products would decline.
The
Company does not control the efforts of its distributors and its distributors are not prohibited from selling competing products.
Our ability to sell our products depends largely on the Company’s relationships with such distributors. Accordingly, we
are subject to the risk that they may not commit the financial and other resources to market and sell our products to our level
of expectation, they may experience financial hardship or they may otherwise terminate our relationship on short notice. In the
U.S. clinical laboratory marketplace, many of our existing and potential customers purchase our products through our two national
distributors, Cardinal Health and Fisher Health. In addition, the Company relies on its distribution network to negotiate pricing
arrangements and contracts with Group Purchasing Organizations and their affiliated hospitals and other members. For the six months
ended June 30, 2019, two customers generated 44% and 34%, or 78% in the aggregate, of the Company’s revenue. For the six
months ended June 30, 2018, two customers generated 49%, and 17%, or 66% in the aggregate, of the Company’s revenue. In
the future, if we are unable to maintain existing relationships, our competitive position would likely suffer and our business
would be harmed.
Our
business is vulnerable to the availability of raw materials, our ability to forecast customer demand and our ability to manage
production capacity.
Our
ability to meet customer demand depends, in part, on our production capacity and on obtaining supplies, a number of which can
only be obtained from a single supplier or a limited number of suppliers. A reduction or disruption in our production capacity
or our supplies could delay products and fulfillment of orders and otherwise negatively impact our business.
We
must accurately predict both the demand for our products and the lead times required to obtain the necessary components and materials.
If we overestimate demand, we may experience underutilized capacity and excess inventory levels. If we underestimate demand, we
may miss delivery deadlines and sales opportunities and incur additional costs for labor overtime, equipment overuse and logistical
complexities. Additionally, our production capacity could be affected by manufacturing problems. Difficulties in the production
process could reduce yields or interrupt production, and, as a result, we may not be able to deliver products on time or in a
cost-effective, competitive manner. Our failure to adequately manage our capacity could have a material adverse effect on our
business, financial condition and results of operations.
Our
ability to meet customer demand also depends on our ability to obtain timely and adequate delivery of materials, parts and components
from our suppliers. We generally do not maintain contracts with any of our key suppliers. From time to time, suppliers may extend
lead times, limit the amounts supplied to us or increase prices due to capacity constraints or other factors. Supply disruptions
may also occur due to shortages in critical materials. In addition, a number of our raw materials are obtained from a single supplier.
Many of our suppliers must undertake a time-consuming qualification process before we can incorporate their raw materials into
our production process. If we are unable to obtain materials from a qualified supplier, it can take up to a year to qualify a
new supplier, assuming an alternative source of supply is available. A reduction or interruption in supplies or a significant
increase in the price of one or more supplies could have a material adverse effect on our business, financial condition and results
of operations.
Some
of our finished goods, including our PIFA products and control materials related to PIFA Heparin/PF4 assays, are temperature-sensitive.
Proper
packaging and time in transit are critical to the stability of some of our clinical laboratory products when they are en route
to our distributors or end users. If certain specialized packaging materials cannot be obtained, and/or if our contracted common
carriers, or those of our distributors, cannot meet product-specific delivery requirements, our products may not perform as intended
and may lead to requests for product replacement. If such issues become widespread it could hurt our reputation and we could potentially
lose customers which would adversely affect our business.
Also,
given the issue of temperature sensitivity, time in transit may limit our ability to service potential markets outside of the
U.S. for those products, especially those with geographies that do not allow for shipment and customs clearance within four business
days. This could adversely affect our potential to generate revenue for some products on an international level.
Demands
of third-party payors, cost reduction pressures among our customers and restrictive reimbursement practices may adversely affect
our revenue.
Our
ability to negotiate favorable contracts with non-governmental payors, including managed-care plans or Group Purchasing Organizations
(“GPOs”), even if facilitated by our distributors, may significantly affect revenue and operating results. Our customers
continue to face cost reduction pressures that may cause them to curtail their use of, or reimbursement for some of our products,
to negotiate reduced prices or other concessions or to delay payment. Furthermore, the increasing leverage of organized
buying groups among non-governmental payors may reduce market prices for our products and services, thereby reducing our profitability.
Reductions in price increases or the amounts received from current customers or lower pricing for our products to new customers
could have a material adverse effect on the financial position, cash flows and results of operations.
Failure
to obtain medical reimbursement for our products, as well as a changing regulatory and reimbursement environment, may impact our
business.
The
U.S. healthcare regulatory environment may change in a way that restricts our ability to market our products due to medical coverage
or reimbursement limits. Sales of our diagnostic tests will depend in part on the extent to which the costs of such tests are
covered by health maintenance, managed care, and similar healthcare management organizations, or reimbursed by government health
payor administration authorities, private health coverage insurers and other third-party payors. These healthcare payors are increasingly
challenging the prices charged for medical products and services. The containment of healthcare costs has become a priority of
federal and state governments. Accordingly, our products may not be considered to be cost effective, and reimbursement may not
be available or sufficient to allow us to sell our products on a competitive basis. Legislation and regulations affecting reimbursement
for our products may change at any time and in ways that are difficult to predict and these changes may have an adverse effect
to us.
CMS,
the federal agency responsible for administering the Medicare program, along with its contractors establishes coverage and reimbursement
policies for the Medicare program. In addition, private payors often follow the coverage and reimbursement policies of Medicare.
We cannot assure you that government or private third-party payors will cover and reimburse the procedures using our products
in whole or in part in the future or that payment rates will be adequate.
For
some of our products, our success in non-U.S. markets may depend upon the availability of coverage and reimbursement from the
third-party payors through which health care providers are paid in those markets. Health care payment systems in non-U.S. markets
vary significantly by country, and include single-payor, government managed systems as well as systems in which private payors
and government-managed systems exist, side-by-side. For some of our products, our ability to achieve market acceptance or significant
sales volume in international markets may be dependent on the availability of reimbursement for our products under health care
payment systems in such markets. There can be no assurance that reimbursement for our products will be obtained or that such reimbursement
will be adequate.
We
may fail to retain qualified personnel.
We
have substantially reduced the number of our employees in order to reduce our costs. Accordingly, retaining our remaining
personnel in the future will be critical to our success. If we fail to retain and motivate these highly skilled personnel, we
may be unable to continue our operating activities, and this could have a material adverse effect on the Company’s business,
financial condition, results of operations and future prospects.
We
rely on the key executive officer of the management team.
We
are dependent on our management team to execute against its business plan. Failure could result in delays in product development,
loss of customers and sales and diversion of management resources, which could adversely affect our operating results.
Expenses
incurred with respect to monitoring, protecting, and defending our intellectual property rights could adversely affect our business.
Competitors
and others may infringe on our intellectual property rights, or may allege that we have infringed on theirs. Monitoring infringement
and misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect infringement or
misappropriation of our proprietary rights.
We
may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property
rights and we may be unable to protect our rights to, or use of, our technology.
Some
or all of our patent applications may not result in the issue of patents, or the claims of any issued patents may not afford meaningful
protection for our technologies or products. In addition, patents issued to us or our licensors, if any, may be challenged and
subsequently narrowed, invalidated, found unenforceable or circumvented. Patent litigation is widespread in the biotechnology
industry and could harm our business. Litigation might be necessary to protect our patent position. Patentability, invalidity,
freedom-to-operate or other opinions may be required to determine the scope and validity of third-party proprietary rights. If
we choose to go to court to stop a third party from using the inventions protected by our patent, that third party would have
the right to ask the court to rule that such patents are invalid and/or should not be enforced against that third party. These
lawsuits are expensive and we may not have the required resources to pursue such litigation or to protect our patent rights. In
addition, there is a risk that the court will decide that our patents are not valid or that we cannot stop the other party from
using their inventions. There is also the risk that, even if the validity of these patents is upheld, the court will find that
the third party’s activities do not infringe our rights in these patents.
Furthermore,
a third party may claim that we are infringing the third party’s patent rights and may go to court to stop us from engaging
in our normal operations and activities, including making or selling our products or product candidates. These lawsuits
are costly and could affect our results of operations and divert the attention of managerial and technical personnel. There is
a risk that a court would decide that we are infringing the third party’s patents and would order us to stop the activities
covered by the patents. In addition, there is a risk that a court will order us to pay the other party’s treble damages
or attorneys’ fees for having violated the other party’s patents. The biotechnology industry has produced a proliferation
of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or
methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
If we are sued for patent infringement, we would need to demonstrate that our products or methods of use either do not infringe
the claims of the relevant patent and/or that the third-party patent claims are invalid, and we may not be able to do this. Proving
invalidity in the United Sates is difficult since it requires a showing of clear and convincing evidence to overcome the presumption
of validity enjoyed by issued patents.
In
addition, changes in either patent laws or in interpretations of patent laws in the United States and other countries may materially
diminish the value of our intellectual property or narrow the scope of our patent protection. In September 2011, the U.S. Congress
passed the Leahy-Smith America Invents Act (“AIA”) which became effective in March 2013. The AIA reforms United States
patent law in part by changing the standard for patent approval for certain patents from a “first to invent” standard
to a “first to file” standard and developing a post-grant review system. It is difficult to predict
the effect or impact the AIA will have on the operation of our business and the protection and enforcement of our intellectual
property. While we believe that the AIA’s post-grant review system is less expensive than litigation should we need to
challenge a third party patent or defend our own patent, the AIA and its implementation could increase the uncertainties and
costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which
could have a material adverse effect on our business and financial condition. Because some patent applications in the United States
may be maintained in secrecy until the patents are issued, patent applications in the United States and many foreign jurisdictions
are typically not published until eighteen months after filing, and publications in the scientific literature often lag behind
actual discoveries. We cannot be certain that others have not filed patent applications for technology covered by our issued patents
or our pending applications or that we were the first to invent the technology (pre-AIA) or first to file (post-AIA). Our competitors
may have filed, and may in the future file, patent applications covering technology similar or the same as ours. Any such patent
application may have priority over our patent application and could further require us to obtain rights to such technologies in
order to carry on our business. If another party has filed a U.S. patent application on inventions similar to or the same as ours,
we may have to participate in an interference or other proceeding in the U.S. Patent and Trademark Office, or the USPTO, or a
court to determine priority of invention in the United States, for pre-AIA applications and patents. The costs of these proceedings
could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position
with respect to such inventions. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively
than we can because they have substantially greater resources.
We
may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
As
is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other biotechnology
or pharmaceutical companies, including our competitors or potential competitors. Although the Company has no knowledge of any
claims against us, we may be subject to claims that these employees or the Company have inadvertently or otherwise used or disclosed
trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these
claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction
to management. To date, none of our employees have been subject to such claims.
We
may be at risk that our former employees may wrongfully use or disclose our trade secrets.
In
addition to patent protection, we rely heavily upon know-how and trade secret protection, as well as non-disclosure agreements
and invention assignment agreements with our employees, consultants, and third parties, to protect our confidential and proprietary
information, especially where we do not believe patent protection is appropriate or obtainable. In addition to contractual measures,
we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such
measures may not, for example, in the case of misappropriation of a trade secret by an employee, former employee, consultant,
former consultant or third party with authorized access, provide adequate protection for our proprietary information. Our security
measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor,
and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim
that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive, and time-consuming, and the outcome
is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse
by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated,
or if any such information was independently developed by a competitor, our competitive position could be harmed.
If
we deliver products with defects, we may be subject to product recalls or negative publicity, our credibility may be harmed, market
acceptance of our products may decrease and we may be exposed to liability.
The
manufacturing and marketing of professional and consumer diagnostics involve an inherent risk of product liability claims. For
example, a defect in one of our diagnostic products could lead to a false positive or false negative result, affecting the eventual
diagnosis. Our product development and production are extremely complex and could expose our products to defects. Manufacturing
and design defects could lead to recalls, either voluntary or required by the FDA or other government authorities, and could result
in the removal of a product from the market. Defects in our products could also harm our reputation, lead to product liability
claims, claims that inaccurate test results lead to death or injury, negative publicity and decrease sales of our products. We
have obtained $10,000,000 of product liability insurance and we have never received a product liability claim, and have generally
not seen product liability claims for screening tests that are accompanied by appropriate disclaimers. However, in the event there
is a claim, this insurance may not fully cover our potential liabilities. In addition, as we attempt to bring new products to
market, we may need to increase our product liability coverage which would be a significant additional expense that we may not
be able to afford. If we are unable to obtain sufficient insurance coverage at an acceptable cost to protect us, we may be forced
to abandon efforts to commercialize our products or those of our strategic partners, which would reduce our revenue.
We
currently manufacture our products at a single location. Any disruption at this facility could adversely affect our business and
results of operations.
We
currently manufacture all our products at our manufacturing plant. If our manufacturing plant were damaged or destroyed, or otherwise
subject to disruption, it would require substantial lead-time to replace or rebuild the facility for the manufacture of our products.
In such event, we would be forced to rely entirely on third-party contract manufacturers for an indefinite period of time. We
do not currently have established relationships with any back-up manufacturers. Even if we are able to establish a relationship
with a third-party manufacturer, there is no assurance that such manufacturer will be able to meet our needs from a technical,
timing, or cost effective manner.
We
are currently subject to a number of securities litigations and we may be subject to similar or other litigation in the future.
The
Company is currently subject to a number of litigations, as discussed in the “Business” section. In connection with
certain of these litigations, the Company has entered into settlements of claims for significant monetary damages. We may also
be subject to judgements or enter into additional settlements of claims for significant monetary damages for the securities litigations
that we have yet to enter into settlement agreements. Defending against the current litigations is or can be time-consuming, expensive
and cause diversion of our management’s attention.
With
respect to any litigation, our insurance may not reimburse us or may not be sufficient to reimburse us for the expenses or losses
we may suffer in contesting and concluding such lawsuit. Substantial litigation costs, including the substantial self-insured
retention that we are required to satisfy before any insurance applies to a claim, unreimbursed legal fees or an adverse result
in any litigation may adversely impact our business, operating results or financial condition. We believe that our directors'
and officers' liability insurance will cover our potential liability with respect to the securities class-action lawsuit; however,
the insurer has reserved its rights to contest the applicability of the insurance to such claims and the limits of the insurance
may be insufficient to cover our eventual liability.
We
face substantial competition from other companies and our operating results may suffer if we fail to compete effectively.
Competition
among providers of rapid, point-of-care screening and testing products is intense and subject to rapid technological change and
evolving industry requirements and standards. We compete with many companies that have greater financial, product development,
sales and marketing resources and experience than we do. Furthermore, new product development and technological change characterize
the areas in which we compete. Our present or future products could be rendered obsolete or uneconomical as a result of technological
advances by one or more of our present or future competitors. We must continue to develop and commercialize new products and technologies
to remain competitive in the diagnostic testing industry. We believe that we compete primarily on the basis of our single-use
testing. Customer and clinical support, and data that demonstrate both improvement in a patient's quality of life and a product's
cost-effectiveness are additional aspects of competition.
We
are aware of other rapid, point-of-care screening and diagnostic testing products in the U.S., Canada, and Europe. Specifically,
Alere/Abbott, ACON Laboratories, Inc., Immucor, Inc., OraSure Technologies, Inc., and Quidel Corporation are companies that develop
rapid, point-of-care screening and diagnostic testing products and currently maintain dominant market positions within the diagnostic
testing market.
If
we market products or interact with health care practitioners in a manner that violates healthcare fraud or abuse laws, we may
be subject to civil or criminal penalties, including exclusion from participation in government healthcare programs.
We
receive payments directly from or bill directly to Medicare, Medicaid or other national or third-party payers for our current
product, U.S. federal and state healthcare laws and regulations pertaining to fraud or abuse are and will be applicable to our
business. We are subject to healthcare fraud and abuse regulation by the U.S. federal government and the states in which we conduct
our business.
The
laws that may affect our ability to operate include the federal healthcare program anti-kickback statute, which prohibits, among
other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce, or in return for, the
purchase, lease or order, or arrangement for the purchase, lease or order of any healthcare item or service reimbursable under
Medicare, Medicaid or other federally financed healthcare programs. This statute applies to arrangements between pharmaceutical
manufacturers and prescribers, purchasers and formulary managers. Although there are a number of statutory exceptions and regulatory
safe harbors protecting certain common activities, the exceptions and safe harbors are drawn narrowly, and practices that involve
remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for
an exception or safe harbor.
Federal
false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the
federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Pharmaceutical companies
have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as providing free product
to customers with the expectation that the customers would bill federal programs for the product, reporting to pricing services
inflated average wholesale prices that were then used by federal programs to set reimbursement rates, engaging in off-label promotion
that caused claims to be submitted to Medicaid for non-covered off-label uses and submitting inflated best price information to
the Medicaid Drug Rebate Program.
The
Health Insurance Portability and Accountability Act of 1996 also created prohibitions against healthcare fraud and false statements
relating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any
healthcare benefit program, including private payers. The false statements statute immediately noted above prohibits knowingly
and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement
in connection with the delivery of or payment for healthcare benefits, items or services.
In
addition, there has been a recent trend of increased federal and state regulation of payments made to physicians. The ACA, through
the Physician Payment Sunshine Act of 2010, imposed new requirements on manufacturers of drugs, devices, biologics and medical
supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions)
to report annually to the Centers for Medicare and Medicaid Services ("CMS") information related to payments or other
"transfers of value" made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors)
and teaching hospitals, and applicable manufacturers and group purchasing organizations to report annually to CMS ownership and
investment interests held by physicians (as defined above) and their immediate family members and payments or other "transfers
of value" to such physician owners and their immediate family members. Manufacturers are required to report such data to
the government by the 90th calendar day of each year.
The
majority of states also have statutes or regulations similar to these federal laws, which apply to items and services reimbursed
under Medicaid and other state programs, or, in several states, apply regardless of the payer. In addition, some states have laws
that require pharmaceutical companies to adopt comprehensive compliance programs. For example, under California law, pharmaceutical
companies must comply with both the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers
and the PhRMA Code on Interactions with Healthcare Professionals, as amended. Moreover, certain states mandate the tracking and
reporting of gifts, compensation and other remuneration paid by us to physicians and other healthcare providers.
Although
compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely
eliminated. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur
significant legal expenses, cause reputational harm and divert our management's attention from the operation of our business.
Moreover, achieving and sustaining compliance with applicable U.S. federal and state laws may prove costly.
Data
security breaches may disrupt our operations and adversely affect our operating results.
Our
network security and data recovery measures and those of third parties with which we contract, may not be adequate to protect
against computer viruses, cyber-attacks, breaches, and similar disruptions from unauthorized tampering with our computer systems.
The misappropriation, theft, sabotage or any other type of security breach with respect to any of our proprietary and confidential
information that is electronically stored, including patient data, could cause interruptions in our operations, could result in
a material disruption of our business operations and could expose us to third-party legal claims. Furthermore, we could be required
to make substantial expenditures of resources to remedy the cause of cyber-attacks or break-ins. This disruption could have a
material adverse impact on our business, operating results and financial condition.
Our
business processes personal medical information. The use of this information is critical to our operations and innovation. New
and evolving regulations could bring increased scrutiny of our data management in the future. Any cyber-attacks or other failure
to protect critical and sensitive systems and information could damage our reputation, prompt litigation or lead to regulatory
sanctions, all of which could materially affect our financial condition and results of operation.
We
are subject to various internal control reporting requirements under the Sarbanes-Oxley Act. We can provide no assurance that
we will at all times in the future be able to report that our internal controls over financial reporting are effective.
As
a public company, we are required to comply with Section 404 of the U.S. Sarbanes-Oxley Act of 2002 ("Section 404").
In any given year, we cannot be certain as to the time of completion of our internal control evaluation, testing and remediation
actions or of their impact on our operations. Upon completion of this process, we may identify control deficiencies of varying
degrees of severity under applicable SEC and Public Company Accounting Oversight Board (U.S.) rules and regulations. Our management,
including our chief executive officer and principal financial officer, does not expect that our internal controls and disclosure
controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system
must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, in our company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Further, controls
can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the
controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions.
Over time, a control may be inadequate because of changes in conditions, such as growth of the company or increased transaction
volume, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and not be detected.
In
addition, as a public company, we are required to report, among other things, control deficiencies that constitute material weaknesses
or changes in internal controls that, or that are reasonably likely to, materially affect internal controls over financial reporting.
A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of our annual consolidated financial statements will
not be prevented or detected on a timely basis. If we fail to comply with the requirements of Section 404 or if we report a material
weakness, we might be subject to regulatory sanction and investors may lose confidence in our consolidated financial statements,
which may be inaccurate if we fail to remedy such material weakness.
We
incur increased costs and demands on management as a result of compliance with laws and regulations applicable to public companies,
which could harm our operating results.
As
a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, including
costs associated with public company reporting requirements. In addition, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act
of 2010, as well as rules implemented by the SEC and the Nasdaq Stock Market, impose a number of requirements on public companies,
including with respect to corporate governance practices. Our management and other personnel need to devote a substantial amount
of time to these compliance and disclosure obligations. Moreover, compliance with these rules and regulations has increased our
legal, accounting and financial compliance costs and has made some activities more time-consuming and costly. It is also more
expensive for us to obtain director and officer liability insurance.
Risks
Related to our Pursuit of Strategic Alternatives
We
are reviewing strategic alternatives and there can be no assurance that we will be successful in identifying or completing any
strategic transaction, that any such strategic transaction will result in additional value for our stockholders or that the process
will not have an adverse impact on our business.
In
November 2018, we announced that our Board of Directors had initiated a process to evaluate strategic alternatives to maximize
shareholder value. We have not set a timetable for completion of this exploratory process and cannot provide any assurances that
the process will result in the consummation of a strategic transaction of any kind, or that we will not abandon the process. We
do not intend to discuss or disclose further developments during this process unless and until our board of directors has approved
a specific action or we otherwise determine that further disclosure is appropriate. The process of reviewing strategic alternatives
may be time consuming and disruptive to our business operations and, if we are unable to effectively manage the process, our business,
financial condition and results of operations could be adversely affected. We could incur substantial expenses associated with
identifying, evaluating and negotiating potential strategic alternatives. We
may not be able to successfully identify attractive acquisition candidates or negotiate favorable terms in the future. Furthermore,
our ability to effectively integrate any future acquisitions will depend on, among other things, the adequacy of our implementation
plans, the ability of our management to oversee and operate effectively the combined operations and our ability to achieve desired
operational efficiencies. If we are unable to successfully integrate the operations of any businesses that we may acquire in the
future, our business, financial position, results of operations or cash flows could be adversely affected. There can be no
assurance that any potential transaction or other strategic alternative, if consummated, will provide greater value to our stockholders
than that reflected in the current price of our common stock. Until the review process is concluded, perceived uncertainties related
to our future may result in the loss of potential business opportunities and volatility in the market price of our common stock
and may make it more difficult for us to attract and retain qualified personnel and business partners.
If
we are unable to make acquisitions and investments, or successfully integrate them into our business, our business could be harmed.
As
part of our business strategy, we may acquire other companies or businesses. However, we may not be able to find suitable acquisition
candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Acquisitions involve numerous risks,
any of which could harm our business and negatively affect our operating results, including:
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difficulties
in integrating the technologies, operations, existing contracts and personnel of an acquired company;
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difficulties
in supporting and transitioning clients and suppliers, if any, of an acquired company;
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diversion
of financial and management resources from existing operations or alternative acquisition opportunities;
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failure
to realize the anticipated benefits or synergies of a transaction;
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failure
to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company or technology, including
issues related to intellectual property, regulatory compliance practices, revenue recognition or other accounting practices,
or employee or client issues;
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risks
of entering new markets in which we have limited or no experience;
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potential
loss of key employees, clients, vendors and suppliers from either our current business or an acquired company’s business;
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inability
to generate sufficient revenue to offset acquisition costs;
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additional
costs or equity dilution associated with funding the acquisition; and
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possible
write-offs or impairment charges relating to acquired businesses.
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The
Company, if it acquires a new business, or retains individuals with expertise in a new industry to pursue a strategic
alternative, will have a limited operating history in such new industry, specifically the Cannabis industry, and may not succeed.
The
Company will have a limited operating history within the Cannabis industry and may not succeed. The Company will be subject to
all risks inherent in a developing business enterprise. The Company’s likelihood of continued success must be considered
in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with manufacturing
specialty products and the competitive and regulatory environment in which the Company operates. For example, the Cannabis industry
is a new industry that, as a whole, may not succeed, particularly if the Federal government changes course and decides to
prosecute those dealing in Cannabis under Federal law. If that happens, there may not be an adequate market for the Company’s
products. As a new industry, there are not established players on whose business models the Company can follow or build upon.
Similarly, there is limited information about comparable companies available for potential investors to review in making a decision
about whether to invest in the Company. Furthermore, as the industrial hemp industry is a new market, it is ripe for technological
advancements that could limit or eliminate the need for the Company’s products. Furthermore, unanticipated expenses, problems,
and technical difficulties may occur and they may result in material delays in the operation of the Company’s business,
in particular with respect to the Company’s new products. The Company may not be able to successfully address these risks
and uncertainties or successfully implement the Company’s operating strategies. If the Company fails to do so, such failure
could materially harm the Company’s business to the point of having to cease operations and could impair the value of the
Company’s common stock to the point investors may lose their entire investment.
If
the Company acquires a business in the cannabis industry or otherwise pursues a strategic alternative, we would face additional
unique and evolving risks.
Further
legislative development beneficial to the cannabis industry is not guaranteed
If
the Company acquires a business in the cannabis industry or otherwise pursues a strategic alternative, the success of such
business would depend on the continued development of the cannabis industry and the activity of commercial business
and government regulatory agencies within the industry. The continued development of the cannabis industry is dependent
upon continued legislative and regulatory authorization of cannabis at the state level and a continued laissez-faire approach
by federal enforcement agencies. Any number of factors could slow or halt progress in this area. Further regulatory
progress beneficial to the industry cannot be assured. While there may be ample public support for legislative action,
numerous factors impact the legislative and regulatory process, including election results, scientific findings or general
public events. Any one of these factors could slow or halt progressive legislation relating to cannabis and the current
tolerance for the use of cannabis by consumers, which could adversely affect the business we may acquire or pursue. These
changes may require us, should we acquire a business or otherwise pursues a strategic alternative in the cannabis
industry, to incur substantial costs associated with legal and compliance fees and ultimately require us to alter our
business plan. Furthermore, violations of these laws, or alleged violations, could disrupt our business and result in a
material adverse effect on our operations. In addition, we cannot predict the nature of any future laws, regulations,
interpretations or applications, and it is possible that regulations may be enacted in the future that will be directly
applicable to the business we may acquire or pursue.
The
cannabis industry could face strong opposition from other industries
We
believe that established businesses in other industries may have a strong economic interest in opposing the development of the
cannabis industry. Cannabis may be seen by companies in other industries as an attractive alternative to their products, including
recreational marijuana as an alternative to alcohol, and medical marijuana as an alternative to various commercial pharmaceuticals.
Many industries that could view the emerging cannabis industry as an economic threat are well established, with vast economic
and federal and state lobbying resources. It is possible that companies within these industries could use their resources to attempt
to slow or reverse legislation legalizing cannabis. Any inroads these companies make in halting or impeding legislative initiatives
that would be beneficial to the cannabis industry could have a detrimental impact on our potential business.
The
legality of marijuana could be reversed in one or more states
There
is a substantial amount of change occurring in the U.S. regarding the use of medical and recreational marijuana products. While
federal laws prohibit the sale and distribution of most marijuana products not approved or authorized by the FDA, at least 30
jurisdictions and the District of Columbia have enacted state laws to enable possession and use of marijuana for medical purposes,
and at least ten jurisdictions for recreational purposes. However, the voters or legislatures of states in which marijuana
has already been legalized could potentially repeal applicable laws which permit the operation of both medical and retail marijuana
businesses. These actions might force our potential business to cease operations in one or more states entirely.
Banking
regulations could limit access to banking services
Since
the use of marijuana is illegal under federal law, there is a compelling argument that banks cannot lawfully accept for deposit
funds from businesses involved with marijuana. Consequently, businesses involved in the cannabis industry often have trouble finding
a bank willing to accept their business. The inability to open bank accounts may make it difficult for our potential business
to operate and our reliance on cash could result in a heightened risk of theft. Additionally, some courts have denied marijuana-related
businesses bankruptcy protection, thus, making it very difficult for lenders to recoup their investments, which may limit the
willingness of banks to lend to us.
Insurance
risks
In
the United States, many marijuana-related businesses are subject to a lack of adequate insurance coverage. In addition, many
insurance companies may deny claims for any loss relating to marijuana or marijuana-related operations based on their
illegality under federal law, noting that a contract for an illegal transaction is unenforceable. Thus,
if we acquire a business or otherwise pursues a strategic alternative in the cannabis industry, we may have a difficult
time obtaining certain insurances that are desired to operate our business, which may expose us to additional risks and
financial liabilities.
USE
OF PROCEEDS
Unless
otherwise indicated in a prospectus supplement, we intend to use the net proceeds from these sales for general corporate purposes
or the acquisition of other businesses and working capital. The amounts and timing of these expenditures will depend on numerous
factors, including the development of our current business initiatives. We have no specific acquisitions contemplated at this
time.
PLAN
OF DISTRIBUTION
We
may sell the securities from time to time to or through underwriters or dealers, through agents, or directly to one or more purchasers.
A distribution of the securities offered by this prospectus may also be effected through the issuance of derivative securities,
including without limitation, warrants, rights to purchase and subscriptions. 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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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; or
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ordinary
brokerage transactions and transactions in which a broker solicits purchasers.
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A
prospectus supplement or supplements with respect to each series of securities will describe the terms of the offering, including,
to the extent applicable:
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the
terms of the offering;
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the
name or names of the underwriters or agents and the amounts of securities underwritten or purchased by each of them, if any;
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the
public offering price or purchase price of the securities or other consideration therefor, and the proceeds to be received
by us from the sale;
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any
delayed delivery requirements;
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any
over-allotment options under which underwriters may purchase additional securities from us;
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any
underwriting discounts or agency fees and other items constituting underwriters’ or agents’ compensation;
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any
discounts or concessions allowed or re-allowed or paid to dealers; and
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any
securities exchange or market on which the securities may be listed.
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The
offer and sale of the securities described in this prospectus by us, the underwriters or the third parties described above may
be effected from time to time in one or more transactions, including privately negotiated transactions, either:
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at
a fixed price or prices, which may be changed;
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in
an “at the market” offering within the meaning of Rule 415(a)(4) of the Securities Act;
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at
prices related to such prevailing market prices; or
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at
negotiated prices.
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Only
underwriters named in the prospectus supplement will be underwriters of the securities offered by the prospectus supplement.
Underwriters
and Agents; Direct Sales
If
underwriters are used in a sale, they will acquire the offered securities for their own account and may resell the offered securities
from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. We may offer the securities to the public through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate.
Unless
the prospectus supplement states otherwise, the obligations of the underwriters to purchase the securities will be subject to
the conditions set forth in the applicable underwriting agreement. Subject to certain conditions, the underwriters will be obligated
to purchase all of the securities offered by the prospectus supplement, other than securities covered by any over-allotment option.
Any public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may change from time to time.
We may use underwriters with whom we have a material relationship. We will describe in the prospectus supplement, naming the underwriter,
the nature of any such relationship.
We
may sell securities directly or through agents we designate from time to time. We will name any agent involved in the offering
and sale of securities, and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.
We
may authorize agents or underwriters to solicit offers by certain types of institutional investors to purchase securities from
us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment
and delivery on a specified date in the future. We will describe the conditions to these contracts and the commissions we must
pay for solicitation of these contracts in the prospectus supplement.
Dealers
We
may sell the offered securities to dealers as principals. The dealer may then resell such securities to the public either at varying
prices to be determined by the dealer or at a fixed offering price agreed to with us at the time of resale.
Institutional
Purchasers
We
may authorize agents, dealers or underwriters to solicit certain institutional investors to purchase offered securities on a delayed
delivery basis pursuant to delayed delivery contracts providing for payment and delivery on a specified future date. The applicable
prospectus supplement or other offering materials, as the case may be, will provide the details of any such arrangement, including
the offering price and commissions payable on the solicitations.
We
will enter into such delayed contracts only with institutional purchasers that we approve. These institutions may include commercial
and savings banks, insurance companies, pension funds, investment companies and educational and charitable institutions.
Indemnification;
Other Relationships
We
may provide agents, underwriters, dealers and remarketing firms with indemnification against certain civil liabilities, including
liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect
to these liabilities. Agents, underwriters, dealers and remarketing firms, and their affiliates, may engage in transactions with,
or perform services for, us in the ordinary course of business. This includes commercial banking and investment banking transactions.
Market-Making;
Stabilization and Other Transactions
There
is currently no market for any of the offered securities, other than our common stock, which is quoted on the NASDAQ Capital Market.
If the offered securities are traded after their initial issuance, they may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities and other factors. While it is possible that an underwriter
could inform us that it intends to make a market in the offered securities, such underwriter would not be obligated to do so,
and any such market-making could be discontinued at any time without notice. Therefore, no assurance can be given as to whether
an active trading market will develop for the offered securities. We have no current plans for listing of the debt securities,
preferred stock, warrants or subscription rights on any securities exchange or quotation system; any such listing with respect
to any particular debt securities, preferred stock, warrants or subscription rights will be described in the applicable prospectus
supplement or other offering materials, as the case may be.
Any
underwriter may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance
with Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Over-allotment involves sales in
excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering or other short-covering transactions
involve purchases of the securities, either through exercise of the over-allotment option or in the open market after the distribution
is completed, to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when
the securities originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short positions.
Those activities may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters
may discontinue any of the activities at any time.
Any
underwriters or agents that are qualified market makers on the NASDAQ Capital Market may engage in passive market making transactions
in our common stock on the NASDAQ Capital Market in accordance with Regulation M under the Exchange Act, during the business day
prior to the pricing of the offering, before the commencement of offers or sales of our common stock. Passive market makers must
comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market
maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids
are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when
certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above
that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
Fees
and Commissions
If
5% or more of the net proceeds of any offering of securities made under this prospectus will be received by a FINRA member participating
in the offering or affiliates or associated persons of such FINRA member, the offering will be conducted in accordance with FINRA
Rule 5121.
DESCRIPTION
OF SECURITIES WE MAY OFFER
General
This
prospectus describes the general terms of our capital stock. The following description is not complete and may not contain all
the information you should consider before investing in our capital stock. For a more detailed description of these securities,
you should read the applicable provisions of New Jersey law and our certificate of incorporation, as amended, referred to herein
as our certificate of incorporation and our amended and restated bylaws, referred to herein as our bylaws. When we offer to sell
a particular series of these securities, we will describe the specific terms of the series in a supplement to this prospectus.
Accordingly, for a description of the terms of any series of securities, you must refer to both the prospectus supplement relating
to that series and the description of the securities described in this prospectus. To the extent the information contained in
the prospectus supplement differs from this summary description, you should rely on the information in the prospectus supplement.
The
total number of shares of capital stock we are authorized to issue is 550,000,000 shares, of which (a) 500,000,000 are common
stock and (b) 50,000,000 are preferred stock.
We,
directly or through agents, dealers or underwriters designated from time to time, may offer, issue and sell, together or separately,
up to $25,000,000 in the aggregate of:
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common
stock;
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preferred
stock;
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purchase
contracts;
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warrants
to purchase our securities;
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subscription
rights to purchase our securities;
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depositary
shares;
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secured
or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities,
senior subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities;
or
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units
comprised of, or other combinations of, the foregoing securities.
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We
may issue the debt securities exchangeable for or convertible into shares of common stock, preferred stock or other securities
that may be sold by us pursuant to this prospectus or any combination of the foregoing. The preferred stock may also be exchangeable
for and/or convertible into shares of common stock, another series of preferred stock or other securities that may be sold by
us pursuant to this prospectus or any combination of the foregoing. When a particular series of securities is offered, a supplement
to this prospectus will be delivered with this prospectus, which will set forth the terms of the offering and sale of the offered
securities.
Common
Stock
As
of November 1, 2019, there were 12,508,958 shares of common stock issued and outstanding, held of record by approximately
705 stockholders. Subject to preferential rights with respect to any outstanding preferred stock, all outstanding shares
of common stock are of the same class and have equal rights and attributes.
Voting
Rights
Each
Stockholder has one vote for each share of common stock held on all matters submitted to a vote of stockholders. A shareholder
may vote in person or by proxy. Elections of directors are determined by a plurality of the votes cast and all other matters are
decided by a majority of the votes cast by those shareholders entitled to vote and present in person or by proxy.
Because
our stockholders do not have cumulative voting rights, stockholders holding a majority of the voting power of our shares of common
stock will be able to elect all of our directors. Our amended and restated certificate of incorporation and bylaws provide that
stockholder actions may be effected at a duly called meeting of stockholders or pursuant to written consent of the majority of
shareholders. A special meeting of stockholders may be called by the President, Chief Executive Officer or the Board of Directors
pursuant to a resolution approved by the majority of the Board of Directors.
Dividend
Rights
The
holders of outstanding shares of common stock are entitled to receive dividends out of funds legally available at the times and
in the amounts that our board may determine, provided that required dividends, if any, on preferred stock have been paid or provided
for. However, to date we have not paid or declared cash distributions or dividends on our common stock and do not currently intend
to pay cash dividends on our common stock in the foreseeable future. We intend to retain all earnings, if and when generated,
to finance our operations. The declaration of cash dividends in the future will be determined by the board based upon our earnings,
financial condition, capital requirements and other relevant factors.
No
Preemptive or Similar Rights
Holders
of our common stock do not have preemptive rights, and common stock is not convertible or redeemable.
Right
to Receive Liquidation Distributions
Upon
our dissolution, liquidation or winding-up, the assets legally available for distribution to our stockholders and remaining after
payment to holders of preferred stock of the amounts, if any, to which they are entitled, are distributable ratably among the
holders of our common stock subject to any senior class of securities.
Preferred
Stock
Our
certificate of incorporation empowers our board of directors, without action by our shareholders, to issue up to 50,00,000 shares
of preferred stock from time to time in one or more series, which preferred stock may be offered by this prospectus and supplements
thereto. As of November 1, 2019, there were no shares of preferred stock designated, issued or outstanding. Our
board may fix the rights, preferences, privileges, and restrictions of our authorized but undesignated preferred shares, including:
We
will fix the rights, preferences, privileges and restrictions of the preferred stock of each series in the certificate of designation
relating to that series. We will file as an exhibit to the registration statement of which this prospectus is a part, or will
incorporate by reference from a current report on Form 8-K that we file with the SEC, the form of any certificate of designation
that describes the terms of the series of preferred stock we are offering before the issuance of the related series of preferred
stock. This description will include any or all of the following, as required:
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the
title and stated value;
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the
number of shares we are offering;
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the
liquidation preference per share;
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the
purchase price;
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the
dividend rate, period and payment date and method of calculation for dividends;
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whether
dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate;
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any
contractual limitations on our ability to declare, set aside or pay any dividends;
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the
procedures for any auction and remarketing, if any;
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the
provisions for a sinking fund, if any;
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the
provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and
repurchase rights;
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any
listing of the preferred stock on any securities exchange or market;
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whether
the preferred stock will be convertible into our common stock, and, if applicable, the conversion price, or how it will be
calculated, and the conversion period;
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whether
the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated,
and the exchange period;
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voting
rights, if any, of the preferred stock;
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preemptive
rights, if any;
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restrictions
on transfer, sale or other assignment, if any;
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a
discussion of any material or special United States federal income tax considerations applicable to the preferred stock;
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the
relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind
up our affairs;
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any
limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred
stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and
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any
other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock.
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If
we issue shares of preferred stock under this prospectus, after receipt of payment therefor, the shares will be fully paid and
non-assessable.
Our
board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of our common stock. Preferred stock could be issued quickly with terms designed
to delay or prevent a change in control of our Company or make removal of management more difficult. Additionally, the issuance
of preferred stock could have the effect of decreasing the market price of our common stock.
Purchase
Contracts
We
may issue purchase contracts, representing contracts obligating holders to purchase from us, and us to sell to the holders, a
specific or varying number of common stock, preferred stock, warrants, depositary shares, debt securities, warrants or any combination
of the above, at a future date or dates. Alternatively, the purchase contracts may obligate us to purchase from holders, and obligate
holders to sell to us, a specific or varying number of common stock, preferred stock, warrants, depositary shares, debt securities,
or any combination of the above. The price of the securities and other property subject to the purchase contracts may be fixed
at the time the purchase contracts are issued or may be determined by reference to a specific formula set forth in the purchase
contracts. The purchase contracts may be issued separately or as a part of a unit that consists of (a) a purchase contract and
(b) one or more of the other securities that may be sold by us pursuant to this prospectus or any combination of the foregoing,
which may secure the holders’ obligations to purchase the securities under the purchase contract. The purchase contracts
may require us to make periodic payments to the holders or require the holders to make periodic payments to us. These payments
may be unsecured or prefunded and may be paid on a current or on a deferred basis. The purchase contracts may require holders
to secure their obligations under the contracts in a manner specified in the applicable prospectus supplement.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
a current report on Form 8-K that we file with the SEC, forms of the purchase contracts and purchase contract agreement, if any.
The applicable prospectus supplement will describe the terms of any purchase contracts in respect of which this prospectus is
being delivered, including, to the extent applicable, the following:
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whether
the purchase contracts obligate the holder or us to purchase or sell, or both purchase and sell, the securities subject to
purchase under the purchase contract, and the nature and amount of each of those securities, or the method of determining
those amounts;
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whether
the purchase contracts are to be prepaid or not;
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whether
the purchase contracts are to be settled by delivery, or by reference or linkage to the value, performance or level of the
securities subject to purchase under the purchase contract;
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any
acceleration, cancellation, termination or other provisions relating to the settlement of the purchase contracts; and
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whether
the purchase contracts will be issued in fully registered or global form.
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Warrants
We
may issue warrants to purchase our securities or other rights, including rights to receive payment in cash or securities based
on the value, rate or price of one or more specified commodities, currencies, securities or indices, or any combination of the
foregoing. Warrants may be issued independently or together with any other securities that may be sold by us pursuant to this
prospectus or any combination of the foregoing and may be attached to, or separate from, such securities. To the extent warrants
that we issue are to be publicly-traded, each series of such warrants will be issued under a separate warrant agreement to be
entered into between us and a warrant agent.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
a current report on Form 8-K that we file with the SEC, forms of the warrant and warrant agreement, if any. The prospectus supplement
relating to any warrants that we may offer will contain the specific terms of the warrants and a description of the material provisions
of the applicable warrant agreement, if any. These terms may include the following:
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the
title of the warrants;
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the
price or prices at which the warrants will be issued;
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the
designation, amount and terms of the securities or other rights for which the warrants are exercisable;
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the
designation and terms of the other securities, if any, with which the warrants are to be issued and the number of warrants
issued with each other security;
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the
aggregate number of warrants;
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any
provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price
of the warrants;
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the
price or prices at which the securities or other rights purchasable upon exercise of the warrants may be purchased;
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if
applicable, the date on and after which the warrants and the securities or other rights purchasable upon exercise of the warrants
will be separately transferable;
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a
discussion of any material U.S. federal income tax considerations applicable to the exercise of the warrants;
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the
date on which the right to exercise the warrants will commence, and the date on which the right will expire;
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the
maximum or minimum number of warrants that may be exercised at any time;
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information
with respect to book-entry procedures, if any; and
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any
other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
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Exercise
of Warrants. Each warrant will entitle the holder of warrants to purchase the amount of securities or other rights, at the
exercise price stated or determinable in the 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, if applicable, unexercised warrants will become void.
Warrants may be exercised in the manner described in the applicable prospectus supplement. When the warrant holder makes the payment
and properly completes and signs the warrant certificate at the corporate trust office of the warrant agent, if any, or any other
office indicated in the prospectus supplement, we will, as soon as possible, forward the securities or other rights that the warrant
holder has purchased. If the warrant holder exercises less than all of the warrants represented by the warrant certificate, we
will issue a new warrant certificate for the remaining warrants.
Subscription
Rights
We
may issue rights to purchase our securities. The rights may or may not be transferable by the persons purchasing or receiving
the rights. In connection with any rights offering, we may enter into a standby underwriting or other arrangement with one or
more underwriters or other persons pursuant to which such underwriters or other persons would purchase any offered securities
remaining unsubscribed for after such rights offering. In connection with a rights offering to holders of our capital stock a
prospectus supplement will be distributed to such holders on the record date for receiving rights in the rights offering set by
us.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
a current report on Form 8-K that we file with the SEC, forms of the subscription rights, standby underwriting agreement or other
agreements, if any. The prospectus supplement relating to any rights that we offer will include specific terms relating to the
offering, including, among other matters:
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the
date of determining the security holders entitled to the rights distribution;
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the
aggregate number of rights issued and the aggregate amount of securities purchasable upon exercise of the rights;
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the
exercise price;
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the
conditions to completion of the rights offering;
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the
date on which the right to exercise the rights will commence and the date on which the rights will expire; and
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any
applicable federal income tax considerations.
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Each
right would entitle the holder of the rights to purchase the principal amount of securities at the exercise price set forth in
the applicable prospectus supplement. Rights may be exercised at any time up to the close of business on the expiration date for
the rights provided in the applicable prospectus supplement. After the close of business on the expiration date, all unexercised
rights will become void.
Holders
may exercise rights as described in the applicable prospectus supplement. Upon receipt of payment and the rights certificate properly
completed and duly executed at the corporate trust office of the rights agent, if any, or any other office indicated in the prospectus
supplement, we will, as soon as practicable, forward the securities purchasable upon exercise of the rights. If less than all
of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to persons other
than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including pursuant
to standby underwriting arrangements, as described in the applicable prospectus supplement.
Depositary
Shares
General.
We may offer fractional shares of preferred stock, rather than full shares of preferred stock. If we decide to offer fractional
shares of our preferred stock, we will issue receipts for depositary shares. Each depositary share will represent a fraction of
a share of a particular series of our preferred stock, and the applicable prospectus supplement will indicate that fraction. The
shares of preferred stock represented by depositary shares will be deposited under a deposit agreement between us and a depositary
that is a bank or trust company that meets certain requirements and is selected by us. The depositary will be specified in the
applicable prospectus supplement. Each owner of a depositary share will be entitled to all of the rights and preferences of the
preferred stock represented by the depositary share. The depositary shares will be evidenced by depositary receipts issued pursuant
to the deposit agreement. Depositary receipts will be distributed to those persons purchasing the fractional shares of our preferred
stock in accordance with the terms of the offering. We will file as exhibits to the registration statement of which this prospectus
is a part, or will incorporate by reference from a current report on Form 8-K that we file with the SEC, forms of the deposit
agreement, form of certificate of designation of underlying preferred stock, form of depositary receipts and any other related
agreements.
Dividends
and Other Distributions. The depositary will distribute all cash dividends or other cash distributions received by
it in respect of the preferred stock to the record holders of depositary shares relating to such preferred shares in proportion
to the numbers of depositary shares held on the relevant record date.
In
the event of a distribution other than in cash, the depositary will distribute securities or property received by it to the record
holders of depositary shares in proportion to the numbers of depositary shares held on the relevant record date, unless the depositary
determines that it is not feasible to make such distribution. In that case, the depositary may make the distribution by such method
as it deems equitable and practicable. One such possible method is for the depositary to sell the securities or property and then
distribute the net proceeds from the sale as provided in the case of a cash distribution.
Redemption
of Depositary Shares. Whenever we redeem the preferred stock, the depositary will redeem a number of depositary shares
representing the same number of shares of preferred stock so redeemed. If fewer than all of the depositary shares are to be redeemed,
the depositary shares to be redeemed will be selected by lot, pro rata or by any other equitable method as the depositary may
determine.
Voting
of Underlying Shares. Upon receipt of notice of any meeting at which the holders of our preferred stock of any series are
entitled to vote, the depositary will mail the information contained in the notice of the meeting to the record holders of the
depositary shares relating to that series of preferred stock. Each record holder of the depositary shares on the record date will
be entitled to instruct the depositary as to the exercise of the voting rights represented by the number of shares of preferred
stock underlying the holder’s depositary shares. The depositary will endeavor, to the extent it is practical to do so, to
vote the number of whole shares of preferred stock underlying such depositary shares in accordance with such instructions. We
will agree to take all action that the depositary may deem reasonably necessary in order to enable the depositary to do so. To
the extent the depositary does not receive specific instructions from the holders of depositary shares relating to such preferred
shares, it will abstain from voting such shares of preferred stock.
Withdrawal
of Shares. Upon surrender of depositary receipts representing any number of whole shares at the depositary’s office,
unless the related depositary shares previously have been called for redemption, the holder of the depositary shares evidenced
by the depositary receipts will be entitled to delivery of the number of whole shares of the related series of preferred stock
and all money and other property, if any, underlying such depositary shares. However, once such an exchange is made, the preferred
stock cannot thereafter be re-deposited in exchange for depositary shares. Holders of depositary shares will be entitled to receive
whole shares of the related series of preferred stock on the basis set forth in the applicable prospectus supplement. If the depositary
receipts delivered by the holder evidence a number of depositary shares representing more than the number of whole shares of preferred
stock of the related series to be withdrawn, the depositary will deliver to the holder at the same time a new depositary receipt
evidencing the excess number of depositary shares.
Amendment
and Termination of Depositary Agreement. The form of depositary receipt evidencing the depositary shares and any provision
of the applicable depositary agreement may at any time be amended by agreement between us and the depositary. We may, with the
consent of the depositary, amend the depositary agreement from time to time in any manner that we desire. However, if the amendment
would materially and adversely alter the rights of the existing holders of depositary shares, the amendment would need to be approved
by the holders of at least a majority of the depositary shares then outstanding.
The
depositary agreement may be terminated by us or the depositary if:
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all
outstanding depositary shares have been redeemed; or
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there
has been a final distribution in respect of the shares of preferred stock of the applicable series in connection with our
liquidation, dissolution or winding up and such distribution has been made to the holders of depositary receipts.
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Resignation
and Removal of Depositary. The depositary may resign at any time by delivering to us notice of its election to do so. We may
remove a depositary at any time. Any resignation or removal will take effect upon the appointment of a successor depositary and
its acceptance of appointment.
Charges
of Depositary. We will pay all transfer and other taxes and governmental charges arising solely from the existence of any
depositary arrangements. We will pay all charges of each depositary in connection with the initial deposit of the preferred shares
of any series, the initial issuance of the depositary shares, any redemption of such preferred shares and any withdrawals of such
preferred shares by holders of depositary shares. Holders of depositary shares will be required to pay any other transfer taxes.
Notices.
Each depositary will forward to the holders of the applicable depositary shares all notices, reports and communications from
us which are delivered to such depositary and which we are required to furnish the holders of the preferred stock represented
by such depositary shares.
Miscellaneous.
The depositary agreement may contain provisions that limit our liability and the liability of the depositary to the holders of
depositary shares. Both the depositary and we are also entitled to an indemnity from the holders of the depositary shares prior
to bringing, or defending against, any legal proceeding. We or any depositary may rely upon written advice of counsel or accountants,
or information provided by persons presenting preferred shares for deposit, holders of depositary shares or other persons believed
by us to be competent and on documents believed by us or them to be genuine.
Debt
Securities
As
used in this prospectus, the term “debt securities” means the debentures, notes, bonds and other evidences of indebtedness
that we may issue from time to time. The debt securities will either be senior debt securities, senior subordinated debt or subordinated
debt securities. We may also issue convertible debt securities. Debt securities may be issued under an indenture (which we refer
to herein as an Indenture), which are contracts entered into between us and a trustee to be named therein. The Indenture has been
filed as an exhibit to the registration statement of which this prospectus forms a part. We may issue debt securities and incur
additional indebtedness other than through the offering of debt securities pursuant to this prospectus. It is likely that convertible
debt securities will not be issued under an Indenture.
The
debt securities may be fully and unconditionally guaranteed on a secured or unsecured senior or subordinated basis by one or more
guarantors, if any. The obligations of any guarantor under its guarantee will be limited as necessary to prevent that guarantee
from constituting a fraudulent conveyance under applicable law. In the event that any series of debt securities will be subordinated
to other indebtedness that we have outstanding or may incur, the terms of the subordination will be set forth in the prospectus
supplement relating to the subordinated debt securities.
We
may issue debt securities from time to time in one or more series, in each case with the same or various maturities, at par or
at a discount. Unless indicated in a prospectus supplement, we may issue additional debt securities of a particular series without
the consent of the holders of the debt securities of such series outstanding at the time of the issuance. Any such additional
debt securities, together with all other outstanding debt securities of that series, will constitute a single series of debt securities
under the applicable Indenture and will be equal in ranking.
Should
an Indenture relate to unsecured indebtedness, in the event of a bankruptcy or other liquidation event involving a distribution
of assets to satisfy our outstanding indebtedness or an event of default under a loan agreement relating to secured indebtedness
of our company or its subsidiaries, the holders of such secured indebtedness, if any, would be entitled to receive payment of
principal and interest prior to payments on the unsecured indebtedness issued under an Indenture.
Each
prospectus supplement will describe the terms relating to the specific series of debt securities. These terms will include some
or all of the following:
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the
title of debt securities and whether the debt securities are senior or subordinated;
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any
limit on the aggregate principal amount of debt securities of such series;
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the
percentage of the principal amount at which the debt securities of any series will be issued;
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the
ability to issue additional debt securities of the same series;
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the
purchase price for the debt securities and the denominations of the debt securities;
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the
specific designation of the series of debt securities being offered;
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the
maturity date or dates of the debt securities and the date or dates upon which the debt securities are payable and the rate
or rates at which the debt securities of the series shall bear interest, if any, which may be fixed or variable, or the method
by which such rate shall be determined;
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the
basis for calculating interest;
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the
date or dates from which any interest will accrue or the method by which such date or dates will be determined;
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the
duration of any deferral period, including the period during which interest payment periods may be extended;
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whether
the amount of payments of principal of (and premium, if any) or interest on the debt securities may be determined with reference
to any index, formula or other method, such as one or more currencies, commodities, equity indices or other indices, and the
manner of determining the amount of such payments;
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the
dates on which we will pay interest on the debt securities and the regular record date for determining who is entitled to
the interest payable on any interest payment date;
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the
place or places where the principal of (and premium, if any) and interest on the debt securities will be payable, where any
securities may be surrendered for registration of transfer, exchange or conversion, as applicable, and notices and demands
may be delivered to or upon us pursuant to the applicable Indenture;
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the
rate or rates of amortization of the debt securities;
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any
terms for the attachment to the debt securities of warrants, options or other rights to purchase or sell our securities;
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if
the debt securities will be secured by any collateral and, if so, a general description of the collateral and the terms and
provisions of such collateral security, pledge or other agreements;
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if
we possess the option to do so, the periods within which and the prices at which we may redeem the debt securities, in whole
or in part, pursuant to optional redemption provisions, and the other terms and conditions of any such provisions;
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our
obligation or discretion, if any, to redeem, repay or purchase debt securities by making periodic payments to a sinking fund
or through an analogous provision or at the option of holders of the debt securities, and the period or periods within which
and the price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant to such
obligation, and the other terms and conditions of such obligation;
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the
terms and conditions, if any, regarding the option or mandatory conversion or exchange of debt securities;
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the
period or periods within which, the price or prices at which and the terms and conditions upon which any debt securities of
the series may be redeemed, in whole or in part at our option and, if other than by a board resolution, the manner in which
any election by us to redeem the debt securities shall be evidenced;
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any
restriction or condition on the transferability of the debt securities of a particular series;
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the
portion, or methods of determining the portion, of the principal amount of the debt securities which we must pay upon the
acceleration of the maturity of the debt securities in connection with any event of default;
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the
currency or currencies in which the debt securities will be denominated and in which principal, any premium and any interest
will or may be payable or a description of any units based on or relating to a currency or currencies in which the debt securities
will be denominated;
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provisions,
if any, granting special rights to holders of the debt securities upon the occurrence of specified events;
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any
deletions from, modifications of or additions to the events of default or our covenants with respect to the applicable series
of debt securities, and whether or not such events of default or covenants are consistent with those contained in the applicable
Indenture;
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any
limitation on our ability to incur debt, redeem stock, sell our assets or other restrictions;
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the
application, if any, of the terms of the applicable Indenture relating to defeasance and covenant defeasance (which terms
are described below) to the debt securities;
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what
subordination provisions will apply to the debt securities
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the
terms, if any, upon which the holders may convert or exchange the debt securities into or for our securities or property;
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whether
we are issuing the debt securities in whole or in part in global form;
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any
change in the right of the trustee or the requisite holders of debt securities to declare the principal amount thereof due
and payable because of an event of default;
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the
depositary for global or certificated debt securities, if any;
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any
material federal income tax consequences applicable to the debt securities, including any debt securities denominated and
made payable, as described in the prospectus supplements, in foreign currencies, or units based on or related to foreign currencies;
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any
right we may have to satisfy, discharge and defease our obligations under the debt securities, or terminate or eliminate restrictive
covenants or events of default in the Indentures, by depositing money or U.S. government obligations with the trustee of the
Indentures;
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the
names of any trustees, depositories, authenticating or paying agents, transfer agents or registrars or other agents with respect
to the debt securities;
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to
whom any interest on any debt security shall be payable, if other than the person in whose name the security is registered,
on the record date for such interest, the extent to which, or the manner in which, any interest payable on a temporary global
debt security will be paid;
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if
the principal of or any premium or interest on any debt securities is to be payable in one or more currencies or currency
units other than as stated, the currency, currencies or currency units in which it shall be paid and the periods within and
terms and conditions upon which such election is to be made and the amounts payable (or the manner in which such amount shall
be determined);
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the
portion of the principal amount of any debt securities which shall be payable upon declaration of acceleration of the maturity
of the debt securities pursuant to the applicable Indenture;
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if
the principal amount payable at the stated maturity of any debt security of the series will not be determinable as of any
one or more dates prior to the stated maturity, the amount which shall be deemed to be the principal amount of such debt securities
as of any such date for any purpose, including the principal amount thereof which shall be due and payable upon any maturity
other than the stated maturity or which shall be deemed to be outstanding as of any date prior to the stated maturity (or,
in any such case, the manner in which such amount deemed to be the principal amount shall be determined); and
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any
other specific terms of the debt securities, including any modifications to the events of default under the debt securities
and any other terms which may be required by or advisable under applicable laws or regulations.
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Unless
otherwise specified in the applicable prospectus supplement, we do not anticipate the debt securities will be listed on any securities
exchange. Holders of the debt securities may present registered debt securities for exchange or transfer in the manner described
in the applicable prospectus supplement. Except as limited by the applicable Indenture, we will provide these services without
charge, other than any tax or other governmental charge payable in connection with the exchange or transfer.
Debt
securities may bear interest at a fixed rate or a variable rate as specified in the prospectus supplement. In addition, if specified
in the prospectus supplement, we may sell debt securities bearing no interest or interest a t a rate that at the time of issuance
is below the prevailing market rate, or at a discount below their stated principal amount. We will describe in the applicable
prospectus supplement any special federal income tax considerations applicable to these discounted debt securities.
We
may issue debt securities with the principal amount payable on any principal payment date, or the amount of interest payable on
any interest payment date, to be determined by referring to one or more currency exchange rates, commodity prices, equity indices
or other factors. Holders of such debt securities may receive a principal amount on any principal payment date, or interest payments
on any interest payment date, that are greater or less than the amount of principal or interest otherwise payable on such dates,
depending upon the value on such dates of applicable currency, commodity, equity index or other factors. The applicable prospectus
supplement will contain information as to how we will determine the amount of principal or interest payable on any date, as well
as the currencies, commodities, equity indices or other factors to which the amount payable on that date relates and certain additional
tax considerations.
Units
We
may issue units consisting of any combination of the other types of securities offered under this prospectus in one or more series.
We may evidence each series of units by unit certificates that we may issue under a separate agreement. We may enter into unit
agreements with a unit agent. Each unit agent, if any, may be a bank or trust company that we select. We will indicate the name
and address of the unit agent, if any, in the applicable prospectus supplement relating to a particular series of units. Specific
unit agreements, if any, will contain additional important terms and provisions. We will file as an exhibit to the registration
statement of which this prospectus is a part, or will incorporate by reference from a current report that we file with the SEC,
the form of unit and the form of each unit agreement, if any, relating to units offered under this prospectus.
If
we offer any units, certain terms of that series of units will be described in the applicable prospectus supplement, including,
without limitation, the following, as applicable:
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the
title of the series of units;
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identification
and description of the separate constituent securities comprising the units;
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the
price or prices at which the units will be issued;
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the
date, if any, on and after which the constituent securities comprising the units will be separately transferable;
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a
discussion of certain United States federal income tax considerations applicable to the units; and
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any
other material terms of the units and their constituent securities.
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Anti-Takeover
Provisions
The
authorization of undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting
or other rights or preferences that could impede the success of any attempt to change our control.
These
provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its
policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us.
These
provisions are also designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics
that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers
for our shares and may have the effect of deterring hostile takeovers or delaying changes in our control or management. As a consequence,
these provisions also may inhibit fluctuations in the market price of our stock that could result from actual or rumored takeover
attempts.
FORMS
OF SECURITIES
Each
security may be represented either by a certificate issued in definitive form to a particular investor or by one or more global
securities representing the entire issuance of securities. Certificated securities in definitive form and global securities will
be issued in registered form. Definitive securities name you or your nominee as the owner of the security, and in order to transfer
or exchange these securities or to receive payments other than interest or other interim payments, you or your nominee must physically
deliver the securities to the trustee, registrar, paying agent or other agent, as applicable. Global securities name a depositary
or its nominee as the owner of the debt securities, warrants or units represented by these global securities. The depositary maintains
a computerized system that will reflect each investor’s beneficial ownership of the securities through an account maintained
by the investor with its broker/dealer, bank, trust company or other representative, as we explain more fully below.
Registered
Global Securities
We
may issue the securities in the form of one or more fully registered global securities that will be deposited with a depositary
or its nominee identified in the applicable prospectus supplement and registered in the name of that depositary or nominee. In
those cases, one or more registered global securities will be issued in a denomination or aggregate denominations equal to the
portion of the aggregate principal or face amount of the securities to be represented by registered global securities. Unless
and until it is exchanged in whole for securities in definitive registered form, a registered global security may not be transferred
except as a whole by and among the depositary for the registered global security, the nominees of the depositary or any successors
of the depositary or those nominees.
The
specific terms of the depositary arrangement with respect to any securities to be represented by a registered global security
will be described in the prospectus supplement relating to those securities. We anticipate that the following provisions will
apply to all depositary arrangements.
Ownership
of beneficial interests in a registered global security will be limited to persons, called participants, that have accounts with
the depositary or persons that may hold interests through participants. Upon the issuance of a registered global security, the
depositary will credit, on its book-entry registration and transfer system, the participants’ accounts with the respective
principal or face amounts of the securities beneficially owned by the participants. Any dealers, underwriters or agents participating
in the distribution of the securities will designate the accounts to be credited. Ownership of beneficial interests in a registered
global security will be shown on, and the transfer of ownership interests will be effected only through, records maintained by
the depositary, with respect to interests of participants, and on the records of participants, with respect to interests of persons
holding through participants. The laws of some states may require that some purchasers of securities take physical delivery of
these securities in definitive form. These laws may impair your ability to own, transfer or pledge beneficial interests in registered
global securities.
So
long as the depositary, or its nominee, is the registered owner of a registered global security, that depositary or its nominee,
as the case may be, will be considered the sole owner or holder of the securities represented by the registered global security
for all purposes under the applicable indenture, warrant agreement or unit agreement.
Except
as described below, owners of beneficial interests in a registered global security will not be entitled to have the securities
represented by the registered global security registered in their names, will not receive or be entitled to receive physical delivery
of the securities in definitive form and will not be considered the owners or holders of the securities under the applicable indenture,
warrant agreement or unit agreement. Accordingly, each person owning a beneficial interest in a registered global security must
rely on the procedures of the depositary for that registered global security and, if that person is not a participant, on the
procedures of the participant through which the person owns its interest, to exercise any rights of a holder under the applicable
indenture, warrant agreement or unit agreement. We understand that under existing industry practices, if we request any action
of holders or if an owner of a beneficial interest in a registered global security desires to give or take any action that a holder
is entitled to give or take under the applicable indenture, warrant agreement or unit agreement, the depositary for the registered
global security would authorize the participants holding the relevant beneficial interests to give or take that action, and the
participants would authorize beneficial owners owning through them to give or take that action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments
to holders with respect to securities represented by a registered global security registered in the name of a depositary or its
nominee will be made to the depositary or its nominee, as the case may be, as the registered owner of the registered global security.
None of the Company, the trustees, the warrant agents, the unit agents or any other agent of the Company, agent of the trustees,
the warrant agents or unit agents will have any responsibility or liability for any aspect of the records relating to payments
made on account of beneficial ownership interests in the registered global security or for maintaining, supervising or reviewing
any records relating to those beneficial ownership interests.
We
expect that the depositary for any of the securities represented by a registered global security, upon receipt of any payment
of principal, premium, interest or other payment or distribution to holders of that registered global security, will immediately
credit participants’ accounts in amounts proportionate to their respective beneficial interests in that registered global
security as shown on the records of the depositary. We also expect that payments by participants to owners of beneficial interests
in a registered global security held through participants will be governed by standing customer instructions and customary practices,
as is now the case with the securities held for the accounts of customers or registered in “street name,” and will
be the responsibility of those participants.
If
the depositary for any of these securities represented by a registered global security is at any time unwilling or unable to continue
as depositary or ceases to be a clearing agency registered under the Exchange Act and a successor depositary registered as a clearing
agency under the Exchange Act is not appointed by us within 90 days, we will issue securities in definitive form in exchange for
the registered global security that had been held by the depositary. Any securities issued in definitive form in exchange for
a registered global security will be registered in the name or names that the depositary gives to the relevant trustee, warrant
agent, unit agent or other relevant agent of ours or theirs. It is expected that the depositary’s instructions will be based
upon directions received by the depositary from participants with respect to ownership of beneficial interests in the registered
global security that had been held by the depositary.
LEGAL
MATTERS
Unless
otherwise indicated in the applicable prospectus supplement, the validity of the securities offered by this prospectus will be
passed upon for us by Ellenoff Grossman & Schole LLP, New York, New York. If legal matters in connection with offerings made
by this prospectus are passed on by counsel for the underwriters, dealers or agents, if any, that counsel will be named in the
applicable prospectus supplement.
EXPERTS
Morison Cogen
LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2018, as filed on April 1, 2019, as set forth in their report which is
incorporated by reference in this prospectus and elsewhere in the registration statement. Our consolidated financial
statements are incorporated by reference in reliance on Morison Cogen LLP’s report, given on their authority as experts
in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
file annual, quarter and periodic reports, proxy statements and other information with the Securities and Exchange Commission
using the Commission’s EDGAR system. The Commission maintains a web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the Commission. The address of such site is http//www.sec.gov.
INCORPORATION
OF DOCUMENTS BY REFERENCE
We
are “incorporating by reference” in this prospectus certain documents we file with the SEC, which means that we can
disclose important information to you by referring you to those documents. The information in the documents incorporated by reference
is considered to be part of this prospectus. Statements contained in documents that we file with the SEC and that are incorporated
by reference in this prospectus will automatically update and supersede information contained in this prospectus, including information
in previously filed documents or reports that have been incorporated by reference in this prospectus, to the extent the new information
differs from or is inconsistent with the old information. We have filed or may file the following documents with the SEC and they
are incorporated herein by reference as of their respective dates of filing.
|
1.
|
Our
Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on April 1, 2019;
|
|
2.
|
Our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019, as filed with the SEC on May 20, 2019
and August 14, 2019, respectively;
|
|
3.
|
Our
Definitive Proxy Statement on Schedule 14A filed with the SEC on February 5, 2019;
|
|
4.
|
Our
Current Reports on Form 8-K filed with the SEC on March 5, 2019, May 16, 2019, June 21, 2019, September 25, 2019, and
November 1, 2019 (other than any portions thereof deemed furnished and not filed); and
|
|
5.
|
The
description of our common stock contained in our Registration Statement on Form 8-A, filed on January 17, 2014 pursuant to
Section 12(b) of the Exchange Act, which incorporates by reference the description of the shares of our common stock contained
in the section entitled “Description of Securities” in our Registration Statement on Form S-1 (File No. 333-190456),
as initially filed with the SEC on August 7, 2013, as amended, and any amendment or report filed with the SEC for purposes
of updating such description.
|
All
documents that we filed with the SEC pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act subsequent to the date
of this registration statement and prior to the filing of a post-effective amendment to this registration statement that indicates
that all securities offered under this prospectus have been sold, or that deregisters all securities then remaining unsold, will
be deemed to be incorporated in this registration statement by reference and to be a part hereof from the date of filing of such
documents.
Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a statement contained in this prospectus, or in any
subsequently filed document that also is deemed to be incorporated by reference in this prospectus, modifies, supersedes or replaces
such statement. Any statement so modified, superseded or replaced shall not be deemed, except as so modified, superseded or replaced,
to constitute a part of this prospectus. None of the information that we disclose under Items 2.02 or 7.01 of any Current Report
on Form 8-K or any corresponding information, either furnished under Item 9.01 or included as an exhibit therein, that we may
from time to time furnish to the SEC will be incorporated by reference into, or otherwise included in, this prospectus, except
as otherwise expressly set forth in the relevant document. Subject to the foregoing, all information appearing in this prospectus
is qualified in its entirety by the information appearing in the documents incorporated by reference.
You
may requests, orally or in writing, a copy of these documents, which will be provided to you at no cost (other than exhibits,
unless such exhibits are specifically incorporate by reference), by contacting Akers Biosciences, Inc., at 201 Grove Road, Thorofare,
New Jersey 08086. Our telephone number is (856) 848-8698. Information about us is also available at our website at http://www.akersbio.com.
However, the information in our website is not a part of this prospectus and is not incorporated by reference.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution.
The
Company is paying all expenses of the offering. The following table sets forth all expenses to be paid by the registrant. All
amounts shown are estimates except for the registration fee.
SEC registration fee
|
|
$
|
3,245
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|
Legal fees and expenses
|
|
$
|
25,000
|
|
Accounting fees and expenses
|
|
$
|
3,500
|
|
Trustees’ Fees and Expenses
|
|
|
*
|
|
Warrant Agent Fees and Expenses
|
|
|
*
|
|
Miscellaneous
|
|
|
*
|
|
Total
|
|
$
|
31,745
|
|
*
These fees are calculated based on the securities offered and the number of issuances and accordingly cannot be estimated at this
time. The applicable prospectus supplement will set forth the estimated amount of expenses of any offering of securities.
Item
15. Indemnification of Directors and Officers.
Section
14A:2-7(3) of the New Jersey Business Corporation Act permits a corporation to provide in its certificate of incorporation that
a director or officer shall not be personally liable, or shall be liable only to the extent therein provided, to the corporation
or its shareholders for damages for breach of any duty owed to the corporation or its shareholders, except that such provision
shall not relieve a director or officer from liability for any breach of duty based upon an act or omission (a) in breach of such
person’s duty of loyalty to the corporation or its shareholders, (b) not in good faith or involving a knowing violation
of law or (c) resulting in receipt by such person of an improper personal benefit. Akers Biosciences, Inc.’s certificate
of incorporation provides for such limitation of liability.
Section
14A:3-5 of the New Jersey Business Corporation Act empowers a corporation to indemnify any current or former director or officer
made a party to a proceeding because he or she is or was a director or officer against liability incurred in the proceeding; provided
that such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal proceeding, such director or officer had no reasonable cause to believe his
conduct was unlawful.
Akers
Biosciences, Inc.’s certificate of incorporation provides that the corporation must indemnify its directors and officers
to the fullest extent authorized by law. Akers Biosciences, Inc. is also expressly required to advance certain expenses to its
directors and officers. Akers Biosciences, Inc. believes that these indemnification provisions are useful to attract and retain
qualified directors and executive officers.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, this indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item
16. Exhibits.
The
following exhibits are filed with this Registration Statement.
The
agreements included or incorporated by reference as exhibits to this registration statement contain representations and warranties
by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the
other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather
as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified
in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;
(iii) may apply contract standards of “materiality” that are different from “materiality” under the applicable
securities laws; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified
in the agreement.
The
undersigned registrant acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible
for considering whether additional specific disclosures of material information regarding material contractual provisions are
required to make the statements in this registration statement not misleading.
*
|
Filed
herewith.
|
|
|
**
|
If
applicable, to be filed by an amendment or as an exhibit to a report pursuant to section 13(a) or section 15(d) of the Exchange
Act and incorporated by reference
|
|
|
+
|
To
be filed pursuant to Rule 305(b)(2) of the Trust Indenture Act.
|
Item
17. Undertakings.
|
(a)
|
The
undersigned Registrant hereby undertakes:
|
(1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided
, however , that paragraphs (1)(i), (1)(ii) and (1)(iii) do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale
of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and
any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(5) That,
for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The
undersigned registrant hereby undertakes that, for purposes of determining any liability of the registrant under the Securities
Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) The
undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period, to set
forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount of
unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public
offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective
amendment will be filed to set forth the terms of such offering.
(d) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
(e) The
undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee
to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Trust Indenture Act.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the State of New Jersey, on this November 1,
2019.
|
AKERS
BIOSCIENCES, INC.
|
|
|
|
By:
|
/s/
Christopher C. Schreiber
|
|
|
Christopher
C. Schreiber
|
|
|
Executive
Chairman of the Board and Director
(Principal Executive Officer) and Director
|
KNOW
ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below hereby constitutes and appoints Christopher
C. Schreiber as his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments,
to this registration statement, and to sign any registration statement for the same offering covered by this registration statement
that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933 increasing the number
of shares for which registration is sought, and all post-effective amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, making such changes in this registration statement as such attorney-in-fact
and agent so acting deem appropriate, with the SEC, granting unto said attorney-in-fact and agent, and each of them, full power
and authority to do and perform each and every act and thing requisite and necessary to be done with respect to the offering of
securities contemplated by this registration statement, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his, her or their substitute or substitutes,
may lawfully do or cause to be done or by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Howard R. Yeaton
|
|
Chief
Executive Officer and Interim Chief Financial Officer
|
|
November 1, 2019
|
Howard
R. Yeaton
|
|
(Principal
Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/
Christopher C. Schreiber
|
|
Executive
Chairman of the Board and Director
|
|
November 1, 2019
|
Christopher
C. Schreiber
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/
Joshua Silverman
|
|
Independent Director
|
|
November 1, 2019
|
Joshua
Silverman
|
|
|
|
|
|
|
|
|
|
/s/
Bill J. White
|
|
Independent
Director
|
|
November 1, 2019
|
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