Filed pursuant to Rule 424(b)(5)
Registration No. 333-226334
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 7, 2018)
1,500,000
Shares
Common
Stock
We are offering 1,500,000 shares of our common stock pursuant
to this prospectus supplement and the accompanying base prospectus.
Our common stock trades on the
Nasdaq
Global Market under the symbol “IIN.” The last reported sale price of our common stock on August 14,
2018 was $68.60 per share.
We have entered into an equity purchase agreement with our
directors and officers listed in “Use of Proceeds” to repurchase, following the closing of this offering, an
aggregate of 500,000 shares of our common stock from such directors and officers at a price equal to the net proceeds per share
that we will receive from this offering, before expenses. We intend to use a portion of the net proceeds from this offering to
fund such repurchase.
Investing in our common stock involves a high degree
of risk. See “Risk Factors” beginning on page S-7 of this prospectus supplement and page 1 of the accompanying base prospectus.
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Per
Share
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Total
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Public offering price
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$55.00
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$82,500,000
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Underwriting discounts and commissions
(1)
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$ 3.30
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$ 4,950,000
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Proceeds, before expenses, to us
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$51.70
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$77,550,000
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(1)
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We have agreed to reimburse the underwriters
for certain expenses. See “Underwriting.”
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We have granted the underwriters an option for a period of
30 days to purchase up to an additional 225,000 shares of our common stock. If the underwriters exercise their option in full,
the total underwriting discounts and commissions payable by us will be $5,692,500 and the total proceeds to us, before
expenses, will be $89,182,500.
The underwriters expect to deliver the shares of common stock
on or about August 20, 2018.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying
base prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Sole Bookrunning
Manager
Stifel
Co-Managers
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B. Riley FBR
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Dougherty & Company
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The date of this prospectus
supplement is August 15, 2018
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is part of a registration statement that
we have filed with the Securities and Exchange Commission, referred to herein as the SEC, utilizing a “shelf” registration
process. Under this shelf registration process, we are offering to sell shares of our common stock using this prospectus supplement
and the accompanying base prospectus. In this prospectus supplement, we provide you with specific information about the terms of
this offering and the shares of common stock that we are selling in this offering. Both this prospectus supplement and the accompanying
base prospectus include important information about us, the shares of common stock being offered and other information you should
know before investing. This prospectus supplement also adds, updates and changes information contained in the accompanying base
prospectus. You should read this prospectus supplement, the accompanying base prospectus and the information incorporated by reference
in this prospectus supplement and the accompanying base prospectus before investing in the shares. To the extent there is a conflict
between the information contained in this prospectus supplement, on the one hand, and the information contained in the accompanying
base prospectus or in any document incorporated by reference that was filed with the SEC before the date of this prospectus supplement,
on the other hand, you should rely on the information in this prospectus supplement. If any statement in one of these documents
is inconsistent with a statement in another document having a later date – for example, a document incorporated by reference
in the accompanying base prospectus – the statement in the document having the later date modifies or supersedes the earlier
statement.
We further note that the representations, warranties and covenants made
by us in any agreement that is filed as an exhibit to any document that is incorporated by reference herein were made solely for
the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to
such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations,
warranties or covenants were accurate only as of the date specified in the relevant agreement. Accordingly, such representations,
warranties and covenants should not be relied on as accurately representing the current state of our affairs.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying base prospectus, along with the information contained in any free
writing prospectus that we have authorized for use in connection with this offering. You should also read and consider the information
in the documents to which we have referred you under the captions “Where You Can Find More Information” and “Documents
Incorporated by Reference” in this prospectus supplement and in the accompanying base prospectus. We have not, and the underwriters
have not, authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. You should not assume that the information appearing in this prospectus supplement, the
accompanying base prospectus, the documents incorporated by reference in this prospectus supplement and the accompanying base prospectus,
and any free writing prospectus authorized by us is accurate as of any date other than the respective dates of those documents
regardless of the time of delivery to you. You should not consider this prospectus supplement, the accompanying prospectus, or
any free writing prospectus authorized by us to be an offer or solicitation relating to the shares in any jurisdiction in which
such an offer or solicitation relating to the shares is not authorized. Furthermore, you should not consider this prospectus supplement,
the accompanying base prospectus, or any free writing prospectus authorized by us to be an offer or solicitation relating to the
shares if the person making the offer or solicitation is not qualified to do so, or if it is unlawful for you to receive such an
offer or solicitation.
Unless otherwise stated, references in this prospectus supplement to
“IntriCon,” the “Company,” “we,” “us” and “our” refer to IntriCon Corporation
and its consolidated subsidiaries.
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere in this prospectus
supplement, the accompanying base prospectus and the documents incorporated by reference. This summary does not contain all the
information that you should consider before investing in our securities. You should read carefully this entire prospectus supplement,
the accompanying base prospectus, the documents incorporated by reference in this prospectus supplement and the accompanying base
prospectus and the information included in any free writing prospectus that we have authorized for use in connection with this
offering before making an investment decision to purchase our common stock, especially the risks discussed in the section entitled
“Risk Factors” in this prospectus supplement and in Item 1A of our Annual Report on Form 10-K for the year ended December
31, 2017 filed with the SEC on March 13, 2018, as well as the consolidated financial statements and notes to those consolidated
financial statements incorporated by reference in this prospectus supplement and the accompanying base prospectus.
The Company
Company Overview
IntriCon is an international company engaged in designing, developing,
engineering, manufacturing and distributing body-worn devices. The Company serves the body-worn device market by designing, developing,
engineering, manufacturing and distributing micro-miniature products, microelectronics, micro-mechanical assemblies, complete assemblies
and software solutions, primarily for the emerging value based hearing healthcare market, the medical bio-telemetry market and
the professional audio communication market. The Company is a Pennsylvania corporation formed in 1930, and has gone through several
transformations since its formation. The Company’s core business of body-worn devices was established in 1993 through the
acquisition of Resistance Technologies Inc., now known as IntriCon, Inc. The Company has facilities in Minnesota, Illinois, Singapore,
Indonesia, the United Kingdom and Germany, and operates through subsidiaries.
The Company’s website is
www.intricon.com
. Information
contained in, or accessible through, the Company’s website does not constitute a part of this prospectus supplement or a
part of the accompanying base prospectus.
For a detailed description of IntriCon’s business, the latest
financial statements of IntriCon, management’s discussion and analysis of IntriCon’s financial condition and results
of operations, and other important information concerning IntriCon, please refer to IntriCon’s Annual Report on Form 10-K
for the year ended December 31, 2017, IntriCon’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018 and
June 30, 3018 and other documents filed with the SEC, which are incorporated by reference into this prospectus supplement and the
accompanying base prospectus.
Market Overview
IntriCon serves the body-worn device market by designing, developing,
engineering, manufacturing and distributing micro-miniature products, microelectronics, micro-mechanical assemblies, complete assemblies
and software solutions, primarily for the medical bio-telemetry market, the emerging value based hearing healthcare market, the
hearing health direct to consumer market and the professional audio communication market.
Hearing
Healthcare Market
In the United States alone, there are approximately 40 million adults
that report some degree of hearing loss. In adults, the most common cause of hearing loss is aging and noise. In fact, by the age
of 65, one out of three people have hearing loss. The hearing-impaired population is expected to grow significantly over the next
decade due to an aging population and more frequent exposure to loud sounds that can cause noise-induced hearing loss. It is estimated
that hearing aids can help more than 90 percent of people with hearing loss, however the current market penetration into the U.S.
hearing impaired population is approximately 20 percent, a percentage that has remained essentially unchanged for the last four
decades. The primary deterrents to greater penetration are cost and access. Along with this, the legacy channel is an oligopoly
of five large hearing aid manufacturers who utilize bricks and mortar and licensed audiologists to sell devices while controlling
the channel dynamics.
The average cost of a hearing aid sold in the US market today is over
$2,400 per device, more than double the cost from twelve years ago. Approximately 70 percent of the hearing impaired have hearing
loss in both ears (referred to as a binaural loss), driving the total cost to almost $5,000 on average for a set of hearing aids.
We believe a perfect vortex of factors has come together over the last
few years to enable the emergence of a market disruptive, high-quality, low cost distribution model, including continued consolidation
of retail (causing escalating hearing aid prices), consumer outcry, consumer education, advancements in technology (such as behind-the-ear
devices, advanced digital signal processing, low-power wireless, and self-fitting software) as well as regulatory actions and pronouncements
by the U.S. Food and Drug Administration, the President’s Council of Advisors on Science and Technology and the National
Academies of Science, Engineering and Medicine.
Today in the US market, the legacy channel pushes all hearing impaired
through the same inefficient, costly channel. However, a very large portion of the hearing-impaired market – mostly notably
those with mild to moderate losses – could be properly served with the proper combination of high quality, outcome-based
devices, advanced fitting software and consumer services/care best practices – all at much lower cost. We believe fundamental
change is needed and are excited about the opportunity to deliver affordable, quality outcomes-based hearing healthcare, by combining
state-of-the-art devices and software technology, along with best practices customer service and at a much lower cost directly
to consumers across the country, many of whom have not been able to afford care previously.
In early January 2016, the U.S. Food and Drug Administration (FDA) weighed
in on low hearing aid penetration rates with an announcement that highlighted statistics from the National Institute on Deafness
and Other Communication Disorders. They found that 37.5 million U.S. adults aged 18 and older report some form of hearing loss.
However, only 30 percent of adults over 70, and 16 percent of those aged 20 to 69, who could benefit from wearing hearing aids,
have ever used them. Based on these statistics, the FDA reopened the public comment period on draft guidance related to the agency’s
premarket requirements for hearing aids and personal sound amplifiers (PSAPs). In April 2016, the FDA hosted a public workshop
to, among other things, gather stakeholder and public input on draft guidance related to the agency’s premarket requirements
for hearing aids and PSAPs. The FDA’s intent is to consider ways in which it can most effectively regulate hearing aids to
promote accessibility and affordability while encouraging innovation. In December 2016, the FDA announced important steps to better
support consumer access to hearing aids. The agency issued a guidance document explaining that it does not intend to enforce the
requirement that individuals age 18 and older receive a medical evaluation or sign a waiver prior to purchasing most hearing aids,
effective immediately. It also announced its commitment to consider creating a category of over-the-counter (OTC) hearing aids.
Furthermore, there have been significant public policy developments
during 2017. On August 18, 2017, President Donald Trump signed into law H.R. 2430, the FDA Reauthorization Act of 2017, which includes
a section concerning the regulation of OTC hearing aids. The law is designed to enable adults with mild to moderate hearing loss
to access OTC hearing aids without being seen by a hearing care professional. The law requires the FDA to create and regulate a
category of OTC hearing aids to ensure they meet the same high standards for safety, consumer labeling, and manufacturing protection
that all other medical devices must meet. Additionally, the law mandates that the FDA establish an OTC hearing aid category for
adults with “perceived” mild to moderate hearing loss within three years of passage of the legislation. The FDA also
must finalize a rule within 180 days after the close of the comment period, detailing what level of safety, labeling and consumer
protections will be included. We believe this law has the potential to remove the significant barriers existing today that prevent
innovative hearing health solutions. We believe that this law will invigorate competition, spur innovation and facilitate the development
of an ecosystem of hearing health care that provides affordable and accessible solutions to millions of unserved or underserved
Americans. Today, IntriCon serves both the value-based hearing healthcare channel and the legacy hearing health channel.
Value-Based
Hearing Healthcare
The Company believes the value-based hearing healthcare (VBHH) market
offers significant growth opportunities. In contrast to the legacy channel dynamics, the VBHH market channel is flexible and able
to serve the end consumer through a variety of modalities which may include remoting fittings, customer support call centers, bricks
and mortar, etc. The average price of a hearing aid sold through this channel is less than twenty-five percent of the average $2,400
device cost typically sold through the legacy channel. The Company recently commissioned an ethnographic research study, which
identified a $3+ billion annual value-based hearing healthcare market opportunity. In addition, this study assisted us in identifying
our customer, various customer segmentations and personas. To best approach this market opportunity, we have focused our efforts
to serve both the value-based Direct-to-End-Consumer (DTEC) and value-based Indirect-to-End-Consumer (ITEC)
channels. Over the
past decade we have invested in the manufacturing footprint, product technology and fitting software to provide individuals access
to affordable, quality outcomes-based hearing healthcare.
Our DTEC represents a channel that sells products and services directly
to the end consumer, which today consists of our Hearing Help Express (HHE) business. In December of 2017, we purchased the remaining
80% of HHE, a direct-to-consumer mail order hearing aid provider. However, the Company has been preparing to address this market
long before the acquisition of HHE and in fact has spent the last decade, investing in the technology and low-cost manufacturing
to design and build superior devices and fitting solutions. With this acquisition, we believe we now have the channel infrastructure
to directly reach consumers and—importantly for millions—the ability to offer high-quality hearing healthcare at a
fraction of the cost. The Company’s devices and technologies coupled with HHE’s high-touch care, outcomes based, and
hassle free telemedicine model has created a complete eco-system of hearing healthcare in which the Company intends to serve the
$3+ billion market. Through our other VBHH initiatives and tests, we have formed alliances with other key partners, which have
given us experience and vital insight as we move aggressively into a more consumer-facing role. HHE provides an efficient, direct-to-consumer
channel to reach consumers who likely do not have insurance that will cover hearing devices. This is a channel that we can build
on and expand via technology—and one that is complementary with many of our existing relationships.
The Company is also focused on serving its value-based ITEC customers,
those companies selling products and services directly to the end consumer. We have established ourselves as a leader in supplying
this portion of the market with advanced, outcome-based products and accessories. The Company has formed strong relationships with
various customers in the channel, including insurance providers, and geriatric product retailers and other DTC hearing aid providers.
Legacy
Hearing Health Channel
We also believe there are niches in the legacy hearing health channel
that will embrace our outcomes-based products and technologies in the United States and Europe. High costs of legacy devices and
retail consolidation have constrained the growth potential of the independent audiologist and dispenser. We believe our software
and product offering can provide independent audiologists and dispensers the ability to compete with larger retailers, such as
Costco, and manufacturer owned retail distributors.
Medical
Bio-Telemetry
In the medical bio-telemetry market, the Company is focused on sales
of bio-telemetry devices for life-critical diagnostic monitoring. The Company manufactures microelectronics, micro-mechanical assemblies,
high-precision injection-molded plastic components and complete bio-telemetry devices for emerging and leading medical device manufacturers.
The medical industry is faced with pressures to reduce the cost of healthcare. Driven by its core technologies, IntriCon helps
shift the point of care from expensive traditional settings, such as hospitals, to less expensive non-traditional settings like
the home. IntriCon currently serves this market by offering medical manufacturers the capabilities to design, develop, manufacture
and distribute medical devices that are easier to use, are more miniature, use less power, and are lighter. Increasingly, the medical
industry is looking for wireless, low-power capabilities in their devices.
IntriCon currently has a presence in the diabetes and cardiac-catheter
positioning markets. For diabetes, IntriCon works with Medtronic to manufacture their wireless continuous glucose monitors (CGM),
sensors assemblies, and accessories associated with Medtronic’s insulin pump and CGM system. In August 2016, the FDA approved
the MiniMed 630G system which is intended to replace Medtronic’s MiniMed 530G system. In September 2016, the FDA approved
the next generation MiniMed 670G insulin pump system, which IntriCon components are also designed into. The MiniMed 670G is the
world’s first hybrid closed loop insulin delivery system. In June 2017, the 670G was launched in the U.S. Medtronic began
fulfilling orders from patients enrolled in their Priority Access Program. In parallel, Medtronic began taking new orders from
interested customers who want to be next in line to receive the system after the Priority Access orders are filled. In March 2018,
the FDA approved the Guardian Connect, Medtronic’s standalone CGM system that allows patients to stay ahead of high and low
glucose events. Looking ahead, we believe there are opportunities to expand our diabetes product offering with Medtronic, as well
as move into new markets outside of the diabetes market.
IntriCon has a suite of medical coils and micro coils that it offers
to various original equipment manufacturing (OEM) customers. These products are currently used in pacemaker programming and interventional
catheter positioning applications.
IntriCon manufactures bubble sensors and flow restrictors that monitor
and control the flow of fluid in an intravenous
infusion system as well as a family of safety needle products for an OEM customer
that utilizes IntriCon’s insert and straight molding capabilities. These products are assembled using full automation, including
built-in quality checks within the production lines.
Professional
Audio Communications
IntriCon entered the high-quality audio communication device market
in 2001, and now has a line of miniature, professional audio headset products used by customers focusing on emergency response
needs. The line includes several communication devices that are extremely portable and perform well in noisy or hazardous environments.
These products are well suited for applications in the fire, law enforcement, safety, aviation and military markets. In addition,
the Company has a line of miniature ear- and head-worn devices used by performers and support staff in the music and stage performance
markets. We believe performance in difficult listening environments and wireless operations will continue to improve as these products
increasingly include our proprietary nanoDSP, wireless nanoLink and PhysioLink technologies.
Core Technologies Overview
Our core technologies expertise is focused on three main markets: medical
bio-telemetry, value based hearing healthcare and professional audio communications. Over the past several years, the Company has
increased investments in the continued development of five critical core technologies: Ultra-Low-Power (ULP) Digital Signal Processing
(DSP), ULP Wireless, Fitting Software, Microminiaturization, and Miniature Transducers. These five core technologies serve as the
foundation of current and future product platform development, designed to meet the rising demand for smaller, portable, more advanced
devices and the need for greater efficiencies in the delivery models. The continued advancements in this area have allowed the
Company to further enhance the mobility and effectiveness of miniature body-worn devices.
ULP
DSP
DSP converts real-world analog signals into a digital format. Through
our nanoDSP™ technology, IntriCon offers an extensive range of ULP DSP amplifiers for hearing, medical and professional audio
applications. Our proprietary nanoDSP incorporates advanced ultra-miniature hardware with sophisticated signal processing algorithms
to produce devices that are smaller and more effective. The Company further expanded its DSP portfolio including improvements to
its Reliant CLEAR™ feedback canceller, offering increased added stable gain and faster reaction time. Additionally, the DSP
technologies are utilized in the Audion8™, our eight-channel hearing aid amplifier, and the Audion16™, our wide dynamic
range compression sixteen-channel hearing aid amplifier. The amplifiers are feature-rich and are designed to fit a wide array of
applications. In addition to multiple compression channels, the amplifiers have a complete set of proven adaptive features which
greatly improve the user experience.
ULP
Wireless
Wireless connectivity is fast becoming a required technology, and wireless
capabilities are especially critical in new body-worn devices. IntriCon’s BodyNet™ ULP technology, including the nanoLink™
and PhysioLink™ wireless systems, offers solutions for transmitting the body’s activities to caregivers and wireless
audio links for professional communications and surveillance products, including diabetes monitoring and audio streaming for hearing
devices.
IntriCon is in the final stages of commercializing its Physiolink3 wireless
technology, which will be incorporated into product platforms serving the medical, hearing health and professional audio communication
markets. This system is based on 2.4GHz proprietary digital radio protocol in the industrial-scientific-medical (ISM) frequency
band and enables audio and data streaming and command and control to ear-worn and body-worn applications over distances of up to
ten meters. The Physiolink3 technology can be used to increase productivity in the emerging VBHH channels through in office wireless
programming, remote cloud based fitting and consumer directed self-fitting of hearing aids. This will provide both greater access
and lower costs for patients. In addition, remote control functions will improve the patient experience while using the device
especially for those with diminished dexterity. The Physiolink3 technology builds on the Physiolink2 capabilities by adding wireless
streaming at, what we believe, are much lower power levels than any technology currently on the market. This will allow for accessories
to enhance the user experience in noisy environments by allowing audio streaming directly to the hearing aid.
Fitting
Software
The ability to efficiently and effectively fit hearing aids is critical
to building a value based eco-system of hearing healthcare. By developing more advanced fitting software systems, individuals can
benefit from fittings that conform to their specific loss, while eliminating the need for an in-person appointment. In addition
to the traditional fitting software, IntriFit, used in the conventional channel, IntriCon has made significant investments in various
advanced fitting software solutions that can enable remote and self-fitting solutions. IntriCon believes these advanced fitting
solutions, along with the other components of the eco-system, will drive access, affordability and superior customer satisfaction
to the millions of individuals that cannot receive care today, primarily due to high cost and low access. IntriCon expects to introduce
our advanced fitting solutions through our various VBHH channels later in 2018.
Microminiaturization
We began honing our microminiaturization skills over 30 years ago, supplying
components to the hearing health industry. Our core miniaturization technology allows us to make devices for our markets that are
one cubic inch and smaller. We also are specialists in devices that run on very low power, as evidenced by our ULP wireless and
DSP. Less power means a smaller battery, which enables us to reduce size even further, and develop devices that fit into the palm
of one’s hand.
Miniature
Transducers
Included in our transducer line are our miniature medical coils and
micro coils used in pacemaker programming and interventional catheter positioning applications. We believe that with the increase
of greater interventional care, our coil technology harbors significant value.
Principal Executive Offices
The Company’s headquarters are located at 1260 Red Fox Road, Arden
Hills, MN 55112, and its telephone number is (651) 636-9770.
The Offering
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Common stock offered
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1,500,000 shares.
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Option to purchase additional shares
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We have granted the underwriters an option to purchase up to an additional 225,000 shares of our common stock. This option is exercisable, in whole or in part, for a period of 30 days from the date of this prospectus supplement.
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Common stock to be outstanding
after this offering and our repurchase of 500,000 shares of our common stock
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8,189,580 shares (or 8,414,580 shares if the underwriters exercise in
full their option to purchase additional shares).
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Proceeds of offering
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We estimate that the net proceeds from this offering,
after deducting underwriting discounts and commissions and estimated offering expenses, will be approximately $77.3
million (or approximately $88.9 million if the underwriters exercise in full their option to purchase additional shares).
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Use of proceeds
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We intend to use the net proceeds from this offering to repay outstanding term loan borrowings under our senior credit facility, to repay outstanding borrowings under our capital expenditure loan facility; to repay outstanding revolving loan borrowings under our senior credit facility, to fund purchases of capital equipment in connection with the expansion of our manufacturing facilities, to repurchase 500,000 shares of our common stock from our directors and officers, and for working capital and other general corporate purposes. See “Use of Proceeds” on page S-10 of this prospectus supplement.
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Risk factors
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Investing in our common stock involves a high degree of risk. See “Risk Factors” on page S-7 of this prospectus supplement, and the risks discussed under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.
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Nasdaq
Global Market symbol
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“IIN”
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The number of shares of our common stock to be outstanding immediately
after the offering is based on 7,189,580 shares of our common stock outstanding as of July 31, 2018, and excludes:
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1,101,586 shares issuable upon the exercise of stock
options outstanding as of July 31, 2018, at a weighted average exercise price of $6.05 per share;
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97,723 shares issuable upon the vesting of restricted
stock units outstanding as of July 31, 2018;
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229,931 shares of our common stock reserved for future
grants of stock options, stock awards, stock appreciation rights, restricted stock units and other equity-based awards under our
2015 Equity Incentive Plan as of July 31, 2018; and
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94,697 shares of our common stock reserved for purchase
under our Employee Stock Purchase Plan, as amended as of July 31, 2018.
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Except as otherwise indicated, all information in this prospectus supplement
assumes no exercise by the underwriters of their option to purchase up to an additional 225,000 shares of our common stock.
RISK FACTORS
An investment in our common stock is subject to a number of risks
and uncertainties. Before you make a decision to invest in our securities, you should consider carefully the risks described below
and discussed under the section captioned “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2017, and in any subsequently filed Quarterly Report on Form 10-Q, which are incorporated by reference
in this prospectus supplement and the accompanying base prospectus in their entirety, together with other information in this prospectus
supplement, the accompanying base prospectus, and the information and documents incorporated by reference. The risks and uncertainties
described below, and those incorporated by reference into this prospectus supplement and the accompanying base prospectus, are
not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial
may also impair our business operations. If any of these risks actually occur, our business, financial condition, results of operations
and prospects could be materially affected. In that case, the value of our common stock could decline substantially.
Risk Factors Relating to the Offering and Our Common Stock
The market price of our common stock has been and is likely to continue
to be volatile and there has been relatively limited trading volume in our stock, which may make it difficult for shareholders
to resell common stock when they want to and at prices they find attractive.
The market price of our common stock has been and is likely to be highly
volatile, and there has been relatively limited trading volume in our common stock. Our stock price has increased significantly
during the past 12 months and in the future may not continue to increase at the same rate or may decline. The common stock market
price could be subject to wide fluctuations in response to a variety of factors, including the following:
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announcements of fluctuations in our or our competitors’ operating results;
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required changes in our reported revenue and revenue recognition accounting policy under Accounting Standards Update (ASU)
No. 2014-09, Revenue from Contracts with Customers (Topic 606);
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the timing and announcement of sales or acquisitions of assets by us or our competitors;
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changes in estimates or recommendations by securities analysts;
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adverse or unfavorable publicity about our products, technologies or us;
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the commencement of material litigation, or an unfavorable verdict, against us;
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terrorist attacks, war and threats of attacks and war;
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additions or departures of key personnel; and
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sales of common stock by us or our shareholders.
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Our offering price may not be indicative of the price of our stock that
will prevail in the trading market following the offering. In addition, the stock market in recent years has experienced significant
price and volume fluctuations. Such volatility has affected many companies irrespective of, or disproportionately to, the operating
performance of these companies. These broad fluctuations and limited trading volume may materially adversely affect the market
price of our common stock, and your ability to sell our common stock.
Most of our outstanding shares are available for resale in the public
market without restriction. All of the shares sold in this offering, other than shares purchased by our affiliates, will also be
available for resale in the public market without restriction. The sale of a large number of these shares could adversely affect
the share price and could impair our ability to raise capital through the sale of equity securities or make acquisitions for common
stock.
“Anti-takeover” provisions may make it more difficult
for a third party to acquire control of us, even if the change in control would be beneficial to shareholders.
We are a Pennsylvania corporation. Anti-takeover provisions in Pennsylvania
law and our charter and bylaws could make it more difficult for a third party to acquire control of us. These provisions could
adversely affect the market price of the common stock and could reduce the amount that shareholders might receive if we are sold.
For example, our charter provides that the board of directors may issue preferred stock without shareholder approval. In addition,
our bylaws provide for a classified board, with each board member serving a staggered three-year term. Directors may be removed
only for cause and only upon the affirmative vote of the holders of at least two-thirds of all of the shares of common stock outstanding
and entitled to vote.
Our management team may invest or spend the proceeds of this offering
in ways with which you may not agree or in ways which may not yield a significant return.
Our management will have broad discretion over the use of proceeds
from this offering. We intend to use the net proceeds from this offering to repay outstanding term loan borrowings under our senior
credit facility, to repay outstanding borrowings under our capital expenditure loan facility; to repay outstanding revolving loan
borrowings under our senior credit facility, to fund purchases of capital equipment in connection with the expansion of our manufacturing
facilities, to repurchase shares of our common stock from our directors and officers, and for working capital and other general
corporate purposes. Our management will have considerable discretion in the application of the net proceeds, and you will not have
the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The net proceeds
may be used for corporate purposes that do not increase our operating results or enhance the value of our common stock.
Investors in this offering will experience immediate and substantial
dilution and may experience further dilution in the future.
The public offering price of the common stock offered pursuant to this
prospectus supplement is substantially higher than the net tangible book value per share of our common stock. Therefore, if you
purchase shares of common stock in this offering, you will incur immediate and substantial dilution in the pro forma net tangible
book value per share of common stock from the price per share that you pay for the common stock. Furthermore, we expect that we
will seek to raise additional capital from time to time in the future. Such financings may involve the issuance of equity and/or
securities convertible into or exercisable or exchangeable for our equity securities. We also expect to continue to utilize equity-based
compensation. To the extent options are exercised, restricted stock units vest or we issue common stock, preferred stock, or securities
such as warrants that are convertible into, exercisable or exchangeable for, our common stock or preferred stock in the future,
you may experience further dilution.
Our shareholders may experience further dilution in their percentage
ownership if we issue additional shares of common stock in the future.
Any additional future issuances of common stock by us will reduce the
percentage of our common stock owned by investors purchasing shares in this offering who do not participate in such future issuances.
In most circumstances, shareholders will not be entitled to vote on whether or not we issue additional common stock.
Because we do not expect to pay dividends on our common stock,
shareholders will benefit from an investment in our common stock only if it appreciates in value.
We currently intend to retain any future earnings to support operations
and to finance the growth and development of our business and do not intend to pay cash dividends on our common stock for the foreseeable
future. Any payment of future dividends will be at the discretion of our board of directors and will depend upon, among other things,
our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment
of dividends, and other factors that our board of directors deems relevant. Terms of our banking agreements prohibit the payment
of cash dividends without prior bank approval. As a result, the success of an investment in our common stock will depend upon any
future appreciation in its value. There is no guarantee that our common stock will appreciate in value or even maintain the price
at which shareholders have purchased their shares.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying base prospectus and the
documents we incorporate by reference in this prospectus supplement and the accompanying base prospectus contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Exchange Act, and may involve material risks, assumptions and uncertainties. Statements that are not purely
historical should be considered forward-looking statements. Often they can be identified by the use of forward-looking words and
phrases, such as “may,” “will,” “believe,” “anticipate,” “expect,”
“should,” “optimistic,” “continue,” “estimate,” “intend,” “plan,”
“would,” “could,” “guidance,” “potential,” “opportunity,” “project,”
“forecast,” “confident,” “projections,” “schedule,” “designed,” “future”
and the like. These statements may include, but are not limited to statements regarding net operating loss carryforwards, the ability
to meet cash requirements for operating needs, the ability to meet liquidity needs, assumptions used to calculate future levels
of funding of employee benefit plans, the adequacy of insurance coverage, and the impact of new accounting pronouncements and litigation.
Forward-looking statements also include, without limitation, statements as to the Company’s expected future results of operations
and growth, strategic alliances and their benefits, government regulation, potential increases in demand for the Company’s
products, the Company’s ability to meet working capital requirements, the Company’s business strategy, the expected
increases in operating efficiencies, anticipated trends in the Company’s markets, estimates of goodwill impairments and amortization
expense of other intangible assets, the effects of changes in accounting pronouncements, the effects of litigation and the amount
of insurance coverage, and statements as to trends or the Company’s or management’s beliefs, expectations and opinions.
These statements are based on our current beliefs, expectations and
assumptions and are subject to a number of risks and uncertainties. Actual results and timing of certain events could differ materially
from those projected in or contemplated by forward-looking statements due to a number of factors including, without limitation,
the risks outlined from time to time in our filings with the SEC. These risks and uncertainties should be considered in evaluating
any forward-looking statement contained in this prospectus supplement, the accompanying base prospectus or incorporated by reference
in this prospectus supplement and the accompanying base prospectus. We undertake no obligation to update or publicly release any
revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this prospectus
supplement. In addition, our past results are not necessarily indicative of our future results.
USE OF PROCEEDS
We
estimate that our net proceeds from the sale of shares of common stock in this offering, after deducting underwriting discounts and commissions and estimated offering expenses, will be
approximately $77.3 million, or approximately $88.9 million if the underwriters exercise in full their option
to purchase additional shares of common stock.
We
intend to use the net proceeds from this offering to repay outstanding term loan borrowings under our senior credit facility;
to repay outstanding borrowings under our capital expenditure loan facility; to repay outstanding revolving loan borrowings under
our senior credit facility; to fund purchases of capital equipment in connection with the expansion of our manufacturing facilities;
to repurchase 500,000 shares of our common stock from our directors and officers; and for working capital and other general corporate
purposes. As of July 31, 2018, we had outstanding balances of approximately $5.75 million under our term loan, approximately $1.0
million under our capital expenditure loan facility, and approximately $5.9 million under our revolving credit facility. Amounts
we pay down under our capital expenditure loan facility and our revolving credit facility may be reborrowed in the future.
We
have entered into an equity purchase agreement with the following directors and officers of our company: Mark S. Gorder (President,
Chief Executive Officer and director), Michael J. McKenna (director), Nicholas A. Giordano (director), Robert N. Masucci (director),
Michael P. Geraci (Vice President of Sales and Marketing), Dennis L. Gonsior (Vice President of Global Operations), Greg Gruenhagen
(Vice President of Quality and Regulatory Affairs), Scott Longval (Chief Financial Officer) and Delain Wright (Vice President
of Business Development). Pursuant to the equity purchase agreement, we will repurchase an aggregate of 500,000 shares
of our common stock from such directors and officers at a price equal to the net proceeds per share that we will receive from
this offering, before expenses. The closing of the share repurchase will be contingent on the closing of, and is expected to occur
following the closing of this offering. The shares that we repurchase will be retired and returned to the status of authorized,
but unissued shares.
Our
credit facility has a maturity date of December 15, 2022. The weighted average interest rate on our revolving credit facility
and term loan were 5.25% and 4.92% for the six months ended June 30, 2018. During fiscal 2018, our capital expenditure loan facility
bears interest based on applicable bank margins plus the higher of (a) the Prime Rate, and (b) the Federal Funds Rate plus 0.5%
per annum. A more complete description of our credit facility is set forth under the heading “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” and in the notes to our consolidated financial statements
in each of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and our Quarterly Report on Form 10-Q for
the quarter ended June 30, 2018, each of which is incorporated by reference in this prospectus supplement.
The
amounts and timing of our actual expenditures will depend on numerous factors, including, capital equipment terms and conditions,
demand from our customers, and securing new business opportunities, as well as the amount of cash used in our operations. We therefore
cannot estimate with certainty the amount of net proceeds to be used for each of the purposes described above. We may find it
necessary or advisable to use the net proceeds for other purposes, and we will have broad discretion in the application of the
net proceeds. Pending the uses described above, we plan to invest the net proceeds from this offering in short- and intermediate-term,
interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the
U.S. government.
CAPITALIZATION
The
following table sets forth our consolidated cash and total capitalization as of June 30, 2018:
|
|
●
|
on
an as adjusted basis to give effect to (a) this offering (assuming no exercise of the
underwriters’ option to purchase additional shares) at a price
per share of $55.00
and after deducting underwriting discounts and commissions and estimated offering expenses payable by
us, and (b) the application of the net proceeds from this offering.
|
The
following data is qualified in its entirety by, and should be read in conjunction with, the information provided under the caption
“Use of Proceeds” in this prospectus supplement, under the caption “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018
incorporated by reference in this prospectus supplement and our consolidated financial statements and notes thereto incorporated
by reference in this prospectus supplement and the accompanying base prospectus.
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2018
|
|
|
|
|
Actual
|
|
|
As
Adjusted
(1)
|
|
|
|
|
(dollars in thousands)
(unaudited)
|
|
|
Cash
|
|
$
|
539
|
|
|
$
|
39,795
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
(2)
|
|
$
|
2,072
|
|
|
$
|
1,072
|
|
|
Long-term debt, less current maturities
(2)
|
|
$
|
11,205
|
|
|
$
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Common stock, $1.00 par value: 20,000,000 shares authorized; 7,037,305 shares issued and outstanding, actual; 8,037,305 shares issued and outstanding, as adjusted
|
|
|
7,037
|
|
|
|
8,037
|
|
|
Additional paid-in capital
|
|
|
22,489
|
|
|
|
72,889
|
|
|
Accumulated deficit
|
|
|
(3,281
|
)
|
|
|
(3,281
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(899
|
)
|
|
|
(899
|
)
|
|
Total shareholders’ equity
|
|
|
25,346
|
|
|
|
76,746
|
|
|
Non-controlling interest
|
|
|
(279
|
)
|
|
|
(279
|
)
|
|
Total equity
|
|
|
25,067
|
|
|
|
76,467
|
|
|
Total capitalization
|
|
|
38,344
|
|
|
|
77,600
|
|
|
|
(1)
|
The
“As adjusted” column reflects (i) the repayment of $5.75 million of borrowings
under our term loan and $6.4 million of borrowings under our revolving credit facility
(there were no borrowings outstanding under our capital expenditure loan facility
as of June 30, 2018) and (ii) the repurchase and cancellation of 500,000 shares of our
common stock from our directors and officers at a price equal to the net proceeds per
share received by IntriCon in the offering, before expenses. Pending the use of the net
proceeds from this offering for funding of capital expenditures or for working capital
and general corporate purposes, we may temporarily invest in short- and intermediate-term,
interest-bearing obligations, investment-grade instruments, certificates of deposit or
direct or guaranteed obligations of the U.S. government. See “Use of Proceeds”
Our receipt of the balance of the net proceeds from this offering has been applied to
increase the amount of cash reflected in the “As Adjusted” column of the
table above and does not reflect any potential temporary investment of such proceeds.
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|
|
(2)
|
As
of July 31, 2018, we had outstanding balances of approximately $5.75 million under our
term loan, approximately $1.0 million under our capital expenditure loan facility, and
approximately $5.9 million under our revolving credit facility.
|
The
capitalization table above is based on the number of shares outstanding as of June 30, 2018, does not give effect to any
exercise
of the underwriters’ option to purchase additional shares, and excludes:
|
|
●
|
1,248,961
shares issuable upon the exercise of stock options outstanding as of June 30, 2018, at a weighted average exercise price of $5.96
per share;
|
|
|
●
|
97,723
shares issuable upon the vesting of restricted stock units outstanding as of June 30, 2018;
|
|
|
●
|
214,565
shares of our common stock reserved for future grants of stock options, stock awards, stock appreciation rights, restricted stock
units and other equity-based awards under our 2015 Equity Incentive Plan as of June 30, 2018; and
|
|
|
●
|
94,697
shares of our common stock reserved for purchase under our Employee Stock Purchase Plan, as amended as of June 30, 2018.
|
UNDERWRITING
Subject
to the terms and conditions set forth in an underwriting agreement between us and Stifel, Nicolaus & Company, Incorporated,
as representative of the several underwriters, each of the underwriters named below has severally agreed to purchase from us the
aggregate number of shares set forth opposite its name below:
|
Underwriters
|
|
Number of Shares
|
|
Stifel,
Nicolaus & Company, Incorporated
|
|
1,275,000
|
|
|
|
|
|
B. Riley FBR, Inc.
|
|
150,000
|
|
|
|
|
|
Dougherty & Company
|
|
75,000
|
|
|
|
|
|
Total
|
|
1,500,000
|
The
underwriting agreement provides that the obligations of the several underwriters are subject to various conditions, including
approval of legal matters by counsel. The nature of the underwriters’ obligations commits the underwriters to purchase and
pay for all of the shares listed above if any are purchased.
The
underwriters expect to deliver the shares to purchasers on or about August
20, 2018.
Option
to Purchase Additional Shares
We
have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus supplement, to purchase,
from time to time, in whole or in part, up to an aggregate of 225,000 shares of our common stock from us, at the public
offering price, less the underwriting discounts and commissions payable by us, as set forth on the cover page of this
prospectus supplement. If the underwriters exercise this option in whole or in part, then each of the underwriters will be
separately committed, subject to the conditions described in the underwriting agreement, to purchase the additional shares of
our common stock in proportion to their respective commitments set forth in the table above.
Commissions
and Discounts
The
underwriters propose to offer the shares directly to the public at the public offering price set forth on the cover page of
this prospectus supplement, and at this price less a concession not in excess of $1.98 per share of common stock to other
dealers. After this offering, the offering price and other selling terms may be changed by the representative. Our shares are
offered subject to receipt and acceptance by the underwriters and to other conditions, including the right to reject orders
in whole or in part.
The
following table summarizes the compensation to be paid to the underwriters by us and the proceeds, before expenses, payable to
us:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per
Share
|
|
|
Total
|
|
|
|
|
No Exercise
|
|
|
Full Exercise
|
|
|
No Exercise
|
|
|
Full Exercise
|
|
|
Public offering price
|
|
$55.00
|
|
|
|
$55.00
|
|
|
|
$82,500,000
|
|
|
|
$94,875,000
|
|
|
|
Underwriting discounts and commissions
|
|
$ 3.30
|
|
|
|
$ 3.30
|
|
|
|
$ 4,950,000
|
|
|
|
$ 5,692,500
|
|
|
|
Proceeds, before expenses, to us
|
|
$51.70
|
|
|
|
$51.70
|
|
|
|
$77,550,000
|
|
|
|
$89,182,500
|
|
|
The
expenses of the offering, not including the underwriting discounts and commissions, payable by us are estimated to be $300,000,
which includes up to $75,000 that we have agreed to reimburse the underwriters for certain of their out-of-pocket expenses.
Indemnification
of Underwriters
We
will indemnify the underwriters against some civil liabilities, including liabilities under the Securities Act. If we are unable
to provide this indemnification, we will contribute to payments the underwriters may be required to make in respect of those liabilities.
No
Sales of Similar Securities
Pursuant
to certain “lock-up” agreements, we and our executive officers and directors, including our executive officers
and directors who are a party to the equity purchase agreement described elsewhere in this prospectus supplement, have
agreed, subject to certain exceptions, not to offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose
of or announce the intention to otherwise dispose of, any common stock or securities convertible into or exchangeable or
exercisable for any common stock without the prior written consent of the representative of the underwriters, for a period of
90 days after the date of this prospectus supplement. In addition, we agreed to not file with the SEC a registration
statement under the Securities Act relating to, any common stock or securities convertible into or exchangeable or
exercisable for any common stock without the prior written consent of the representative of the underwriters, for such 90 day
period.
The
exceptions to the lock-up for executive officers and directors subject to the lock-up include: (a) transfers made as a bona fide
gift; (b) transfers of common stock or any security convertible into or exercisable for common stock to an immediate family member,
an immediate family member of a domestic partner or a trust for the benefit of the executive officer or director, a domestic partner
or an immediate family member or to any corporation, partnership, limited liability company or other entity all of the beneficial
ownership interests of which are held exclusively by the executive officer or director, a domestic partner and/or one or more
family members of the executive officer or director or the domestic partner of the executive officer or director in a transaction
not involving a disposition for value; (c) transfers made by will or intestate succession; (d) securities transferred to one or
more affiliates of the person or entity subject to the lock-up and distributions of securities to partners, members or shareholders
of an entity subject to the lock-up in a transaction not involving a disposition for value; (e) transfers made pursuant to the
equity purchase agreement described in this prospectus supplement; (f) the exercise of any option, warrant or other right to acquire
shares of common stock, the settlement of any stock-settled stock appreciation rights, restricted stock or restricted stock units,
or the conversion of any convertible security into securities of the Company, provided, however, that in any such case the securities
issued upon exercise shall remain subject to the lock-up; and (g) the surrender or forfeiture of shares of common stock to the
Company in a transaction exempt from Section 16(b) of the Exchange Act to satisfy tax withholding obligations upon exercise or
vesting of stock options or equity awards or in connection with the “net” or cashless exercise of stock options. In
addition one of our directors, may sell up to an aggregate of 10,000 shares of common stock pursuant to a trading plan established
pursuant to Rule 10b5-1 under the Exchange Act on or after the date of this prospectus supplement.
Additionally,
in our case, exceptions to the lock -up restrictions include: (a) shares sold in this offering; (b) shares or other securities
issued pursuant to any director or employee stock option or incentive plan, employee stock purchase plan, stock ownership plan
or dividend reinvestment plan of the Company in effect at the date of this prospectus supplement; (c) shares of common stock issued
upon the conversion of outstanding securities; (d) subject to certain limitations, shares or other securities issued in connection
with any acquisition or strategic agreement, provided that the aggregate number of shares issued does not exceed 10% of the number
of shares of common stock outstanding after giving effect to this offering and our repurchase of 500,000 shares of common stock;
(e) subject to certain limitations, filing of a registration statement on Form S-8 relating to the registration of shares issuable
pursuant to a new equity incentive plan and the issuance of shares or other securities pursuant to such new plan.
Stifel,
Nicolaus & Company, Incorporated, in its sole discretion, may release the common stock and other securities subject to the
lock-up agreements described above in whole or in part at any time with or without notice. When determining whether or not to
release common stock and other securities from lock-up agreements, Stifel, Nicolaus & Company, Incorporated will consider,
among other factors, the holder’s reasons for requesting the release, the number of shares of common stock and other securities
for which the release is being requested and market conditions at the time.
Short
Sales, Stabilizing Transactions and Penalty Bids
In
order to facilitate this offering, persons participating in this offering may engage in transactions that stabilize, maintain
or otherwise affect the price of our common stock during and after this offering. Specifically, the underwriters may engage in
the following activities in accordance with the rules of the SEC.
Short
sales
. Short sales involve the sales by the underwriters of a greater number of shares than they are required to purchase
in the offering. Covered short sales are short sales made in an amount not greater than the underwriters’ option to purchase
additional shares from us in this offering. The underwriters may close out any covered short position by either exercising their
option to purchase additional shares or by purchasing shares in the open market. In determining the source of shares to close
out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase
in the open market as compared to the price at which they may purchase shares through the option to purchase additional shares.
Naked short sales are any short sales in excess of such option to purchase additional shares. The underwriters must close out
any naked short position by purchasing shares in the open market. A naked short position is more
likely to be created if the underwriters
are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could
adversely affect investors who purchase in this offering.
Stabilizing
transactions
. The underwriters may make bids for or purchases of the shares for the purpose of pegging, fixing, or maintaining
the price of the shares, so long as stabilizing bids do not exceed a specified maximum.
Penalty
bids
. If the underwriters purchase shares in the open market in a stabilizing transaction or syndicate covering transaction,
they may reclaim a selling concession from the underwriters and selling group members who sold those shares as part of this offering.
Stabilization and syndicate covering transactions may cause the price of the shares to be higher than it would be in the absence
of these transactions. The imposition of a penalty bid might also have an effect on the price of the shares if it discourages
presales of the shares.
The
transactions above may occur on the
Nasdaq
Global Market or otherwise. Neither
we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have
on the price of the shares. If these transactions are commenced, they may be discontinued without notice at any time.
Passive
Market-Making
In
connection with the offering, the underwriters may engage in passive market-making transactions in the common stock on the
Nasdaq
Global Market in accordance with Rule 103 of Regulation M under the Exchange Act during the period before the commencement
of offers or sales of common stock and extending through the completion and distribution. A passive market-maker must display
its bids at a price not in excess of the highest independent bid of the security. However, if all independent bids are lowered
below the passive market-maker’s bid, that bid must be lowered when specified purchase limits are exceeded.
Miscellaneous
Our
common stock is traded on the
Nasdaq
Global Market under the symbol “IIN.”
The
underwriters have in the past, or may in the future, provide various investment banking and other financial services for us for
which services they have received or may in the future receive, customary fees.
The
transfer agent and registrar for our common stock is Broadridge Corporate Issuer Solutions, Inc.
European
Economic Area
In
relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member
state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state
(the relevant implementation date), an offer of securities described in this prospectus may not be made to the public in that
relevant member state other than:
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|
●
|
to
any legal entity that is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities;
|
|
|
|
|
|
|
●
|
to
any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total
balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last
annual or consolidated accounts;
|
|
|
|
|
|
|
●
|
to
fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining
the prior consent of the representative; or
|
|
|
|
|
|
|
●
|
in
any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive,
|
provided
that no such offer of securities shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus
Directive. For purposes of this provision, the expression an “offer of securities to the public” in any relevant member
state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities
to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in
that member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus
Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.
We
have not authorized and do not authorize the making of any offer of securities through any financial intermediary on their behalf,
other than offers made by the underwriters with a view to the final placement of the securities as contemplated in this prospectus
supplement and the accompanying prospectus. Accordingly, no purchaser of the securities, other than the underwriters, is authorized
to make any further offer of the securities on behalf of us or the underwriters.
United
Kingdom
This
prospectus supplement and the accompanying prospectus are only being distributed to, and are only directed at, persons in the
United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Qualified Investors)
that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the Order) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated,
falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). This prospectus
supplement and the accompanying prospectus and their contents are confidential and should not be distributed, published or reproduced
(in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom
who is not a relevant person should not act or rely on this document or any of its contents.
Canada
This
prospectus supplement constitutes an “exempt offering document” as defined in and for the purposes of applicable Canadian
securities laws. No prospectus has been filed with any securities commission or similar regulatory authority in Canada in connection
with the offer and sale of the common stock. No securities commission or similar regulatory authority in Canada has reviewed or
in any way passed upon this prospectus supplement or on the merits of the common stock and any representation to the contrary
is an offence.
Canadian
investors are advised that this prospectus supplement has been prepared in reliance on section 3A.3 of National Instrument 33-105
Underwriting Conflicts
(“NI 33-105”). Pursuant to section 3A.3 of NI 33-105, this prospectus supplement is
exempt from the requirement that the Company and the underwriter(s) provide Canadian investors with certain conflicts of interest
disclosure pertaining to “connected issuer” and/or “related issuer” relationships that may exist between
the Company and the underwriter(s) as would otherwise be required pursuant to subsection 2.1(1) of NI 33-105.
Resale
Restrictions
The
offer and sale of the common stock in Canada is being made on a private placement basis only and is exempt from the requirement
that the Company prepares and files a prospectus under applicable Canadian securities laws. Any resale of the common stock acquired
by a Canadian investor in this offering must be made in accordance with applicable Canadian securities laws, which may vary depending
on the relevant jurisdiction, and which may require resales to be made in accordance with Canadian prospectus requirements, pursuant
to a statutory exemption from the prospectus requirements, in a transaction exempt from the prospectus requirements or otherwise
under a discretionary exemption from the prospectus requirements granted by the applicable local Canadian securities regulatory
authority. These resale restrictions may under certain circumstances apply to resales of the common stock outside of Canada.
Representations
of Purchasers
Each
Canadian investor who purchases the common stock will be deemed to have represented to the Company and the underwriter(s) that
the investor (i) is purchasing the common stock as principal, or is deemed to be purchasing as principal in accordance with applicable
Canadian securities laws, for investment only and not with a view to resale or redistribution; (ii) is an “accredited investor”
as such term is defined in section 1.1 of National Instrument 45-106
Prospectus Exemptions
or, in Ontario, as such term
is defined in section 73.3(1) of the
Securities Act
(Ontario); and (iii) is a “permitted client” as such term
is defined in section 1.1 of National Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant Obligations
.
Taxation
and Eligibility for Investment
Any
discussion of taxation and related matters contained in this prospectus supplement does not purport to be a comprehensive description
of all of the tax considerations that may be relevant to a Canadian investor when deciding to purchase the common stock and, in
particular, does not address any Canadian tax considerations. No representation or warranty is hereby made as to the tax consequences
to a resident, or deemed resident, of Canada of an investment in the
common stock or with respect to the eligibility of the common
stock for investment by such investor under relevant Canadian federal and provincial legislation and regulations.
Rights
of Action for Damages or Rescission
Securities
legislation in certain of the Canadian jurisdictions provides certain purchasers of securities pursuant to an offering memorandum
(such as this prospectus supplement), including where the distribution involves an “eligible foreign security” as
such term is defined in Ontario Securities Commission Rule 45-501
Ontario Prospectus and Registration Exemptions
and in
Multilateral Instrument 45-107
Listing Representation and Statutory Rights of Action Disclosure Exemptions
, as applicable,
with a remedy for damages or rescission, or both, in addition to any other rights they may have at law, where the offering memorandum,
or other offering document that constitutes an offering memorandum, and any amendment thereto, contains a “misrepresentation”
as defined under applicable Canadian securities laws. These remedies, or notice with respect to these remedies, must be exercised
or delivered, as the case may be, by the purchaser within the time limits prescribed under, and are subject to limitations and
defenses under, applicable Canadian securities legislation. In addition, these remedies are in addition to and without derogation
from any other right or remedy available at law to the investor.
Language
of Documents
Upon
receipt of this document, each Canadian investor hereby confirms that it has expressly requested that all documents evidencing
or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation
or any notice) be drawn up in the English language only.
Par la réception de ce document, chaque investisseur canadien
confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant
de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant,
pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.
LEGAL
MATTERS
The
validity of the issuance of the shares offered by this prospectus supplement and the accompanying base prospectus, together with
certain other legal matters, will be passed upon for us by Blank Rome LLP, Philadelphia, Pennsylvania. The underwriters are being
represented by Goodwin Procter LLP, New York, New York.
EXPERTS
The
consolidated financial statements incorporated in this prospectus supplement by reference to the Annual Report on Form 10-K for
the year ended December 31, 2017, have been audited by Baker Tilly Virchow Krause, LLP, an independent registered public accounting
firm, as set forth in their report therein. Such consolidated financial statements are incorporated by reference herein in reliance
upon such report given on the authority of said firm as experts in auditing and accounting.
Where
you can find more information
We
are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC. You
may read and copy these reports, proxy statements and other information at the SEC’s public reference room at 100 F Street,
N.E., Washington, D.C. 20549 or at the SEC’s other public reference facilities. Please call the SEC at 1-800-SEC-0330 for
more information about the operation of the public reference rooms. You can request copies of these documents by writing to the
SEC and paying a fee for the copying costs. In addition, the SEC maintains an Internet site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our SEC
filings are available on the SEC’s Internet site. We maintain a website at http://www.intricon.com. Information found on,
or accessible through, our website is not a part of, and is not incorporated into, this prospectus supplement or the accompanying
base prospectus, and you should not consider it part of this prospectus supplement or part of the accompanying base prospectus.
documents
incorporated by reference
We
are allowed to incorporate by reference information contained in documents that we file with the SEC. This means that we can disclose
important information to you by referring you to those documents and that the information in this prospectus supplement is not
complete and you should read the information incorporated by reference for more detail. Information in this prospectus supplement
supersedes information incorporated by reference that we filed with the SEC prior to the date of this prospectus supplement, while
information that we file later with the SEC will automatically update and supersede the information in this prospectus supplement.
We
incorporate by reference the documents listed below and any future filings we will make with the SEC under Section 13(a), 13(c),
14 or 15(d) of the Exchange Act from the date of this prospectus supplement but prior to the termination of the offering of the
securities covered hereby (other than, in each case, information deemed to have been furnished or not filed in accordance with
SEC rules):
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our
Annual Report on Form 10-K for the fiscal year ended December 31, 2017;
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our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018 and June 30, 2018;
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those
portions of our proxy statement for our 2018 Annual Meeting of Shareholders filed on
March 13, 2018, which were incorporated by reference into Part III of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2017;
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our
Current Reports on Form 8-K filed with the SEC on April 30, 2018, July 25, 2018 and August 14, 2018 (excluding
any information furnished under Items 2.02 or 7.01 of Form 8-K); and
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the
description of our common stock which is incorporated by reference to our Form 8-A filed
with the SEC on December 28, 2007.
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We
will provide, without charge, to each person to whom this prospectus supplement is delivered, upon the written or oral
request by such person, a copy of the documents incorporated by reference as described above (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into such documents). Please direct your oral or
written request to:
Scott
Longval, Chief Financial Officer
c/o
IntriCon Corporation
1260
Red Fox Road
Arden
Hills, MN 55112
(651)
636-9770
PROSPECTUS
$125,000,000
INTRICON
CORPORATION
Common
Stock, Preferred Stock, Depositary Shares
Warrants
to Purchase Common Stock, Preferred Stock or Depositary Shares
Subscription
Rights to Purchase Common Stock, Preferred Stock or Depositary Shares
Share
Purchase Contracts
Share
Purchase Units
Units
We
may offer from time to time securities described in this prospectus separately or together in any combination. We may offer and
sell such securities in one or more offerings with a total aggregate principal amount or initial purchase price not to exceed
$125.0 million. These securities may be convertible into or exchangeable for our other securities.
This
prospectus provides a general description of these securities. We will provide you with specific information about the offering
and terms of these securities in supplements to this prospectus. The prospectus supplement may also add to, update, supplement
or clarify information contained in this prospectus. This prospectus may not be used to offer or sell securities unless accompanied
by a prospectus supplement.
You
should carefully read this prospectus and any applicable prospectus supplement, together with any documents incorporated by reference,
before you invest in our securities.
We
may offer and sell these securities on a continuous or delayed basis, at prices and on terms to be determined at the time of any
particular offering, directly to purchasers, through agents, dealers or underwriters as designated from time to time, or through
a combination of these methods. See “Plan of Distribution.” The prospectus supplement for each offering will describe
in detail the plan of distribution for that offering and will set forth the names of underwriters, dealers or agents, if any,
involved in the offering and any applicable discounts or commissions payable to them. Net proceeds from the sale of the securities
will also be set forth in the applicable prospectus supplement.
Unless
otherwise stated in a prospectus supplement, none of these securities will be listed on any securities exchange. Our common stock
is listed on the NASDAQ Global Market under the symbol “IIN.” On July 23, 2018, the reported last sale price of our
common stock was $50.05 per share.
Investing
in our securities involves risks. See “Risk Factors” beginning on page 1 of this prospectus. You should carefully
read and consider the risk factors described in the applicable prospectus supplement and in the documents we incorporate by reference
before you invest in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is August 7, 2018
.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a “shelf” registration statement on Form S-3 that we filed with the Securities and Exchange
Commission, referred to as the “SEC,” under the Securities Act of 1933, as amended, referred to as the “Securities
Act.” Under this shelf registration statement, we are registering the securities described in this prospectus with a total
aggregate principal amount or initial purchase price not to exceed $125.0 million. We may, from time to time, offer and sell such
securities, or any combination of such securities, in one or more offerings.
This
prospectus provides you with a general description of the securities we may offer. Each time we offer or sell securities, we will
provide you with a prospectus supplement containing specific information about the terms of that offering. The prospectus supplement
may also add to, update, supplement or clarify information contained or incorporated by reference, as applicable, in this prospectus.
If there is any inconsistency between the information in this prospectus and the information in the prospectus supplement, you
should rely on the information in the prospectus supplement. This prospectus does not contain all of the information set forth
in the registration statement and the exhibits to the registration statement. For further information concerning us and the securities,
you should read the entire registration statement and the additional information described under “Documents Incorporated
by Reference” below.
Unless
the context requires otherwise or unless otherwise indicated, (i) all references to “IntriCon,” “Company,”
“we,” “our,” or “us” refer collectively to IntriCon Corporation and its consolidated subsidiaries;
and (ii) all references to “common shares” refer to shares of our common stock and all references to “preferred
stock” refer to shares of our preferred stock.
You
should rely only on the information contained or incorporated by reference, as applicable, in this prospectus, any prospectus
supplement, or other offering materials related to an offering of securities described in this prospectus. We have not authorized
anyone to provide you with different or additional information. If anyone provides you with different or additional information,
you should not rely on it.
You
should not assume that the information contained or incorporated by reference, as applicable, in this prospectus, any prospectus
supplement, or other offering materials related to an offering of securities described in this prospectus is accurate as of any
date other than the date of that document. Neither the delivery of this prospectus, any prospectus supplement or other offering
materials related to an offering of securities described in this prospectus, nor any distribution of securities pursuant to this
prospectus, any such prospectus supplement, or other offering materials shall, under any circumstances, create any implication
that there has been no change in the information set forth or incorporated by reference, as applicable, in this prospectus, any
such prospectus supplement or other offering materials since the date of each such document. Our business, financial condition,
results of operations and prospects may have changed since those dates.
This
prospectus does not constitute, and any prospectus supplement or other offering materials related to an offering of securities
described in this prospectus will not constitute, an offer to sell, or a solicitation of an offer to purchase, the offered securities
in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer or solicitation in such jurisdiction.
INTRICON
We
are an international company engaged in designing, developing, engineering, manufacturing and distributing body-worn devices.
We serve the body-worn device market by designing, developing, engineering, manufacturing and distributing micro-miniature products,
microelectronics, micro-mechanical assemblies, complete assemblies and software solutions, primarily for the emerging value based
hearing healthcare market (which includes the hearing health direct to consumer market), the hearing health market, the medical
bio-telemetry market and the professional audio communication market.
Our
executive offices are located at 1260 Red Fox Road, Arden Hills, MN 55112, and our telephone number at that address is (651) 636-9770.
RISK
FACTORS
Investing
in our securities involves risks. You should carefully consider the risks described in any prospectus supplement and those incorporated
by reference into this prospectus before making an investment decision. The risks and uncertainties described in any prospectus
supplement and incorporated by reference into this prospectus are not the only ones facing our company. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these risks
actually occur, our business, financial condition and results of operations could be materially affected. In that case, the value
of our securities could decline substantially and you could lose all or part of your investment in these securities. Please also
refer to section below entitled “Cautionary Statement Relating to Forward-Looking Statements” for additional information
related to risk factors that we may face.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any documents
we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, our filings with the SEC are
available to the public through the SEC’s Internet site at http://www.sec.gov. Information about us is also available on
our website at http://www.intricon.com. The information contained on or linked to our website is not part of this prospectus.
This
prospectus is part of a registration statement on Form S-3 filed with the SEC under the Securities Act. This prospectus does not
contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further
information concerning us and the securities, you should read the entire registration statement and the additional information
described under “Documents Incorporated by Reference” below. The registration statement has been filed electronically
and may be obtained in any manner listed above. Any statements contained in this prospectus concerning the provisions of any document
are not necessarily complete, and, in each instance, reference is made to the copy of such document filed as an exhibit to the
registration statement or otherwise filed with the SEC. Each such statement is qualified in its entirety by such reference.
DOCUMENTS
INCORPORATED BY REFERENCE
The
SEC rules allow us to incorporate by reference information in this prospectus. This means that we can disclose important information
to you by referring you to another document. Any information referred to in this way is considered part of this prospectus from
the date we file that document with the SEC. Information that we file with the SEC in the future automatically will update and
supersede, where applicable, the information contained in this prospectus and in the documents previously filed with the SEC and
incorporated by reference into this prospectus.
We
incorporate by reference into this prospectus the following documents or information filed (File No. 1-05005) with the SEC (other
than, in each case, information deemed to have been furnished or not filed in accordance with SEC rules):
(a) our
Annual Report on Form 10-K for the fiscal year ended December 31, 2017;
(b) our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2018;
(c) those
portions of our proxy statement for our 2018 Annual Meeting of Shareholders filed on March 13, 2018, which were incorporated
by reference into Part III of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
(d) our
Current Reports on Form 8-K filed with the SEC on April 30, 2018 and July 25, 2018 (excluding any information furnished under
Items 2.02 or 7.01 of Form 8-K); and
(e) the
description of our common stock which is incorporated by reference to our Form 8-A filed with the SEC on December 28, 2007.
All
documents we subsequently file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of
a post-effective amendment to the registration statement of which this prospectus is a part which indicates that all
securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this prospectus and to be part of this prospectus from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a statement contained herein (or in any other
subsequently filed document which also is or is deemed to be incorporated by reference herein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute part of this prospectus.
To
the extent that any information contained in any document or any exhibit thereto, is or was furnished to, rather
than filed with, the SEC, such information or exhibit is specifically not incorporated by reference.
We
will provide, without charge, to each person to whom this prospectus is delivered, upon the written or oral request by such person,
a copy of the documents incorporated by reference as described above (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into such documents). Please direct your oral or written request to:
Scott
Longval, Chief Financial Officer
c/o
IntriCon Corporation
1260
Red Fox Road
Arden
Hills, MN 55112
(651)
636-9770
CAUTIONARY
STATEMENT RELATING TO FORWARD-LOOKING STATEMENTS
Certain
oral statements made by our management from time to time and some of the statements in this prospectus, the documents incorporated
by reference into this prospectus and in any prospectus supplement may be deemed “forward-looking statements” within
the meaning of Section 21E of the Exchange Act, and Section 27A of the Securities Act, which are intended to be covered by the
safe harbors created by those provisions. All statements, other than statements of historical fact, that discuss goals, intentions
and expectations as to future trends, plans, events, results of operations or financial condition, or state other information
relating to us are forward-looking statements. The words “look forward to,” “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “plan,” “will,”
“would,” “should,” “could,” “guidance,” “potential,” “opportunity,”
“continue,” “project,” “forecast,” “confident,” “prospects,” “schedule,”
“designed,” “future,” “discussions,” “if” and similar expressions, and the negative
thereof, typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations,
beliefs, assumptions, estimates and forecasts about our business.
These
statements are not guarantees of future performance and are subject to a number of risks and uncertainties that could cause actual
results to differ materially from what is expressed or implied by these forward-looking statements. Factors that could cause actual
results to differ from those anticipated include, but are not limited to:
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ability to successfully implement our business and growth strategy;
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risks
arising in connection with the insolvency of our former subsidiary, Selas SAS, and potential
liabilities and actions arising in connection with that insolvency;
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the
volume and timing of orders received by us, particularly from Medtronic and hi HealthInnovations;
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changes
in our estimated future cash flows;
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our
ability to collect our accounts receivable;
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foreign
currency movements in markets that we serve;
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changes
in the global economy and financial markets;
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weakening
demand for our products due to general economic conditions;
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changes
in the mix of products sold;
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our
ability to meet demand;
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changes
in customer requirements;
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timing
and extent of research and development expenses;
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FDA
approval, timely release and acceptance of our products and the products of our customers;
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competitive
pricing pressures;
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pending
and potential future litigation;
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cost
and availability of electronic components and commodities for our products;
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our
ability to create and market products in a timely manner and develop products that are
inexpensive to manufacture;
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our
ability to comply with covenants in our debt agreements or to obtain waivers if we do
not comply;
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our
ability to repay debt when it comes due;
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our
ability to obtain extensions of our current credit facility or a new credit facility;
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the
loss of one or more of our major customers;
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our
ability to identify, complete and integrate acquisitions;
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effects
of legislation;
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effects
of foreign operations;
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our
ability to develop new products;
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our
ability to recruit and retain engineering and technical personnel;
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the
costs and risks associated with research and development investments;
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the
recent recessions in Europe and the debt crisis in certain countries in the European
Union;
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our
ability and the ability of our customers to protect intellectual property;
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loss
of members of our senior management team; and
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other
risk factors set forth in our most recent Annual Report on Form 10-K or any subsequent
Quarterly Report on Form 10-Q, which are incorporated by reference into this prospectus,
and referenced in this prospectus or the applicable prospectus supplement.
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Unpredictable
or unknown factors could also have material adverse effects on us. All forward-looking statements are expressly qualified in their
entirety by the foregoing cautionary statements. Except as required under the Federal securities laws and rules and regulations
of the SEC, we undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information,
future events, or otherwise.
USE
OF PROCEEDS
We
intend to use the net proceeds from the sale of the securities as set forth in the applicable prospectus supplement.
DESCRIPTION
OF SECURITIES WE MAY SELL
Capital
Stock
The
following description of our capital stock includes a summary of certain provisions of applicable Pennsylvania law, our articles
of incorporation and bylaws. The following description of the terms of the preferred stock we may issue sets forth certain general
terms and provisions of any series of preferred stock to which any prospectus supplement may relate. Particular terms of the preferred
stock offered by any prospectus supplement and the extent, if any, to which these general terms and provisions shall apply to
any series of preferred stock so offered will be described in the prospectus supplement relating to the applicable preferred stock.
The applicable prospectus supplement may also state that any of the terms set forth in this description are inapplicable to such
series of preferred stock. This description of our capital stock does not purport to be complete and is subject to and qualified
in its entirety by reference to applicable Pennsylvania law and the provisions of our articles of incorporation, bylaws and any
applicable certificates of designation, which have been or will be filed with the SEC. See “Where You Can Find More Information”
for information on how to obtain copies of these documents.
General
If
the prospectus supplement so provides, offered securities may be convertible into, exchangeable for or exercisable for shares
of our capital stock. As described under “Description of Securities We May Sell—Depositary Shares”, we may,
at our option, elect to offer depositary shares evidenced by depositary receipts, each representing an interest (to be specified
in the prospectus supplement relating to the particular series of the preferred stock) in a share of the particular series of
the preferred stock issued and deposited with a preferred stock depositary.
Authorized
Capitalization
As
of July 23, 2018, our authorized capital stock consisted of (i) 20,000,000 shares of common stock, par value $1.00 per share,
of which 7,146,243 shares were issued and outstanding, and (ii) 1,000,000 shares of preferred stock, par value $1.00 per share,
of which none was issued and outstanding.
Common
Stock
The
rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights
of the holders of shares of any then outstanding preferred stock.
Dividend
Rights.
The
holders of our common stock may receive cash dividends, if and when declared by our board of directors out of funds legally available
for that purpose, and subject to preferential rights of the holders of preferred stock outstanding at the time.
Voting
Rights.
Subject
to the rights specifically granted to holders of any then outstanding preferred stock, our common shareholders are entitled to
vote together as a class on all matters submitted to a vote of our shareholders, including the election of directors. Each share
of common stock entitles the holder thereof to one vote on each matter to come before the shareholders, except as otherwise provided
in our articles of incorporation or by law. Holders of our common stock do not have cumulative voting rights with respect to the
election of directors.
No
Pre-emptive or Other Rights.
Holders
of common stock are not entitled to pre-emptive, subscription, conversion or redemption rights.
Right
to Receive Liquidation Distributions.
Upon
our dissolution or liquidation, holders of our common stock are entitled to share ratably in our net assets after payment or provision
for all liabilities and any preferential liquidation rights of our preferred stock then outstanding.
Preferred
Stock
Our
board of directors may from time to time authorize the issuance of one or more series of preferred stock without shareholder approval.
Subject to the provisions of our articles of incorporation and limitations prescribed by law, our board of directors is authorized
to adopt resolutions to, among other things, issue shares of preferred stock in one or more series and to fix or change the determination
of the voting rights, designations, preferences, limitations, special and relative rights of the shares of any class or series
of the preferred stock. The authority of the board with respect to each class or series of preferred stock includes, but is not
limited to, the determination of the following:
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the
number of shares constituting that class or series and the distinctive designation of
that class or series;
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the
dividend rate on the shares of that class or series, whether the preferred stock will
also be entitled to any participating or other dividends and whether dividends shall
be cumulative, and, if so, from which date or dates;
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whether
that class or series shall have voting rights, in addition to any voting rights provided
by law, and, if so, the terms and conditions of such voting rights;
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whether
the shares shall be convertible into, or exchangeable for, any other shares of our stock
or other securities and, if so, the terms and conditions of such conversion or exchange,
including the conversion or exchange price or prices or rate or rates, provisions for
any adjustment of the conversion or exchange prices or rates, and whether the shares
shall be convertible or exchangeable at the option of the holder or us, or both, or upon
the happening of a specified event or events;
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whether
the shares shall be redeemable and, if so, the terms and conditions, if any, upon which
they may be redeemed, including the date or dates or event or events upon or after which
they shall be redeemable, the cash, property or rights (including our securities or of
an entity or entities other than us) for which they may be redeemed, whether they shall
be redeemable at the option of the holder or us, or both, or upon the happening of a
specified event or events and the amount or rate of cash, property or rights per share
payable in case of redemption, which amount may vary under different conditions and at
different redemption dates, including provisions for any adjustment of the redemption
prices or rates;
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whether
the shares shall be entitled to the benefit of a retirement or sinking fund to be applied
to the purchase or redemption of such shares and, if so entitled, the amount of such
fund and the terms and provisions relative to the operation thereof;
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the
rights of the holders of the shares in the event of our voluntary or involuntary liquidation,
dissolution, winding up or distribution of our assets;
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whether
the shares shall have priority over or parity with or be junior to the shares of any
other series or class in any respect or shall be entitled to the benefit of limitations
restricting the issuance of shares of any other series or class having priority over
or parity with the shares of such series in any respect, or restricting the payment of
dividends on or the making of other distributions in respect of shares of any other series
or class ranking junior to the shares of the series as to dividends or distributions
or restricting the purchase or redemption of the shares of any such junior series or
class, and the terms of any such restriction;
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subject
to the provisions of the next paragraph, any other preferences, qualifications, limitations,
restrictions and relative or special rights or such series.
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In
the resolution or resolutions authorizing a new series of preferred stock, our board of directors may provide for such additional
rights, and with respect to rights as to dividends, redemption and liquidation, such relative preferences between shares of different
series, as are consistent with the rights of all outstanding shares of previously established series, and with all provisions
of our articles of incorporation, but in the resolution or resolutions authorizing a new series of preferred stock our board of
directors may provide that such series shall have a preference over outstanding preferred stock of any previously created series
with respect to rights as to dividends, redemption and liquidation only to the extent that the resolution or resolutions of the
board of directors authorizing such previously created series expressly so permits.
We
will describe any the terms of any class of preferred stock authorized by our board of directors in the applicable prospectus
supplement.
The
issuance of such preferred stock may adversely affect the rights of holders of our common stock by, among other things:
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restricting
the payment of dividends on our common stock;
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diluting
the voting power of our common stock;
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reducing
the amount of assets remaining for payment to holders of shares in the event of a liquidation
of assets or otherwise impairing the liquidation rights of our common stock;
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delaying
or preventing a change in control without further action by the shareholders; or
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decreasing
the market price of our common stock.
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One
of the effects of undesignated preferred stock whose terms may be set by the board of directors may be to enable our board of
directors to discourage an attempt to obtain control of our company by means of a tender offer, proxy contest, merger or otherwise.
Anti-Takeover
Considerations and Special Provisions of the Articles of Incorporation, Bylaws and Pennsylvania Law
Our
articles of incorporation and bylaws contain a number of provisions relating to corporate governance and to the rights of shareholders.
Certain of these provisions may be deemed to have a potential “anti-takeover” effect by delaying, deferring or preventing
a change of control of us. In addition, certain provisions of Pennsylvania law may have a similar effect.
Preferred
Stock
Our
ability to issue preferred shares in the future having terms established by the board of directors without shareholder approval,
while providing flexibility in connection with possible acquisitions and other corporate purposes, could adversely affect the
voting power of holders of common stock. As noted above, one of the effects of undesignated preferred stock whose terms may be
set by the board of directors may be to enable our board of directors to discourage an attempt to obtain control of our company
by means of a tender offer, proxy contest, merger or otherwise.
Classified
Board of Directors
Our
bylaws provide that our directors be classified into three classes, as nearly equal in number as possible, with one class being
elected each year. Each director holds office for a term of three years until his or her successor is duly elected and qualified
unless his or her term ends earlier due to death, resignation or removal. Any director or the entire board of directors may be
removed only for cause and only upon the affirmative vote of two-thirds of all of the shares outstanding and entitled to vote;
provided that the board of directors retains the right conferred by Pennsylvania corporate law to declare vacant the office of
a director for reasons specified therein.
Under
the classified board provisions described above, it would take at least two elections of directors for any individual or group
to gain control of our board of directors. Accordingly, these provisions could discourage a third party from initiating a proxy
contest, making a tender offer or otherwise attempting to gain control of us.
Removal
of Directors
Our
directors may be removed only for cause and only upon the affirmative vote of the holders of at least two-thirds of all of the
shares of common stock outstanding and entitled to vote. This provision could also discourage a third party from initiating a
proxy contest, making a tender offer or otherwise attempting to gain control of us.
Amendment
to Articles of Incorporation and Bylaws
Under
the Pennsylvania Business Corporation Law of 1988, as amended, referred to as the “BCL,” shareholders may not propose
an amendment to our articles of incorporation.
Our
bylaws provide that the affirmative vote of the holders of at least two-thirds of our voting stock then outstanding, voting together
as a single class, is required to amend or repeal provisions of our bylaws relating to a classified board or the removal of a
director or the entire board of directors. Except for such provision, our bylaws generally may be amended by our board or by the
affirmative vote of the holders of a majority of the outstanding shares entitled to vote, present in person or represented by
proxy, at a meeting at which a quorum is present, though such a majority be less than a majority of all of the shares entitled
to vote thereon.
Special
Meetings
Under
the BCL, special meetings of shareholders may be called only by the board of directors. This provision may have the effect of
delaying consideration of a shareholder proposal until the next annual meeting unless a special meeting is called by our board.
Advance
Notice Procedures
Our
bylaws require our shareholders to provide advance notice if they wish to submit a proposal or nominate candidates for director
at a meeting of shareholders. These procedures provide that notice of shareholder proposals and shareholder nominations for the
election of directors at a meeting of shareholders must be made in writing and received by our secretary, in the case of proposals,
or the chairman of the nominating committee, in the case of director nominations, at our principal executive offices, in the case
of an annual meeting, no later than the date upon which shareholder proposals must be submitted to us for inclusion in our proxy
statement relating to such meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and, in the case
of a special meeting, the earlier of (a) 30 days prior to the printing of our proxy materials or information statement with respect
to such meeting or (b) if no proxy materials or information statement are being distributed to shareholders, at least the close
of business on the fifth day following the date on which notice of such meeting is first given to shareholders. Each nomination
or proposal must set forth:
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the
name and address of the shareholder making the nomination or proposal and the person
or persons nominated, or the subject matter of the proposal;
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a
representation that the shareholder is a holder of record, and/or beneficial owner, of
the voting stock entitled to vote at the meeting and intends to appear in person or by
proxy at the meeting to vote for the person or persons nominated, or the proposal submitted;
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a
description of all arrangements and understandings between the shareholder and each nominee
or any other person or persons pursuant to which the nomination was made, or the proposal
was submitted, by the shareholder;
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such
other information regarding each nominee proposed by such shareholder as would be required
to be included in a proxy statement filed pursuant to the proxy rules of the Securities
and Exchange Commission had the nominee been nominated by the nominating committee; and
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the
consent of each nominee to serve as a director, if so elected.
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Pennsylvania
Anti-Takeover Provisions
The
BCL includes certain provisions that may have an anti-takeover effect, including the following:
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a
director of a classified board may be removed by shareholders only for cause;
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shareholders
of
“
registered corporations,” such as IntriCon, are not entitled to
call special meetings of the shareholders;
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actions
by shareholders of registered corporations without a meeting must receive the unanimous
written consent of all shareholders; and
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shareholders
of registered corporations are not entitled to propose amendments to the articles of
incorporation.
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In
addition, under the BCL, subject to certain exceptions, a business combination between a Pennsylvania corporation and a person
owning 20% or more of such corporation’s voting stock, or an “interested person,” may be accomplished only if:
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the
business combination is approved by the corporation’s directors prior to the date
on which such person acquired 20% or more of such stock, or if the board approved such
person’s acquisition of 20% or more of such stock, prior to such acquisition;
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the
business combination is approved by the vote of shareholders entitled to cast a majority
of votes that all shareholders would be entitled to cast in an election of directors
(excluding shares held by the interested person), if the interested person owns shares
entitled to cast at least 80% of the votes all shareholders would otherwise be entitled
to cast in the election of directors, which vote may occur no earlier than three months
after the interested person acquired its 80% ownership, and the consideration received
by shareholders in the business combination satisfies certain minimum conditions;
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the
business combination is approved by the affirmative vote of all outstanding shares of
common stock;
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the
business combination is approved by the vote of shareholders entitled to cast a majority
of the votes that all shareholders would be entitled to cast in the election of directors
(excluding shares held by the interested person), which vote may occur no earlier than
five years after the interested person became an interested person; or
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the
business combination is approved at a shareholders’ meeting called for such purpose
no earlier than five years after the interested person became an interested person, and
the consideration received by shareholders in the business combination satisfies certain
minimum conditions.
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A
corporation may exempt itself from this provision by an amendment to its articles of incorporation that requires shareholder approval.
Our articles of incorporation do not provide an exemption from this provision. Pennsylvania has also adopted other anti-takeover
legislation from which we have elected to exempt our company in our bylaws.
The
BCL also expressly permits directors of a corporation to consider the interests of constituencies other than shareholders, such
as employees, suppliers, customers, creditors and the community, in discharging their duties. The BCL provides, among other things,
that directors need not, in their consideration of the best interests of the corporation, consider any particular constituency’s
interest, including the interests of shareholders, as the dominant or controlling interest. Further, the BCL expressly provides
that directors do not violate their fiduciary duty solely by relying on poison pills or anti-takeover provisions of the BCL.
The
existence of the foregoing provisions of our articles of incorporation and bylaws and the BCL may have an anti-takeover effect
and could delay, defer or prevent a tender offer or takeover attempt that a shareholder might consider in its best interest, including
those attempts that might result in a premium over the market price for the shares of our common stock held by shareholders.
Limitations
on Liability and Indemnification of Officers and Directors
Articles
of Incorporation/Bylaws
As
permitted by the BCL, our bylaws provide that a director shall not be personally liable for monetary damages for any action taken,
or any failure to take any action, as a director except to the extent that the director breached or failed to perform the duties
of the director’s office, as required by the applicable provisions of the BCL, and such breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.
Our
bylaws also require us to indemnify any person who was or is a party (other than a party plaintiff suing in his own behalf or
in the right of the Company) or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
including actions by or in the right of the Company, whether civil, criminal, administrative or investigative, by reason of the
fact that such person is or was our director or officer, or is or was serving while our director or officer at our request as
a director, officer, employee, agent fiduciary or other representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including attorney’s fees), judgments, fines, excise taxes
and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding
unless the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful
misconduct or recklessness.
Our
bylaws provide that expenses actually and reasonably incurred by our officer or director in defending a civil or criminal action,
suit or proceeding described in the preceding paragraph shall be paid by us in advance of the final disposition of such action,
suit or proceeding (regardless of the financial condition of such director or officer) upon receipt of an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined that the person is not entitled to be indemnified
by us.
Our
bylaws also state that the indemnification provided for therein is not exclusive of any other rights persons seeking indemnification
might have, including under any insurance arrangements.
Liability
Insurance
We
have obtained directors’ and officers’ liability insurance which covers certain liabilities, including liabilities
to us and our shareholders, in the amount of $10.0 million.
SEC
Position on Indemnification for Securities Act Liabilities
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or our controlling
persons pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Transfer
Agent and Registrar
Our
transfer agent and registrar for our common stock is Broadridge Corporate Issuer Solutions, Inc.
Listing
Our
common stock trades on the NASDAQ Global Market under the symbol “IIN”.
Depositary
Shares
The
following summary of certain provisions of the depositary shares does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the deposit agreement and form of depositary receipt that will be filed with
the SEC in connection with the offering of such depositary shares. See “Where You Can Find More Information” for information
on how to obtain copies of these documents. The particular terms of any depositary shares offered by us will be described in the
applicable prospectus supplement. To the extent the terms of the depositary shares described in the prospectus supplement differ
from the terms set forth in this summary, the terms described in the prospectus supplement will supersede the terms described
below.
General
We
may issue depositary shares representing fractional interests in preferred stock of any class or series. Each depositary share
will represent a fraction of a share of a particular series of preferred stock, and the prospectus supplement will indicate that
fraction. The shares of preferred stock represented by depositary shares will be deposited under a deposit agreement between our
company 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. Subject to the terms of the deposit agreement, each holder of a depositary
share will be entitled, proportionately, to all the rights, preferences and privileges of the series of preferred stock represented
by that depositary share, including dividend, voting, redemption, conversion, exchange and liquidation rights.
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 stock 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 this event, the depositary may, with our approval, adopt any
method it deems equitable and practicable for the purpose of effecting the distribution, including a public or private sale of
the property and distribution of the net proceeds from the sale to the record holders of the depositary receipts.
The
amount so distributed in any of the circumstances described above will be reduced by any amount required to be withheld by us
or the depositary on account of taxes.
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 redeposited 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.
Conversion
and Exchange
We
will describe any terms relating to the conversion or exchange of any shares of preferred stock underlying the depositary shares
in the applicable prospectus supplement. If any shares of preferred stock underlying the depositary shares are subject to provisions
relating to their conversion or exchange, each record holder of depositary shares will have the right or obligation to convert
or exchange the depositary shares pursuant to the terms thereof.
Redemption
of Depositary Shares
If
shares of preferred stock underlying the depositary shares are subject to redemption, the depositary shares will be redeemed from
the proceeds received by the depositary as a result of the redemption, in whole or in part, of the shares of preferred stock held
by the depositary. The redemption price per depositary share will be equal to the aggregate redemption price payable with respect
to the number of shares of preferred stock underlying that depositary share. Whenever we redeem shares of preferred stock from
the depositary, the depositary will redeem as of the same redemption date a proportionate number of depositary shares representing
the shares of preferred stock that were redeemed. If less than all the depositary shares are to be redeemed, the depositary shares
to be redeemed will be selected by lot or proportionately as we may determine.
After
the date fixed for redemption, the depositary shares called for redemption will no longer be deemed to be outstanding and all
rights of the holders of the depositary shares will cease, other than the right to receive the redemption price upon redemption.
Voting
Upon
receipt of notice of any meeting at which the holders of any shares of preferred stock underlying the depositary shares are entitled
to vote, the depositary will mail the information contained in the notice to the record holders of the depositary receipts. Each
record holder of depositary receipts on the record date (which will be the same date as the record date for the shares of preferred
stock) will be entitled to instruct the depositary as to the exercise of the voting rights pertaining to the number of shares
of preferred stock underlying that holder’s depositary shares. The depositary will endeavor, insofar as practicable, to
vote the number of shares of preferred stock underlying the depositary shares in accordance with those instructions, and we will
agree to take all reasonable action which may be deemed necessary by the depositary in order to enable the depositary to do so.
The depositary will abstain from voting the shares of preferred stock to the extent it does not receive specific written instructions
from holders of depositary receipts representing the shares of preferred stock.
Warrants
The
following summary of certain provisions of the warrants does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the provisions of the warrant agreement and warrant certificates that will be filed with the SEC in
connection with the offering of such warrants. See “Where You Can Find More Information” for information on how to
obtain copies of these documents. The particular terms of any warrants offered by us will be described in the applicable prospectus
supplement. To the extent the terms of the warrants described in the prospectus supplement differ from the terms set forth in
this summary, the terms described in the prospectus supplement will supersede the terms described below.
General
We
may issue warrants to purchase common stock, preferred stock or depositary shares. We will issue each series of warrants under
a separate warrant agreement between us and a warrant agent that is a bank or trust company. Warrants will be represented by warrant
certificates.
The
terms of warrants described in the applicable prospectus supplement may include the following:
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the
title of the warrants;
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the
aggregate number of warrants;
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the
price or prices at which the warrants will be issued;
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the
currency or currencies, including composite currencies, in which the price of the warrants
may be payable;
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the
designation and terms of the underlying warrant securities purchasable upon exercise
of the warrants;
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the
price at which and the currency or currencies, including composite currencies, in which
the underlying warrant securities purchasable upon exercise of the warrants may be purchased;
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the
date on which the right to exercise the warrants will commence and the date on which
that right will expire;
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whether
the warrants will be issued in registered form or bearer form;
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if
applicable, the minimum or maximum amount of warrants which may be exercised at any one
time;
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if
applicable, the designation and terms of the underlying warrant securities with which
the warrants are issued and the number of warrants issued with each underlying warrant
security;
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if
applicable, the date on and after which the warrants and the related underlying warrant
securities will be separately transferable;
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information
with respect to book-entry procedures, if any;
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if
applicable, a discussion of certain U.S. federal income tax considerations; 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 to purchase such number of common shares, preferred stock or depositary shares, as the case may
be, at such exercise price as shall be set forth in, or shall be determinable as set forth in, the applicable prospectus supplement.
Warrants may be exercised at the times and in the manner set forth in the applicable prospectus supplement. The applicable prospectus
supplement will specify how the exercise price of any warrants is to be paid, which may include payment in cash or by surrender
of other warrants issued under the same warrant agreement (a so-called “cashless exercise”). Upon receipt of payment
of the exercise price and, if required, the certificate representing the warrants being exercised properly completed and duly
executed at the office or agency of the applicable warrant agent or at any other office or agency designated for that purpose,
we will promptly deliver the securities to be delivered upon such exercise.
No
Rights as Holders of Shares
Holders
of warrants will not be entitled, by virtue of being such holders, to vote, consent or receive notice as holders of our outstanding
shares in respect of any meeting of holders of our shares for the election of our directors or any other matter, or to exercise
any other rights whatsoever as holders of our shares, or to receive any dividends or distributions, if any, on our shares.
Subscription
Rights
The
following summary of certain provisions of the subscription rights does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the subscription rights agreement and the subscription rights certificate that
will be filed with the SEC in connection with the offering of such subscription rights. See “Where You Can Find More Information”
for information on how to obtain copies of these documents. The particular terms of any subscription rights offered by us will
be described in the applicable prospectus supplement. To the extent the terms of the subscription rights described in the prospectus
supplement differ from the terms set forth in this summary, the terms described in the prospectus supplement will supersede the
terms described below.
General
We
may issue subscription rights to purchase common stock, preferred stock or depositary shares. We will issue subscription rights
under a subscription rights agreement and subscription rights will be represented by subscription rights certificates.
The
terms of subscription rights described in the applicable prospectus supplement may include the following:
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the
price, if any, for the subscription rights;
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the
exercise price payable for each share of common stock, preferred stock or depositary
shares upon the exercise of the subscription rights;
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the
number of subscription rights issued;
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the
number and terms of the shares of common stock or shares of preferred stock or depositary
shares;
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the
extent to which the subscription rights are transferable;
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the
date on which the right to exercise the subscription rights shall commence, and the date
on which the subscription rights shall expire;
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the
extent to which the subscription rights may include an over-subscription privilege with
respect to unsubscribed securities;
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if
applicable, the material terms of any standby underwriting or purchase arrangement entered
into by us in connection with the offering of subscription rights; and
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any
other terms of the subscription rights, including the terms, procedures and limitations
relating to the exercise of the subscription rights.
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Exercise
of Subscription Rights
Each
subscription right will entitle the holder to purchase such number of common shares, preferred stock or depositary shares, as
the case may be, at such exercise price as shall be set forth in, or shall be determinable as set forth in, the applicable prospectus
supplement. Subscription rights may be exercised at the times and in the manner set forth in the applicable prospectus supplement.
The applicable prospectus supplement will specify how the exercise price of any subscription rights is to be paid. Upon receipt
of payment of the exercise price and, if required, the certificate representing the subscription rights being exercised properly
completed and duly executed at the office or agency designated for that purpose, we will promptly deliver the securities to be
delivered upon such exercise.
No
Rights as Holders of Shares
Holders
of subscription rights will not be entitled, by virtue of being such holders, to vote, consent or receive notice as holders of
our outstanding shares in respect of any meeting of holders of our shares for the election of our directors or any other matter,
or to exercise any other rights whatsoever as holders of our shares, or to receive any distributions, if any, on our shares.
Share
Purchase Contracts and Share Purchase Units
The
following summary of certain provisions of the share purchase contracts and share purchase units does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the provisions of the share purchase contract, share purchase
unit agreement, pledge agreement or depositary agreement, as applicable, that will be filed with the SEC in connection with the
offering of such securities. See “Where You Can Find More Information” for information on how to obtain copies of
these documents. The particular terms of any share purchase contracts and share purchase units offered by us will be described
in the applicable prospectus supplement. To the extent the terms of the share purchase contracts and share purchase units described
in the prospectus supplement differ from the terms set forth in this summary, the terms described in the prospectus supplement
will supersede the terms described below.
We
may issue share purchase contracts, representing contracts obligating holders to purchase from us, and obligating us to sell to
the holders, a specified number of shares of common stock, preferred stock, or other securities described in this prospectus or
the applicable prospectus supplement at a future date or dates. The price per share may be fixed at the time the share purchase
contracts are issued or may be determined by reference to a specific formula set forth in the share purchase contracts. The share
purchase contracts may be issued separately or as a part of share purchase units consisting of a share purchase contract and either
shares of preferred stock, depositary shares, debt obligations of third parties, including U.S. Treasury securities, any other
security described in the applicable prospectus supplement, or any combination of the foregoing, securing the holder’s obligations
to purchase the securities under the share purchase contracts.
The
share purchase contracts may require us to make periodic payments to the holders of the share purchase units or vice versa, and
such payments may be unsecured or prefunded on some basis. The share purchase contracts may require holders to secure their obligations
thereunder in a specified manner. In certain circumstances, we may deliver newly issued prepaid share purchase contracts upon
release to a holder of any collateral securing the holder’s obligations under the original share purchase contract.
Units
The
following summary of certain provisions of the units does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the provisions of the unit agreement that will be filed with the SEC in connection with the offering of the units.
See “Where You Can Find More Information” for information on how to obtain copies of this document. The particular
terms of any units offered by us will be described in the applicable prospectus supplement. To the extent the terms of the units
described in the prospectus supplement differ from the terms set forth in this summary, the terms described in the prospectus
supplement will supersede the terms described below.
We
may issue units consisting of one or more of the other securities described in this prospectus or the applicable prospectus supplement
in any combination in such amounts and in such numerous distinct series as we determine.
Each
unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder
of a unit will have the rights and obligations of a holder of each included security.
The
terms of units described in the applicable prospectus supplement may include the following:
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the
designation and terms of the units and of the securities comprising the units, including
whether and under what circumstances those securities may be held or transferred separately;
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a
description of the terms of any unit agreement governing the units;
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a
description of any provisions for the issuance, payment, settlement, transfer or exchange
of the units or of the securities comprising the units; and
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whether
the units will be issued in fully registered or global form.
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PLAN
OF DISTRIBUTION
We
may sell the securities offered by this prospectus in any one or more of the following ways from time to time:
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directly
to investors, including through a specific bidding, auction or other process;
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to
investors through agents;
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to
or through brokers or dealers;
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to
the public through underwriting syndicates led by one or more managing underwriters;
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to
one or more underwriters acting alone for resale to investors or to the public;
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through
block trades in which the broker or dealer engaged to handle the block trade will attempt
to sell the securities as agent, but may position and resell a portion of the block as
principal to facilitate the transaction; or
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through
a combination of any such methods of sale.
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We
may also sell the securities offered by this prospectus in “at the market offerings” within the meaning of Rule 415(a)(4)
of the Securities Act, to or through a market maker or into an existing trading market, on an exchange or otherwise.
The
prospectus supplement related to a particular offering will set forth the terms of the offering and the method of distribution
and will identify any firms acting as underwriters, dealers or agents in connection with the offering, including:
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the
name or names of any underwriters, dealers or agents;
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the
purchase price of the securities and the proceeds to us from the sale;
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any
over-allotment options under which the underwriters may purchase additional securities
from us;
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any
underwriting discounts and other items constituting compensation to underwriters, dealers
or agents;
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any
public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers; or
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any
securities exchange or market on which the securities offered in the prospectus supplement
may be listed.
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Only
those underwriters identified in such prospectus supplement are deemed to be underwriters in connection with the securities offered
in the prospectus supplement. Any underwritten offering may be on a best efforts or a firm commitment basis.
The
distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which
may be changed, at varying prices determined at the time of sale, or at prices determined as the applicable prospectus supplement
specifies. The securities may be sold through a rights offering, forward contracts or similar arrangements. In any distribution
of subscription rights to shareholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed
securities directly to third parties or may engage the services of one or more underwriters, dealers or agents, including standby
underwriters, to sell the unsubscribed securities to third parties.
In
connection with the sale of the securities, underwriters, dealers or agents may be deemed to have received compensation from us
in the form of underwriting discounts or commissions and also may receive commissions from securities purchasers for whom they
may act as agent. Underwriters may sell the securities to or through dealers, and the dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as
agent.
We
will provide in the applicable prospectus supplement information regarding any underwriting discounts or other compensation that
we pay to underwriters or agents in connection with the securities offering, and any discounts, concessions or commissions which
underwriters allow to dealers. Underwriters, dealers and agents participating in the securities distribution may be deemed to
be underwriters, and any discounts and commissions they receive and any profit they realize on the sale of the securities may
be deemed to be underwriting discounts and commissions under the Securities Act.
Underwriters
and their controlling persons, dealers and agents may be entitled, under agreements entered into with us, to indemnification against
and contribution toward specific civil liabilities, including liabilities under the Securities Act.
Unless
otherwise specified in the related prospectus supplement, each series of securities will be a new issue with no established trading
market, other than shares of our common stock, which are listed on the NASDAQ Global Market. Any common stock sold pursuant to
a prospectus supplement will be listed on the NASDAQ Global Market, subject to compliance with applicable NASDAQ continued listing
requirements. We may elect to list any series on an exchange, but we are not obligated to do so. It is possible that one or more
underwriters may make a market in the securities, but such underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the liquidity of, or the trading market for, any offered
securities.
In
connection with an offering, the underwriters may purchase and sell securities in the open market. These transactions may include
short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by
the underwriters of a greater number of securities than they are required to purchase in an offering. Stabilizing transactions
consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of the securities while
an offering is in progress. The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to
the underwriters a portion of the underwriting discount received by it because the underwriters have repurchased securities sold
by or for the account of that underwriter in stabilizing or short-covering transactions. These activities by the underwriters
may stabilize, maintain or otherwise affect the market price of the securities. As a result, the price of the securities may be
higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued
by the underwriters at any time. Underwriters may engage in over-allotment. If any underwriters create a short position in the
securities in an offering in which they sell more securities than are set forth on the cover page of the applicable prospectus
supplement, the underwriters may reduce that short position by purchasing the securities in the open market.
Any
person participating in the distribution of common stock registered under the registration statement that includes this prospectus
will be subject to applicable provisions of the Exchange Act, and the applicable SEC rules and regulations, including, among others,
Regulation M, which may limit the timing of purchases and sales of any of our common stock by any such person. Furthermore, Regulation
M may restrict the ability of any person engaged in the distribution of our common stock to engage in market-making activities
with respect to our common stock. These restrictions may affect the marketability of our common stock and the ability of any person
or entity to engage in market-making activities with respect to our common stock.
Underwriters,
dealers or agents that participate in the offer of securities, or their affiliates or associates, may be customers of, have engaged
or engage in transactions with, and perform services for, us or our affiliates in the ordinary course of business for which they
may have received or receive customary fees and reimbursement of expenses.
VALIDITY
OF SECURITIES
The
validity of any securities offered from time to time by this prospectus and any related prospectus supplement will be passed upon
by Blank Rome LLP. If legal matters in connection with offerings made pursuant to this prospectus and any related prospectus supplement
are passed upon by counsel to underwriters, dealers or agents, if any, such counsel will be named in the prospectus supplement
related to such offering.
EXPERTS
The
consolidated financial statements incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year
ended December 31, 2017, have been audited by Baker Tilly Virchow Krause, LLP, an independent registered public accounting firm,
as set forth in their reports therein. Such consolidated financial statements and schedule are incorporated by reference herein
in reliance upon such reports given on the authority of said firm as experts in auditing and accounting.
1,500,000
Shares
Common
Stock
PROSPECTUS
SUPPLEMENT
Sole Bookrunning
Manager
Stifel
Co-Managers
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B. Riley FBR
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Dougherty & Company
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August
15, 2018
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