As
filed with the Securities and Exchange Commission on September 22,
2022
Registration
No. 333 --266070
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT NO. 2
TO
FORM
S-1
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
SINTX
Technologies, Inc.
(Exact
name of registrant as specified in its charter)
Delaware |
|
3841 |
|
84-1375299 |
(State
or other jurisdiction of
incorporation or organization) |
|
(Primary
Standard Industrial
Classification Code Number) |
|
(I.R.S.
Employer
Identification Number) |
1885
West 2100 South
Salt
Lake City, UT, 84119
(801)
839-3500
(Address,
including zip code, and telephone number,
including area code, of registrant’s principal executive
offices)
B.
Sonny Bal, MD
President
and Chief Executive Officer
SINTX
Technologies, Inc.
1885
West 2100 South
Salt
Lake City, UT, 84119
(801)
839-3500
(Name,
address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
David
F. Marx
Daniel P. Lyman
Dorsey & Whitney LLP
111 South Main Street, Suite 2100
Salt Lake City, Utah 84111 |
|
Barry
L. Grossman
Sarah E. Williams
Matthew Bernstein
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas, 11th Floor
New York, NY 10105 |
Approximate
date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes
effective.
If
any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act:
|
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
|
|
|
|
|
|
Non-accelerated
filer |
☒ |
Smaller
reporting company |
☒ |
|
|
|
|
|
|
|
|
Emerging
growth company |
☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The
Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Act or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not
permitted.
PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, DATED
SEPTEMBER 22, 2022
SINTX TECHNOLOGIES, INC.
Subscription
Rights to Purchase Up to 10,000 Units
Consisting
of an Aggregate of Up to 10,000 Shares of Series D Convertible
Preferred Stock
and 54,260,000 Warrants to Purchase Shares of Common
Stock
at
a Subscription Price of $1,000 Per Unit and
Up
to 27,130,000 Shares of Common Stock Issuable upon the Conversion
of
Series
D Convertible Preferred Stock Included in the Units
and
Up
to 54,260,000 Shares of Common Stock Issuable upon the Exercise
of
Warrants
Included in the Units
This prospectus relates to our distribution to holders of our
common stock, Series B Preferred Stock, Series C Preferred Stock
and certain outstanding warrants, which we refer to as the
Participating Warrants, at no charge, non-transferable subscription
rights to purchase units. Each unit, which we refer to as a Unit,
consists of (i) one share of Series D Convertible Preferred Stock,
which we refer to as the Preferred Stock, and, based on the
Estimated Conversion Price (as defined below), (ii) 2,713 common
stock purchase warrants expiring five years from the date of
issuance, which we refer to as the Class A Warrants, and (iii)
2,713 common stock purchase warrants expiring three years from the
date of issuance, which we refer to as the Class B Warrants and,
together with the Class A Warrants, the Warrants. The actual number
of Class A Warrants included in each Unit will be calculated as the
quotient obtained by dividing $1,000 by the Conversion Price. The
actual number of Class B Warrants included in each Unit will be
calculated as the quotient obtained by dividing $1,000 by the
Conversion Price. Each share of Preferred Stock is convertible, at
the option of the holder at any time, into a number of shares of
our common stock equal to the quotient of the stated value of the
Preferred Stock ($1,000) divided by the Conversion Price
(initially, the Conversion Price will be equal to 90% of the lowest
closing price for a share of our common stock as quoted on the
Nasdaq Capital Market, during the five (5) trading days prior to
the expiration of the Subscription Period (including the last day
of the Subscription Period). Each Warrant will be exercisable for
one share of our common stock at an exercise price per share equal
to the Conversion Price. For purposes of this preliminary
prospectus, we have assumed an estimated Conversion Price of
$0.36864 which is equal to 90% of the closing price of our common
stock on September 19, 2022 (the “Estimated Conversion Price”). As
noted elsewhere in this prospectus, the Estimated Conversion Price
is subject to change when calculated on the expiration date of this
offering.
We
refer to the offering that is the subject of this prospectus as the
Rights Offering. In the Rights Offering, you will receive one
subscription right for every share of common stock (including each
share of common stock issuable upon conversion of Series B
Preferred Stock, Series C Preferred Stock, and exercise of
Participating Warrants) owned at 5:00 p.m., Eastern Time, on
September 23, 2022, the record date of the Rights Offering, or the
Record Date. The Preferred Stock and the Warrants comprising the
Units will separate upon the expiration of the Rights Offering and
will be issued separately but may only be purchased as a Unit, and
the Units will not trade as a separate security. The subscription
rights will not be tradable. Holders as of the Record Date of
Series B Preferred Stock, Series C Preferred Stock, and
Participating Warrants, will also receive subscription rights
pursuant to the terms of those Series B Preferred Stock, Series C
Preferred Stock, and Participating Warrants.
Each
subscription right will entitle you to purchase one Unit, which we
refer to as the Basic Subscription Right, at a subscription price
per Unit of $1,000, which we refer to as the Subscription Price. If
you exercise your Basic Subscription Rights in full, and any
portion of the Units remain available under the Rights Offering,
you will be entitled to an over-subscription privilege to purchase
a portion of the unsubscribed Units at the Subscription Price,
subject to proration and ownership limitations, which we refer to
as the Over-Subscription Privilege. Each subscription right
consists of a Basic Subscription Right and an Over-Subscription
Privilege, which we refer to as the Subscription Right.
The
Subscription Rights will expire if they are not exercised by 5:00
p.m., Eastern Time, on October 12, 2022, unless the Rights Offering
is extended or earlier terminated by us. If we elect to extend the
Rights Offering, we will issue a press release announcing the
extension no later than 9:00 a.m., Eastern Time, on the next
business day after the most recently announced expiration date of
the Rights Offering. We may extend the Rights Offering for
additional periods in our sole discretion for any reason up to an
additional 45 days. Once made, all exercises of Subscription Rights
are irrevocable.
We
have not entered into any standby purchase agreement or other
similar arrangement in connection with the Rights Offering. The
Rights Offering is being conducted on a best-efforts basis and
there is no minimum amount of proceeds necessary to be received in
order for us to close the Rights Offering.
We
have engaged Maxim Group LLC to act as dealer-manager in the Rights
Offering.
Investing
in our securities involves a high degree of risk. See “Risk
Factors” beginning on page 13 of this prospectus. You should
carefully consider these risk factors, as well as the information
contained in this prospectus, before you invest.
Our
stock transfer agent, American Stock Transfer & Trust Company,
LLC, will serve as the Subscription Agent and D.F. King & Co.,
Inc., will serve as Information Agent for the Rights Offering. The
Subscription Agent will hold the funds we receive from subscribers
until we complete, abandon or terminate the Rights Offering. If you
want to participate in this Rights Offering and you are the record
holder of your shares, we recommend that you submit your
subscription documents to the Subscription Agent well before the
deadline. If you want to participate in this Rights Offering and
you hold shares of our common stock, Series B Preferred Stock,
Series C Preferred Stock, or Participating Warrants through your
broker, dealer, bank or other nominee, you should promptly contact
your broker, dealer, bank or other nominee and submit your
subscription documents in accordance with the instructions and
within the time period provided by your broker, dealer, bank or
other nominee. For a detailed discussion, see “The Rights Offering
- The Subscription Rights.”
Our
board of directors reserves the right to terminate the Rights
Offering for any reason any time before the expiration of the
Rights Offering. If we terminate the Rights Offering, all
subscription payments received will be returned within 10 business
days, without interest or deduction. We expect the Rights Offering
to expire on or about October 12, 2022, subject to our right to
extend the Rights Offering as described above, and that we would
close on subscriptions within five business days of such
date.
Our
common stock is listed on the Nasdaq Capital Market, or Nasdaq,
under the symbol “SINT.” On September 21, 2022, the last reported
sale price of our common stock was $0.4005 per share. There is no
public trading market for the Preferred Stock or the Warrants and
they will not be listed for trading on Nasdaq or any other
securities exchange or market. The Subscription Rights are
non-transferrable and will not be listed for trading on Nasdaq or
any other securities exchange or market. You are urged to obtain a
current price quote for our common stock before exercising your
Subscription Rights.
|
|
Per
Unit |
|
|
Total(2) |
|
Subscription
price |
|
$ |
1,000 |
|
|
$ |
10,000,000 |
|
Dealer-Manager
fees and expenses (1) |
|
$ |
80
|
|
|
$ |
800,000
|
|
Proceeds
to us, before expenses |
|
$ |
920
|
|
|
$ |
9,200,000
|
|
|
(1) |
In
connection with this Rights Offering, we have agreed to pay to
Maxim Group LLC as the dealer-manager an aggregate cash fee equal
to 7.0% of the gross proceeds received by us directly from
exercises of the Subscription Rights. We agreed to reimburse
expenses of Maxim Group LLC in the Rights Offering, up to $100,000.
We have also agreed to issue Maxim Group LLC a warrant covering a
number of shares of our common stock equal to 4.0% of the total
number of shares of common stock issuable upon the conversion of
the Preferred Stock issued in the Rights Offering. We have also
agreed that a portion of this compensation may be paid to
Ascendiant Capital Markets, LLC. See “Plan of
Distribution.” |
|
(2) |
Assumes
the Rights Offering is fully subscribed but excludes proceeds from
the exercise of Warrants included within the Units. |
Our
board of directors is making no recommendation regarding your
exercise of the Subscription Rights. You should carefully consider
whether to exercise your Subscription Rights before the expiration
date. You may not revoke or revise any exercises of Subscription
Rights once made.
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.
Dealer-Manager
Maxim
Group LLC
The
date of this Prospectus is
,
2022
TABLE
OF CONTENTS
ABOUT THIS PROSPECTUS
The
registration statement of which this prospectus forms a part that
we have filed with the Securities and Exchange Commission, or SEC,
includes exhibits that provide more detail of the matters discussed
in this prospectus. You should read this prospectus and the related
exhibits filed with the SEC, together with the additional
information described under the headings “Where You Can Find More
Information” and “Incorporation by Reference” before making your
investment decision.
You
should rely only on the information provided in this prospectus or
in a prospectus supplement or any free writing prospectuses or
amendments thereto. Neither we nor the deal-manager have authorized
anyone else to provide you with different information. We do not,
and the dealer-manager and its affiliates do not, take any
responsibility for, and can provide no assurance as to the
reliability of, any information that others may provide to you. If
anyone provides you with different or inconsistent information, you
should not rely on it. You should assume that the information in
this prospectus is accurate only as of the date hereof, regardless
of the time of delivery of this prospectus or any sale of
securities. Our business, financial condition, results of
operations and prospects may have changed since that
date.
We
are not, and the dealer-manager is not, offering to sell or seeking
offers to purchase these securities in any jurisdiction where the
offer or sale is not permitted. We and the dealer-manager have not
done anything that would permit this offering or possession or
distribution of this prospectus in any jurisdiction where action
for that purpose is required, other than in the United States.
Persons outside the United States who come into possession of this
prospectus must inform themselves about, and observe any
restrictions relating to, the offering of the securities as to
distribution of the prospectus outside of the United
States.
Unless
the context otherwise requires, references in this prospectus to
“SINTX,” “the Company,” “we,” “us” and “our” refer to SINTX
Technologies, Inc. and our subsidiaries. Solely for convenience,
trademarks and tradenames referred to in this prospectus may appear
without the ® or ™ symbols, but such references are not intended to
indicate in any way that we will not assert, to the fullest extent
under applicable law, our rights, or that the applicable owner will
not assert its rights, to these trademarks and
tradenames.
PROSPECTUS SUMMARY
This
summary contains basic information about us and this offering.
Because it is a summary, it does not contain all of the information
that you should consider before investing. Before you decide to
invest in our Units, you should read this entire prospectus
carefully, including the section entitled “Risk Factors” and any
information incorporated by reference herein.
Company
Overview
SINTX Technologies is a 25-year-old advanced materials company
formed in December 1996, that develops and commercializes advanced
ceramics for biomedical, industrial, and antipathogenic
applications. We have grown from focusing primarily on the
research, development and commercialization of medical devices
manufactured with silicon nitride to becoming an advanced ceramics
company engaged in diverse fields, including biomedical, industrial
and antipathogenic applications. This diversification enables us to
focus on our core competencies which are the manufacturing,
research, and development of products comprised from advanced
ceramic materials for external partners. We seek to connect with
new customers, partners and manufacturers to help them realize the
goal of leveraging our expertise in advanced ceramics to create
new, innovative products across these sectors.
SINTX
Core Business
Biomedical Applications: Since its inception, SINTX has been
focused on medical grade silicon nitride. SINTX silicon nitride
products are biocompatible, bioactive, antipathogenic, and have
shown superb bone affinity. Spinal implants made from SINTX silicon
nitride have been successfully implanted in humans since 2008 in
the US, Europe, Brazil, and Taiwan. This established use, along
with its inherent resistance to bacterial adhesion and bone
affinity – mean that it may also be suitable in other fusion device
applications such as hip, knee and dental implants. Bacterial
infection of any biomaterial implants is always a concern. SINTX
silicon nitride is inherently resistant to bacterial colonization
and biofilm formation, making it antibacterial. SINTX silicon
nitride products can be polished to a smooth and wear-resistant
surface for articulating applications, such as bearings for hip and
knee replacements.
We
believe that silicon nitride has a superb combination of properties
that make it suited for long-term human implantation. Other
biomaterials are based on bone grafts, metal alloys, and polymers-
all of which have well-known practical limitations and
disadvantages. In contrast, silicon nitride has a legacy of success
in the most demanding and extreme industrial environments. As a
human implant material, silicon nitride offers bone ingrowth,
resistance to bacterial and viral infection, ease of diagnostic
imaging, resistance to corrosion, and superior strength and
fracture resistance, among other advantages, all of which claims
are validated in our large and growing inventory of peer-reviewed,
published literature reports. We believe that our versatile silicon
nitride manufacturing expertise positions us favorably to introduce
new and innovative devices in the medical and non-medical
fields.
In June 2022, the Company acquired Technology Assessment and
Transfer, Inc. (TA&T). TA&T is a nearly 40-year-old
business, and TA&T’s mission is to transition advanced
materials and process technologies from a laboratory environment to
commercial products and services. TA&T has supplied ceramics
for use in several biomedical applications. These products were
made via 3D printing and include components for surgical
instruments as well as conceptual and prototype dental
implants.
Industrial Applications: It is the belief of SINTX that its
silicon nitride has the best combination of mechanical, thermal,
and electrical properties of any technical ceramic material. It is
a high-performance technical ceramic with high strength, toughness,
and hardness, and is extremely resistant to thermal shock and
impact. It is also an electrically insulating ceramic material.
Typically, it is used in applications where high load-bearing
capacity, thermal stability, and wear resistance are required. The
Company has obtained AS9100D certification and ITAR registration to
facilitate entry into the aerospace portion of this market.
SINTX has recently entered the ceramic armor market through the
purchase of assets from B4C, LLC and a technology partnership with
Precision Ceramics USA. SINTX intends to develop and manufacture
high-performance ceramics for personnel, aircraft, and vehicle
armor including a 100% Boron Carbide material for ultimate
lightweight performance in ballistic applications, and a composite
material made of Boron Carbide and Silicon Carbide for exceptional
multi-hit performance against ballistic threats. SINTX has signed a
10-year lease at a building near its headquarters in Salt Lake
City, UT to house development and manufacturing activities for
SINTX Armor.
TA&T’s primary area of expertise is material processing and
fabrication know how for a broad spectrum of monolithic ceramic,
ceramic composite, and coating materials. Primary technologies
include Additive Manufacturing (3D Printing) of ceramics and
metals, low-cost fabrication of fiber reinforced ceramic matrix
composites (CMCs) and refractory chemical vapor deposited (CVD)
coatings, transparent ceramics for ballistic armor and optical
applications, and magnetron sputtered (PVD) coatings for
lubrication, wear resistance and environmental barrier coatings for
CMCs. TA&T also provides a host of services that include 3D
printing, PVD-CVD coatings, material processing-CMCs, CIP, PS, HP,
HIP, and material characterization for powders and finished
parts-TGA/DSC, PSD. SA, Dilatometry, UV-VIS and FTIR transmission,
haze and clarity.
Antipathogenic
Applications: Today, there is a global need to improve
protection against pathogens in everyday life. SINTX believes that
by incorporating its unique composition of silicon nitride
antipathogenic powder into products such as face masks, filters,
and wound care devices, it is possible to manufacture surfaces that
inactivate pathogens, thereby limiting the spread of infection and
disease. The discovery in 2020 that SINTX silicon nitride
inactivates SARS-CoV-2, the virus which causes the disease
COVID-19, has opened new markets and applications for our material
and we have refocused many of our resources on these
opportunities.
SINTX
presently manufactures advanced ceramic powders and components in
our manufacturing facilities based in Salt Lake City,
Utah.
Our
Strategy
Our
goal is to become a leading advanced ceramics company. Key elements
of our strategy to achieve this goal are the following:
|
● |
Develop
new products with anti-pathogenic properties, including
inactivation of the SARS-CoV-2 virus, utilizing our silicon nitride
technology. We have conducted multiple tests over the last nine
years which have identified and verified the antipathogenic
properties of our silicon nitride powders, fully dense components,
and silicon nitride-containing composites. Our research has
explored the fundamental mechanisms responsible for these
antipathogenic properties with the objective of developing
commercial products and revenue from them. We have several
partnerships exploring opportunities in face masks, filters, wound
care, and coatings. |
|
|
|
|
● |
Develop
additional commercial opportunities outside of the medical device
market. We have pursued the development of non-medical uses for
our silicon nitride since selling the retail spine business in
2018. In 2019, we became ITAR-registered and obtained AS9100D
certification of our quality management system. We have hired
experienced business development employees to identify new markets
and applications for our materials and develop commercial
relationships. We made the first shipments of non-medical products
in our history in 2020. These were primarily prototype orders, and
we expect some of these to transition into regular production
orders. We expect to generate revenue from new products with the
launch of SINTX Armor and the acquisition of TA&T. The
potential use of our silicon nitride in antipathogenic applications
has also opened up the potential to enter many new
markets. |
|
|
|
|
● |
Develop
new silicon nitride manufacturing technologies. Our current
manufacturing process has allowed us to successfully produce spinal
implants for over 10 years. We have made advancements in our
processes – including the purchase of new manufacturing equipment –
which we have leveraged to develop new porous and textured
implants. In 2021, SINTX purchased new equipment for its research
and development team to develop new composite products of silicon
nitride with rigid polymers and fabrics. |
|
|
|
|
● |
Apply
our silicon nitride technology platform to new medical
opportunities. We believe our biomaterial expertise, flexible
manufacturing process, and strong intellectual property will allow
us to transition currently available medical device products made
of inferior biomaterials and manufacture them using silicon nitride
and our technology platform to improve their characteristics. We
are seeking partnerships to utilize our capabilities and
manufacture products for medical OEM and private label
partnerships. We see specific opportunities in markets such as foot
and ankle, dental, maxillofacial, and arthroplasty. |
Intellectual
Property
We
rely on a combination of patents, trademarks, trade secrets,
nondisclosure agreements, proprietary information ownership
agreements and other intellectual property measures to protect our
intellectual property rights. We believe that to have a competitive
advantage, we must continue to develop and maintain the proprietary
aspects of our technologies.
We
have fourteen issued U.S. patents, one foreign patent, eighteen
pending U.S. non-provisional patent applications, one pending U.S.
provisional patent application, thirty-three pending foreign
applications and eleven pending PCT patent applications. Our first
issued patent expired in 2016, with the last of these patents
expiring in 2039.
We
have seven U.S. patents directed to articulating implants using our
high-strength, high toughness doped silicon nitride solid ceramic.
The issued patents, which include US 6,881,229; US 7,666,229; US
7,780,738; US 8,123,812; US 8,133,284; US 9,051,639; and US
9,517,136 begin to expire in June 2022.
We
also have two U.S. patents related to our CSC technology that are
directed to implants that have both a dense load-bearing, or
cortical, component and a porous, or cancellous, component,
together with a surface coating. These issued patents, US 8,133,284
and US 9,649,197 will expire in June 2022 and 2035,
respectively.
In
addition, U.S. Patent No. 10,806,831 directed to antibacterial
implants and U.S. Patent No. 11,191,787 directed to antipathogenic
devices were recently issued which will expire in 2037 and 2039,
respectively.
With
respect to PCT patent application serial no. PCT/US2018/014781
directed to antibacterial biomedical implants, we entered the
national stage in Europe, Australia, Brazil, Canada, China, Japan,
Hong Kong, and South Korea as well as two divisional patent
applications filed in Australia and Japan to seek potential patent
protection for our proprietary technologies in those
countries.
With
respect to PCT patent application serial no. PCT/US2019/026789
directed to methods for improving the wear performance of
ceramic-polyethylene or ceramic-ceramic articulation couples
utilized in orthopaedic joint prostheses, we entered the national
stage in Australia, Brazil, Canada, Europe, Japan, Korea, and
Mexico to seek proprietary technologies in those
countries.
With
respect to PCT application serial no. PCT/US2019/048072 directed to
antipathogenic devices and methods, we entered the national stage
in Europe, Japan, Mexico, Australia, Brazil, Canada, South Korea,
China and India to seek proprietary technologies in those
countries.
With
respect to PCT application serial no. PCT/US2020/037170 directed to
methods of surface functionalization of zirconia-toughened alumina
with silicon nitride, we entered the national stage in Europe,
Australia, Brazil, Canada, China, India, Japan, Mexico, and the
United States to seek proprietary technologies in those
countries.
With
respect to PCT application serial no. PCT/US2021/014725 directed to
antifungal composites and methods thereof, we plan on entering the
national stage before the statutory deadline on July 24, 2022 in
Europe, Brazil, Australia, Canada, China, India, Mexico, and South
Korea to seek proprietary technologies in those
countries.
In
relation to the sale of our spine implant business to CTL Medical
under the Asset Purchase Agreement dated September 5, 2018 we
assigned our entire right to forty-eight (48) U.S. patents, two (2)
foreign patents and three (3) pending patent applications from our
patent portfolio to CTL Medical under that transaction. In
addition, three (3) U.S. patents (U.S. patent nos. 9,399,309;
9,517,136; and 9,649,197) directed to silicon nitride manufacturing
processes were licensed to CTL Medical under an irrevocable, fully
paid-up, worldwide license for a ten-year term with CTL Medical
also having a Right of First Negotiation to acquire these patents
if SINTX decides to later sell these IP assets to a third
party.
Our
remaining issued patents and pending applications are directed to
additional aspects of our products and technologies including,
among other things:
|
● |
designs
for intervertebral fusion devices; |
|
|
|
|
● |
designs
for hip implants; |
|
|
|
|
● |
designs
for knee implants; |
|
|
|
|
● |
implants
with improved antibacterial characteristics; |
|
|
|
|
● |
implants
with improved wear performance and surface
functionalization |
|
|
|
|
● |
antipathogenic,
antibacterial, antimicrobial, antifungal, and antiviral
compositions, devices, and methods; and |
|
|
|
|
● |
methods
and systems for laser cladding, laser coating, and laser sintering
of silicon nitride. |
We
also expect to rely on trade secrets, know-how, continuing
technological innovation and in-licensing opportunities to develop
and maintain our intellectual property position. However, trade
secrets are difficult to protect. We seek to protect the trade
secrets in our proprietary technology and processes, in part, by
entering into confidentiality agreements with commercial partners,
collaborators, employees, consultants, scientific advisors and
other contractors and into invention assignment agreements with our
employees and some of our commercial partners and consultants.
These agreements are designed to protect our proprietary
information and, in the case of the invention assignment
agreements, to grant us ownership of the technologies that are
developed.
Corporate
Information
Our
headquarters is located at 1885 West 2100 South, Salt Lake City,
Utah 84119, and our telephone number is (801) 839-3500. We maintain
a website at https://www.sintx.com. Information on the website is
not incorporated by reference and is not a part of this
prospectus.
Summary
of the Rights Offering
Securities
to be Offered |
|
We
are distributing to you, at no charge, one non-transferable
Subscription Right to purchase one Unit for every share of our
common stock (or share of common stock issuable upon conversion of
Series B Preferred Stock, Series C Preferred Stock and exercise of
the Participating Warrants) that you owned on the Record Date. Each
Unit consists of one share of our Preferred Stock and approximately
5,426 Warrants, based on the Estimated Conversion Price. The actual
number of Warrants that will be included in the Units will depend
on the Conversion Price determined at the expiration of the Rights
Offering. The actual number of Class A Warrants included in each
Unit will be calculated as the quotient obtained by dividing $1,000
by the Conversion Price. The actual number of Class B Warrants
included in each Unit will be calculated as the quotient obtained
by dividing $1,000 by the Conversion Price. The Units will separate
upon the closing of the Rights Offering and the Preferred Stock and
Warrants will be issued separately, however, they may only be
purchased as a Unit, and the Unit will not trade as a separate
security. |
|
|
|
Size
of Offering |
|
10,000
Units. |
|
|
|
Subscription
Price |
|
$1,000
per Unit. |
|
|
|
Series
D Convertible Preferred Stock |
|
Each
share of Preferred Stock will be convertible, at the option of the
holder at any time, into the number of shares of our common stock
determined by dividing the $1,000 stated value per share of the
Preferred Stock by a conversion price equal to 90% of the lowest
closing price for a share of our common stock as quoted on the
Nasdaq Capital Market, during the five (5) trading days prior to
the expiration of the Subscription Period (including the last day
of the Subscription Period), subject to adjustment (the “Conversion
Price”). For purposes of this preliminary prospectus, we have
assumed an estimated Conversion Price of $0.36864 which is equal to
90% of the closing price of our common stock on September 19, 2022
(the “Estimated Conversion Price”). Based on the Estimated
Conversion Price, the Preferred Stock included in the Units would
be initially convertible into an aggregate of 27,130,000 shares of
common stock. The actual number of shares that the Preferred Stock
may be converted into will depend on the Conversion Price
determined on the expiration date. Because the actual Conversion
Price will be determined on the expiration date, rights holders
will not know the Conversion Price, nor will they know the number
of shares of common stock underlying the Preferred Stock, at the
time of exercise. The Preferred Stock has certain conversion rights
and dividend rights. |
|
|
|
Warrants |
|
Each
Class A Warrant entitles the holder to purchase one share of our
common stock at an exercise price equal to the Conversion Price,
subject to adjustment, from the date of issuance through its
expiration five years from the date of issuance. Each Class B
Warrant entitles the holder to purchase one share of our common
stock at an exercise price equal to the Conversion Price, subject
to adjustment, from the date of issuance through its expiration
three years from the date of issuance. Based on the Estimated
Conversion Price, the Warrants included in the Units would be
initially exercisable for an aggregate of 54,260,000 shares of
common stock. The actual number of shares that the Warrants may be
exercised for will depend on the Conversion Price determined on the
expiration date. The actual number of Class A Warrants included in
each Unit will be calculated as the quotient obtained by dividing
$1,000 by the Conversion Price. The actual number of Class B
Warrants included in each Unit will be calculated as the quotient
obtained by dividing $1,000 by the Conversion Price. Because the
actual Conversion Price will be determined on the expiration date,
rights holders will not know the Conversion Price, nor will they
know the number of shares of common stock underlying the Warrants,
at the time of exercise. The Warrants will be exercisable for cash,
or, solely during any period when a registration statement for the
exercise of the Warrants is not in effect, on a cashless basis, at
any time and from time to time after the date of
issuance. |
|
|
|
Record
Date |
|
5:00
p.m., Eastern Time, September 23, 2022. |
|
|
|
Basic
Subscription Rights |
|
Your
Basic Subscription Right will entitle you to purchase one Unit at
the Subscription Price. You may exercise your Basic Subscription
Right for some or all of your Subscription Rights, or you may
choose not to exercise your Subscription Rights. If you choose to
exercise your Subscription Rights, there is no minimum number of
Units you must purchase. We are distributing Basic Subscription
Rights to purchase an aggregate of 25,896,283 Units, but are only
selling 10,000 Units in the Rights Offering. In the event that the
Rights Offering is over-subscribed, rights holders will be entitled
to their pro rata portion of the Units. |
|
|
|
Over-Subscription
Privilege |
|
If
you exercise your Basic Subscription Rights in full, you may also
choose to exercise an over-subscription privilege to purchase a
portion of any Units that are not purchased by our other common,
Series B Preferred, and Series C Preferred stockholders or
Participating Warrant holders through the exercise of their Basic
Subscription Rights, subject to proration and stock ownership
limitations described elsewhere in this prospectus. The
subscription agent will return any excess payments by mail without
interest or deduction promptly after expiration of the subscription
period. |
|
|
|
Expiration
Date |
|
The
Subscription Rights will expire at 5:00 p.m., Eastern Time, on
October 12, 2022. |
|
|
|
Procedure
for Exercising Subscription Rights |
|
To
exercise your Subscription Rights, you must take the following
steps:
If
you are a record holder, as of the Record Date, of our common
stock, Series B Preferred Stock, Series C Preferred Stock or
Participating Warrants, you must deliver payment and a properly
completed Rights Certificate to the Subscription Agent to be
received before 5:00 p.m., Eastern Time, on October 12, 2022. You
may deliver the documents and payments by first class mail or
courier service. If you use first class mail for this purpose, we
recommend using registered mail, properly insured, with return
receipt requested.
If as
of the Record Date you are a beneficial owner of shares of common
stock, Series B Preferred Stock, Series C Preferred Stock or
Participating Warrants that are registered in the name of a broker,
dealer, bank or other nominee, you should instruct your broker,
dealer, bank or other nominee to exercise your Subscription Rights
on your behalf. Please follow the instructions of your nominee, who
may require that you meet a deadline earlier than 5:00 p.m.,
Eastern Time, on October 12, 2022.
|
Payment
Adjustments |
|
If
you send a payment that is insufficient to purchase the number of
Units requested, or if the number of Units requested is not
specified in the Rights Certificate, the payment received will be
applied to exercise Subscription Rights to the extent of the
payment. If the payment exceeds the amount necessary for the full
exercise of your Subscription Rights, including any
over-subscription privilege exercised and permitted, the excess
will be returned to you promptly in cash. You will not receive
interest or a deduction on any payments refunded to you under the
Rights Offering. |
|
|
|
Delivery
of Shares and Warrants |
|
As
soon as practicable after the expiration of the Rights Offering,
and within five business days thereof, we expect to close on
subscriptions and for the Subscription Agent to arrange for the
issuance of the shares of Preferred Stock and Warrants purchased
pursuant to the Rights Offering. All shares and Warrants that are
purchased in the Rights Offering will be issued in book-entry, or
uncertificated, form meaning that you will receive a direct
registration, or DRS, account statement from our transfer agent
reflecting ownership of these securities if you are a holder of
record. If you hold your shares or Participating Warrants in the
name of a bank, broker, dealer, or other nominee, DTC will credit
your account with your nominee with the securities you purchased in
the Rights Offering. |
|
|
|
Non-transferability
of Subscription Rights |
|
The
Subscription Rights may not be sold, transferred, assigned or given
away to anyone. The Subscription Rights will not be listed for
trading on any stock exchange or market. |
|
|
|
Transferability
of Warrants |
|
The
Class A Warrants will be separately transferable following their
issuance and through their expiration five years from the date of
issuance. The Class B Warrants will be separately transferable
following their issuance and through their expiration three years
from the date of issuance. |
|
|
|
No
Board Recommendation |
|
Our
board of directors is not making a recommendation regarding your
exercise of the Subscription Rights. You are urged to make your
decision to invest based on your own assessment of our business and
financial condition, our prospects for the future, the terms of the
Rights Offering, the information in this prospectus and other
information relevant to your circumstances. Please see “Risk
Factors” for a discussion of some of the risks involved in
investing in our securities. |
|
|
|
No
Revocation |
|
Except
as described below, all exercises of Subscription Rights are
irrevocable, even if you later learn of information that you
consider to be unfavorable to the exercise of your Subscription
Rights. |
|
|
|
Use
of Proceeds |
|
Assuming
the exercise of Subscription Rights to purchase all Units of the
Rights Offering, after deducting fees and expenses payable to the
dealer-manager, before deducting other estimated expenses payable
by us and excluding any proceeds received upon exercise of any
Warrants, we estimate the net proceeds of the Rights Offering will
be approximately $9.2 million. We intend to use the net proceeds
from the exercise of Subscription Rights for general corporate
purposes and to fund ongoing operations and expansion of our
business. See “Use of Proceeds.” |
Material
U.S. Federal Income
Tax
Consequences
|
|
For
U.S. federal income tax purposes, we do not believe you should
recognize income or loss upon receipt or exercise of a Subscription
Right, but the receipt and exercise of the Subscription Rights is
unclear in certain respects. You should consult your own tax
advisor as to the tax consequences of the Rights Offering in light
of your particular circumstances. See “Material U.S. Federal Income
Tax Consequences.” |
|
|
|
Extension,
Amendment and Termination |
|
Although
we do not presently intend to do so, we may extend the Rights
Offering for additional time in our sole discretion for any reason
for up to an additional 45 days. For example, we may decide that
changes in the market price of our common stock warrant an
extension, or we may decide that the degree of stockholder
participation in the Rights Offering is less than the level we
desire. In the event that we decide to extend the Rights Offering
and you have already exercised your Subscription Rights, your
subscription payment will remain with the Subscription Agent until
such time as the Rights Offering closes or is terminated. We also
reserve the right to amend or modify the terms of the Rights
Offering, as appropriate. Our board of directors may for any reason
terminate the Rights Offering at any time before the expiration of
the Rights Offering. In the event that the Rights Offering is
cancelled, all subscription payments received by the Subscription
Agent will be returned, without interest or deduction, as soon as
practicable.
If we
should make any fundamental changes to the terms set forth in this
prospectus, we will (i) file a post-effective amendment to the
registration statement of which this prospectus forms a part, (ii)
offer potential purchasers who have subscribed for rights the
opportunity to cancel such subscriptions and issue a refund of any
money advanced by such stockholder or eligible warrant holder, and
(iii) recirculate an updated prospectus after the post-effective
amendment is declared effective with the SEC.
|
|
|
|
Subscription
Agent |
|
American
Stock Transfer & Trust Company, LLC |
|
|
|
Information
Agent |
|
D.F.
King & Co., Inc. |
|
|
|
Questions |
|
If
you have any questions about the Rights Offering, please contact
the Information Agent, D.F. King & Co., Inc., toll free at
(866) 620-2536, by mail at D.F. King & Co., Inc., 48 Wall
Street, 22nd Floor, New York, NY 10005 or by email at
sintx@dfking.com. |
|
|
|
Market
for Common Stock |
|
Our
common stock is listed on Nasdaq under the symbol
“SINT.” |
|
|
|
Market
for Series D Preferred Stock |
|
There
is no established public trading market for the Series D Preferred
Stock, and we do not expect a market to develop. In addition, we do
not intend to apply for listing of the Series D Preferred Stock on
any securities exchange or recognized trading system. |
|
|
|
Market
for Warrants |
|
There
is no established public trading market for the Warrants, and we do
not expect a market to develop. In addition, we do not intend to
apply for listing of the Warrants on any securities exchange or
recognized trading system. |
|
|
|
Dealer-manager |
|
Maxim
Group LLC will act as dealer-manager for the Rights
Offering. |
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE
The
SEC allows us to “incorporate by reference” into this prospectus
the information in other documents that we file with it. This means
that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and information in
documents that we file later with the SEC will automatically update
and supersede information contained in documents filed earlier with
the SEC or contained in this prospectus. We incorporate by
reference in this prospectus the documents listed below and any
future filings that we may make with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act prior to the termination of
the offering under this prospectus; provided, however, that we are
not incorporating, in each case, any documents or information
deemed to have been furnished and not filed in accordance with SEC
rules:
|
● |
our
Annual Report on Form 10-K for the year ended
December 31, 2021; |
|
|
|
|
● |
our
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2022; |
|
|
|
|
● |
our
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2022; |
|
|
|
|
● |
our
Current Report on Form 8-K filed on January 4,
2022; |
|
|
|
|
● |
our
Current Report on Form 8-K filed on July 6,
2022: |
|
|
|
|
● |
our
Current Report on Form 8-K filed on July 11,
2022: |
|
|
|
|
● |
the
description of our common stock, which is contained in the
Registration Statement on Form 8-A, as filed with the SEC
on February 7, 2014, as updated by the description of our common
stock contained in Exhibit 4.11 to our Annual Report
on Form 10-K for the fiscal year ended December 31, 2021 and
including any amendment or report filed for the purpose of updating
such description. |
Additionally,
all documents filed by us with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act (i) prior to effectiveness of this
registration statement, and (ii) after the effective date of this
registration statement and before the termination or completion of
any offering hereunder, shall be deemed to be incorporated by
reference into this prospectus from the respective dates of filing
of such documents, except that we do not incorporate any document
or portion of a document that is “furnished” to the SEC, but not
deemed “filed.”
Any
statement contained in this prospectus supplement, the accompanying
prospectus or in a document incorporated or deemed to be
incorporated by reference into this prospectus supplement and the
accompanying prospectus will be deemed to be modified or superseded
for purposes of this prospectus supplement and the accompanying
prospectus to the extent that a statement contained in this
prospectus supplement and the accompanying prospectus or any other
subsequently filed document that is deemed to be incorporated by
reference into this prospectus supplement and the accompanying
prospectus modifies or supersedes the statement. Any statements so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus supplement
and the accompanying prospectus.
We
will furnish without charge to you, on written or oral request, a
copy of any or all of the documents incorporated by reference in
this prospectus, including exhibits to these documents. You should
direct any requests for documents to SINTX Technologies, Inc.,
Attention: Investor Relations, 1885 West 2100 South, Salt Lake
City, Utah 84119 or by calling (801) 839-3500.
You
also may access these filings on our website at
www.sintx.com. We do not incorporate the
information on our website into this prospectus supplement or the
accompanying prospectus and you should not consider any information
on, or that can be accessed through, our website as part of this
prospectus supplement or the accompanying prospectus (other than
those filings with the SEC that we specifically incorporate by
reference into this prospectus supplement and the accompanying
prospectus).
WHERE YOU CAN FIND MORE
INFORMATION
We
have filed a registration statement on Form S-1 with the SEC under
the Securities Act of 1933, as amended. This prospectus is part of
the registration statement, but the registration statement includes
additional information and exhibits. We file annual, quarterly and
current reports, proxy statements and other information with the
SEC. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding companies,
such as ours, that file documents electronically with the SEC. The
website address is www.sec.gov. The information on the SEC’s
website is not part of this prospectus, and any references to this
website or any other website are inactive textual references
only.
QUESTIONS AND ANSWERS RELATING TO THE
RIGHTS OFFERING
The
following are examples of what we anticipate will be common
questions about this Rights Offering. The answers are based on
selected information included elsewhere in this prospectus. The
following questions and answers do not contain all of the
information that may be important to you and may not address all of
the questions that you may have about the Rights Offering. This
prospectus and the documents incorporated by reference into this
prospectus contain more detailed descriptions of the terms and
conditions of the Rights Offering and provides additional
information about us and our business, including potential risks
related to the Rights Offering, the Units offered hereby, and our
business. We urge you to read this entire prospectus and the
documents incorporated by reference into this
prospectus.
Why
are we conducting the Rights Offering?
We
are conducting the Rights Offering to raise additional capital for
general corporate purposes and to fund ongoing operations and
expansion of our business.
What
is a Unit?
Each Unit consists of one share of Series D Convertible Preferred
Stock and, based on the Estimated Conversion Price, 5,426 warrants
to purchase common stock, at a subscription price of $1,000 per
Unit. No fractional Units will be issued. Each share of Preferred
Stock will have a stated value of $1,000 and will be convertible
into shares of our common stock at a conversion price equal to the
Conversion Price determined on the expiration date. Each Class A
Warrant entitles you to purchase one share of common stock at a per
share exercise price equal to the Conversion Price, from the date
of issuance through its expiration five years after the date of
issuance. Each Class B Warrant entitles you to purchase one share
of common stock at a per share exercise price equal to the
Conversion Price, from the date of issuance through its expiration
three years after the date of issuance. The Preferred Stock do not
generally have any voting rights and will not be certificated. The
shares of Preferred Stock and warrants that comprise each Unit are
immediately separable and will be issued separately in this Rights
Offering, however, they may only be purchased as a Unit, and the
Units will not trade as a separate security.
What
is the Rights Offering?
We
are distributing, at no charge, to holders of our common stock,
Series B Preferred Stock, Series C Preferred Stock and holders of
the Participating Warrants, as of the Record Date, non-transferable
Subscription Rights to purchase Units at a price of $1,000 per
Unit. The Subscription Rights will not be tradable. Each Unit
consists of one share of our Preferred Stock and, based on the
Estimated Conversion Price, 5,426 Warrants. See “Are there risks in
exercising my Subscription Rights?” below. Each Warrant will be
exercisable for one share of our common stock. Upon expiration of
the Rights Offering, the Preferred Stock and Warrants comprising
the Units will immediately separate and will be issued separately
but may only be purchased as a Unit, and the Units will not trade
as a separate security. There is no public trading market for the
Preferred Stock or the Warrants and they will not be listed for
trading on Nasdaq or any other securities exchange or market. The
common stock to be issued upon conversion of the Preferred Stock or
exercise of the Warrants, like our existing shares of common stock,
will be traded on the NASDAQ Capital Market under the symbol
“SINT.” You will receive one Subscription Right for every share of
common stock (including each share of common stock issuable upon
conversion of Series B Preferred Stock, Series C Preferred Stock
and exercise of Participating Warrants) that you owned as of 5:00
p.m., Eastern Time, on the Record Date. Each Subscription Right
entitles the record holder to a Basic Subscription Right and an
Over-Subscription Privilege. The Subscription Rights will expire if
they are not exercised by 5:00 p.m., Eastern Time, on October 12,
2022, unless we extend or earlier terminate the Rights
Offering.
What
are the Basic Subscription Rights?
For every share you owned (including each share of common stock
issuable upon conversion of Series B Preferred Stock, Series C
Preferred Stock and exercise of Participating Warrants) as of the
Record Date, you will receive one Basic Subscription Right, which
gives you the opportunity to purchase one Unit, consisting of one
share of our Preferred Stock and, based on the Estimated Conversion
Price, 5,426 Warrants, for a price of $1,000 per Unit. For example,
if you owned 100 shares of common stock as of the Record Date, you
will receive 100 Subscription Rights and will have the right to
purchase 100 shares of our Preferred Stock and, based on the
Estimated Conversion Price, Warrants to purchase 542,600 shares of
our common stock for $1,000 per Unit (or a total payment of
$100,000). You may exercise all or a portion of your Basic
Subscription Rights or you may choose not to exercise any Basic
Subscription Rights at all.
If
you are a record holder of our common stock, Series B Preferred
Stock, Series C Preferred Stock or Participating Warrants, the
number of shares you may purchase pursuant to your Basic
Subscription Rights is indicated on the enclosed Rights
Certificate. If you hold your common shares, Series B Preferred
Stock, Series C Preferred Stock or Participating Warrants in the
name of a broker, dealer, bank or other nominee who uses the
services of the Depository Trust Company, or DTC, you will not
receive a Rights Certificate. Instead, DTC will issue one
Subscription Right to your nominee record holder for each share of
our common stock (including each share of common stock issuable
upon conversion of Series B Preferred Stock, Series C Preferred
Stock and exercise of Participating Warrants) that you beneficially
own as of the Record Date. If you are not contacted by your
nominee, you should contact your nominee as soon as
possible.
What
is the Over-Subscription Privilege?
If
you exercise your Basic Subscription Rights in full, you may also
choose to exercise your Over-Subscription Privilege to purchase a
portion of any Units that are not purchased by other holders of
common stock, Series B Preferred Stock, Series C Preferred Stock or
Participating Warrant holders and remain available under the Rights
Offering. You should indicate on your Rights Certificate, or the
form provided by your nominee if your shares are held in the name
of a nominee, how many additional Units you would like to purchase
pursuant to your Over-Subscription Privilege, which we refer to as
your Over-Subscription Request.
Subject
to stock ownership limitations, if enough Units are available, we
will seek to honor your Over-Subscription Request in full. If Over-
Subscription Requests exceed the number of Units available,
however, we will allocate the available Units pro-rata among the
stockholders and warrant holders exercising the Over-Subscription
Privilege in proportion to the number of shares of our common stock
(including each share of common stock issuable upon conversion of
Series B Preferred Stock, Series C Preferred Stock and exercise of
Participating Warrants) each of those stockholders and warrant
holders owned on the Record Date, relative to the number of shares
(including each share of common stock issuable upon conversion of
Series B Preferred Stock, Series C Preferred Stock and exercise of
Participating Warrants) owned on the Record Date by all record
holders exercising the Over-Subscription Privilege. If this
pro-rata allocation results in any stockholders or warrant holders
receiving a greater number of Units than the stockholder or warrant
holders subscribed for pursuant to the exercise of the
Over-Subscription Privilege, then such stockholder or warrant
holder will be allocated only that number of Units for which the
stockholder or warrant holder oversubscribed, and the remaining
Units will be allocated among all other stockholders and warrant
holders exercising the Over-Subscription Privilege on the same pro
rata basis described above. The proration process will be repeated
until all Units have been allocated. See “The Rights Offering-
Limitation on the Purchase of Units” for a description of certain
stock ownership limitations.
To
properly exercise your Over-Subscription Privilege, you must
deliver to the Subscription Agent the subscription payment related
to your Over- Subscription Privilege before the Rights Offering
expires. Because we will not know the total number of unsubscribed
Units before the expiration of the Rights Offering, if you wish to
maximize the number of Units you purchase pursuant to your
over-subscription privilege, you will need to deliver payment in an
amount equal to the aggregate Subscription Price for the maximum
number of Units available, assuming that no common, Series B or
Series C stockholder or warrant holders other than you has
purchased any Units pursuant to such stockholder’s or warrant
holder’s basic subscription right and over-subscription privilege.
See “The Rights Offering- The Subscription Rights-Over-Subscription
Privilege.” To the extent you properly exercise your
Over-Subscription Privilege for a number of Units that exceeds the
number of unsubscribed Units available to you, any excess
subscription payments will be returned to you within 10 business
days after the expiration of the Rights Offering, without interest
or deduction.
American
Stock Transfer & Trust Company, LLC, our Subscription Agent for
the Rights Offering, will determine the allocation of
Over-Subscription Requests based on the formula described
above.
May
the Subscription Rights that I exercise be reduced for any
reason?
Yes. While we are distributing to holders of our common stock,
Series B Preferred Stock, Series C Preferred Stock, and holders of
the Participating Warrants, one Subscription Right for every share
of common stock (including each share of common stock issuable upon
conversion of Series B Preferred Stock, Series C Preferred Stock
and exercise of Participating Warrants) owned on the Record Date,
we are only seeking to raise $10 million in gross proceeds in this
Rights Offering. As a result, based on 24,727,789 shares of common
stock outstanding as of August 31, 2022, 19,306 shares of common
stock issuable upon conversion of 26 shares of Series B Preferred
Stock, 33,753 shares of common stock issuable upon conversion of 50
shares of Series C Preferred Stock and 1,115,729 shares of common
stock issuable upon exercise of Participating Warrants, we would
grant Subscription Rights to acquire 25,896,283 Units but will only
accept subscriptions for 10,000 Units. Accordingly, enough Units
may not be available to honor your subscription in full. If
exercises of Basic Subscription Rights exceed the number of Units
available in the Rights Offering, we will allocate the available
Units pro-rata among the record holders exercising the Basic
Subscription Rights in proportion to the number of shares of our
common stock (including each share of common stock issuable upon
conversion of Series B Preferred Stock, Series C Preferred Stock
and exercise of Participating Warrants) each of those record
holders owned on the Record Date, relative to the number of shares
owned on the Record Date by all record holders exercising the Basic
Subscription Right. If this pro-rata allocation results in any
record holders receiving a greater number of Units than the record
holder subscribed for pursuant to the exercise of the Basic
Subscription Rights, then such record holder will be allocated only
that number of Units for which the record holder subscribed, and
the remaining Units will be allocated among all other record
holders exercising their Basic Subscription Rights on the same pro
rata basis described above. The proration process will be repeated
until all Units have been allocated. Please also see the discussion
under “The Rights Offering-The Subscription
Rights-Over-Subscription Privilege” and “The Rights
Offering-Limitation on the Purchase of Units” for a description
potential proration as to the Over-Subscription Privilege and
certain stock ownership limitations.
If
for any reason the number of Units allocated to you is less than
you have subscribed for, then the excess funds held by the
Subscription Agent on your behalf will be returned to you, without
interest, as soon as practicable after the Rights Offering has
expired and all prorating calculations and reductions contemplated
by the terms of the Rights Offering have been effected, and we will
have no further obligations to you.
What
are the terms of the Series D Convertible Preferred
Stock?
Each
share of Preferred Stock will be convertible at the option of the
holder at any time, into the number of shares of our common stock
determined by dividing the $1,000 stated value per share of the
Preferred Stock by a conversion price equal to the Conversion Price
determined on the expiration date. The Preferred Stock has certain
conversion rights and dividend rights as described in more detail
herein.
What
are the terms of the Warrants?
Each Class A Warrant entitles the holder to purchase one share of
our common stock at a per share exercise price equal to the
Conversion Price from the date of issuance through its expiration
five years from the date of issuance. Each Class B Warrant entitles
the holder to purchase one share of our common stock at a per share
exercise price equal to the Conversion Price from the date of
issuance through its expiration three years from the date of
issuance. The Warrants will be exercisable for cash, or, solely
during any period when a registration statement for the exercise of
the Warrants is not in effect, on a cashless basis.
Are
the Preferred Stock or Warrants listed?
There
is no public trading market for the Preferred Stock or Warrants and
they will not be listed for trading on Nasdaq or any other
securities exchange or market. The Warrants will be issued in
registered form under a warrant agent agreement with American Stock
Transfer & Trust Company, LLC, as warrant agent.
Will
fractional shares be issued upon exercise of Subscription Rights,
the conversion of Preferred Stock, or the exercise of
Warrants?
No.
We will not issue fractional shares of common stock in the Rights
Offering. We will only distribute Subscription Rights to acquire
whole Units, rounded down to the nearest whole number of underlying
common shares giving rise to such Subscription Rights. Any excess
subscription payments received by the Subscription Agent will be
returned within 10 business days after expiration of the Rights
Offering, without interest or deduction.
Additionally,
no fractional shares of common stock will be issued as a result of
the conversion of shares of Preferred Stock or the exercise of
Warrants. Instead, for any such fractional share that would
otherwise have been issuable upon conversion of shares of Preferred
Stock, we may, at our election, pay a cash payment equal to such
fraction multiplied by the conversion price or round up to the next
whole share, and for any such fractional share that would have
otherwise been issued upon exercise of Warrants, we will round up
such fraction to the next whole share.
What
effect will the Rights Offering have on our outstanding common
stock?
Assuming no other transactions by us involving our capital stock
prior to the expiration of the Rights Offering, and if the Rights
Offering is fully subscribed, upon consummation of the Rights
Offering we will have, based on shares of common stock outstanding
as of August 31, 2022, 24,727,789 shares of common stock issued and
outstanding, 26 shares of Series B Preferred Stock issued and
outstanding convertible into an aggregate of 19,306 shares of
our common stock, 50 shares of Series C Preferred Stock issued and
outstanding convertible into an aggregate of 33,753 shares of our
common stock, and 10,000 shares of Preferred Stock issued and
outstanding convertible into an aggregate of 27,130,000 shares of
our common stock, based on the Estimated Conversion Price, and
Warrants to purchase an additional 54,260,000 shares of our common
stock, based on the Estimated Conversion Price, issued and
outstanding. The exact number of shares of Preferred Stock and
Warrants that we will issue in this offering will depend on the
number of Units that are subscribed for in the Rights Offering. In
addition, because the Conversion Price will be determined on the
expiration date, the actual number of shares of common stock
underlying the Preferred Stock and Warrants will not be known until
the expiration date.
How
was the Subscription Price determined?
In
determining the Subscription Price, the directors considered, among
other things, the following factors:
|
● |
the
current and historical trading prices of our common
stock; |
|
|
|
|
● |
the
price at which stockholders might be willing to participate in the
Rights Offering; |
|
|
|
|
● |
the
value of the common stock issuable upon conversion of the Preferred
Stock being issued as a component of the Unit; |
|
|
|
|
● |
the
value of the Warrant being issued as a component of the
Unit; |
|
|
|
|
● |
our
need for additional capital and liquidity; |
|
|
|
|
● |
the
cost of capital from other sources; and |
|
|
|
|
● |
comparable
precedent transactions, including the percentage of shares offered,
the terms of the subscription rights being offered, the
subscription price and the discount that the subscription price
represented to the immediately prevailing closing prices for those
offerings. |
In
conjunction with the review of these factors, the board of
directors also reviewed our history and prospects, including our
past and present earnings and cash requirements, our prospects for
the future, the outlook for our industry and our current financial
condition. The board of directors also believed that the
Subscription Price should be designed to provide an incentive to
our current stockholders to participate in the Rights Offering and
exercise their Basic Subscription Right and their Over-Subscription
Privilege.
The
Subscription Price does not necessarily bear any relationship to
any established criteria for value. You should not consider the
Subscription Price as an indication of actual value of our company
or our common stock. The market price of our common stock may
decline during or after the Rights Offering. You should obtain a
current price quote for our common stock and perform an independent
assessment of our Preferred Stock and Warrants before exercising
your Subscription Rights and make your own assessment of our
business and financial condition, our prospects for the future, the
terms of the Rights Offering, the information in this prospectus
and the other considerations relevant to your circumstances. Once
made, all exercises of Subscription Rights are irrevocable. In
addition, there is no established trading market for the Preferred
Stock or the Warrants to be issued pursuant to this offering, and
the Preferred Stock and the Warrants may not be widely
distributed.
Am
I required to exercise all the Basic Subscription Rights I receive
in the Rights Offering?
No.
You may exercise any number of your Basic Subscription Rights, or
you may choose not to exercise any Basic Subscription Rights. If
you do not exercise any Basic Subscription Rights, the number of
shares of our common stock you own (including each share of common
stock issuable upon conversion of Series B Preferred Stock, Series
C Preferred Stock and exercise of Participating Warrants) will not
change. However, if you choose to not exercise your Basic
Subscription Rights in full and other holders of Subscription
Rights do exercise, your proportionate ownership interest in our
company will decrease. If you do not exercise your Basic
Subscription Rights in full, you will not be entitled to exercise
your Over-Subscription Privilege.
How
soon must I act to exercise my Subscription Rights?
If
you received a Rights Certificate and elect to exercise any or all
of your Subscription Rights, the Subscription Agent must receive
your completed and signed Rights Certificate and payment for both
your Basic Subscription Rights and any Over-Subscription Privilege
you elect to exercise before the Rights Offering expires on October
12, 2022, at 5:00 p.m., Eastern Time, unless we extend or earlier
terminate the Rights Offering. If you hold your common shares,
Series B Preferred Stock, Series C Preferred Stock, or
Participating Warrants in the name of a broker, dealer, bank or
other nominee, your nominee may establish a deadline before the
expiration of the Rights Offering by which you must provide it with
your instructions to exercise your Subscription Rights, along with
the required subscription payment.
May
I transfer my Subscription Rights?
No.
The Subscription Rights may be exercised only by the common, Series
B Preferred and Series C Preferred stockholders and Participating
Warrant holders to whom they are distributed, and they may not be
sold, transferred, assigned or given away to anyone else, other
than by operation of law. As a result, Rights Certificates may be
completed only by the stockholder or warrant holder who receives
the certificate. We do not intend to apply for the listing of the
Subscription Rights on any securities exchange or recognized
trading market.
Will
our directors and executive officers participate in the Rights
Offering?
To
the extent they hold common stock, Series B Preferred Stock, Series
C Preferred Stock, or Participating Warrants as of the Record Date,
our directors and executive officers will be entitled to
participate in the Rights Offering on the same terms and conditions
applicable to other Rights holders.
Are
we requiring a minimum subscription to complete the Rights
Offering?
There
is no aggregate minimum we must receive to complete the Rights
Offering.
Has
the board of directors made a recommendation to stockholders
regarding the Rights Offering?
No.
Our board of directors is making no recommendation regarding your
exercise of the Subscription Rights. Rights holders who exercise
Subscription Rights will incur investment risk on new money
invested. We cannot predict the price at which our shares of common
stock will trade after the Rights Offering. On September 21, 2022,
the last reported sale price of our common stock on Nasdaq was
$0.4005 per share. You should make your decision based on your
assessment of our business and financial condition, our prospects
for the future, the terms of the Rights Offering, the information
contained in this prospectus and other considerations relevant to
your circumstances. See “Risk Factors” for discussion of some of
the risks involved in investing in our securities.
How
do I exercise my Subscription Rights?
If
you are a common or Series B Preferred or Series C Preferred
stockholder or Participating Warrant holder of record (meaning you
hold your shares of our common stock, Series B Preferred Stock,
Series C Preferred Stock, or Participating Warrants in your name
and not through a broker, dealer, bank or other nominee) and you
wish to participate in the Rights Offering, you must deliver a
properly completed and signed Rights Certificate, together with
payment of the Subscription Price for both your Basic Subscription
Rights and any Over-Subscription Privilege you elect to exercise,
to the Subscription Agent before 5:00 p.m., Eastern Time, on
October 12, 2022. If you are exercising your Subscription Rights
through your broker, dealer, bank or other nominee, you should
promptly contact your broker, dealer, bank or other nominee and
submit your subscription documents and payment for the Units
subscribed for in accordance with the instructions and within the
time period provided by your broker, dealer, bank or other
nominee.
What
if my shares are held in “street name”?
If
you hold your shares of our common stock, Series B Preferred Stock,
Series C Preferred Stock, or Participating Warrants in the name of
a broker, dealer, bank or other nominee, then your broker, dealer,
bank or other nominee is the record holder of the shares you
beneficially own. The record holder must exercise the Subscription
Rights on your behalf. Therefore, you will need to have your record
holder act for you.
If
you wish to participate in this Rights Offering and purchase Units,
please promptly contact the record holder of your shares or
Participating Warrants. We will ask the record holder of your
shares or Participating Warrants, who may be your broker, dealer,
bank or other nominee, to notify you of this Rights
Offering.
What
form of payment is required?
You
must timely pay the full Subscription Price for the full number of
Units you wish to acquire pursuant to the exercise of Subscription
Rights by delivering to the Subscription Agent a:
|
● |
personal
check drawn on a U.S. bank; |
|
|
|
|
● |
certified
check drawn on a U.S. bank; |
|
|
|
|
● |
U.S.
Postal money order; or |
|
|
|
|
● |
wire
transfer. |
If
you send payment by personal uncertified check, payment will not be
deemed to have been delivered to the Subscription Agent until the
check has cleared. As such, any payments made by personal check
should be delivered to the Subscription Agent no fewer than three
business days prior to the expiration date.
If
you send a payment that is insufficient to purchase the number of
Units you requested, or if the number of Units you requested is not
specified in the forms, the payment received will be applied to
exercise your Subscription Rights to the fullest extent possible
based on the amount of the payment received.
Will
I receive interest on any funds I deposit with the Subscription
Agent?
No.
You will not be entitled to any interest on any funds that are
deposited with the Subscription Agent pending completion or
cancellation of the Rights Offering. If the Rights Offering is
cancelled for any reason, the Subscription Agent will return this
money to subscribers, without interest or penalty, as soon as
practicable.
When
will I receive my new shares of Preferred Stock and
Warrants?
As
soon as practicable after the expiration of the Rights Offering,
and within five business days thereof, we expect to close on
subscriptions and for the Subscription Agent to arrange for the
issuance of the shares of Preferred Stock and Warrants purchased in
the Rights Offering. At closing, all prorating calculations and
reductions contemplated by the terms of the Rights Offering will
have been effected and payment to us for the subscribed-for Units
will have cleared. All shares and Warrants that you purchase in the
Rights Offering will be issued in book-entry, or uncertificated,
form meaning that you will receive a direct registration, or DRS,
account statement from our transfer agent reflecting ownership of
these securities if you are a holder of record. If you hold your
common, Series B Preferred or Series C Preferred Stock or
Participating Warrants in the name of a broker, dealer, bank or
other nominee, DTC will credit your account with your nominee with
the securities you purchase in the Rights Offering. American Stock
Transfer & Trust Company, LLC, is acting as the warrant agent
in this offering.
After
I send in my payment and Rights Certificate to the Subscription
Agent, may I cancel my exercise of Subscription
Rights?
No.
Exercises of Subscription Rights are irrevocable, even if you later
learn information that you consider to be unfavorable to the
exercise of your Subscription Rights. You should not exercise your
Subscription Rights unless you are certain that you wish to
purchase Units at the Subscription Price.
How
much will our company receive from the Rights
Offering?
Assuming that all Units are sold in the Rights Offering, we
estimate that the net proceeds from the Rights Offering will be
approximately $9.2 million, based on the Subscription Price of
$1,000 per Unit, after deducting fees and expenses payable to the
dealer-manager, before deducting other estimated expenses payable
by us and excluding any proceeds received upon exercise of any
Warrants. If all Warrants included in the Units are exercised for
cash at the Estimated Conversion Price of $0.36864 per share, we
will receive an additional approximately $20 million. We intend to
use the net proceeds for general corporate purposes and to fund
ongoing operations and expansion of our business. See “Use of
Proceeds.”
Are
there risks in exercising my Subscription Rights?
Yes.
The exercise of your Subscription Rights involves risks. Exercising
your Subscription Rights involves the purchase of shares of our
Preferred Stock and Warrants to purchase common stock and you
should consider this investment as carefully as you would consider
any other investment. In addition, our Preferred Stock and Warrants
will not be listed on Nasdaq and a market for the Preferred Stock
and Warrants does not exist. See “Risk Factors” for discussion of
additional risks involved in investing in our
securities.
Can
the board of directors terminate, extend or amend the Rights
Offering?
Yes.
Our board of directors may decide to terminate the Rights Offering
at any time and for any reason before the expiration of the Rights
Offering. We also have the right to extend the Rights Offering for
additional periods in our sole discretion for up to an additional
45 days. We do not presently intend to extend the Rights Offering.
We will notify stockholders and the public if the Rights Offering
is terminated or extended by issuing a press release announcing the
extension no later than 9:00 a.m., Eastern Time, on the next
business day after the most recently announced expiration date of
the Rights Offering. In the event that we decide to extend the
Rights Offering and you have already exercised your Subscription
Rights, your subscription payment will remain with the Subscription
Agent until such time as the Rights Offering closes or is
terminated.
Our
board of directors also reserves the right to amend or modify the
terms of the Rights Offering in its sole discretion. If we should
make any fundamental changes to the terms of the Rights Offering
set forth in this prospectus, we will file a post-effective
amendment to the registration statement in which this prospectus is
included, offer potential purchasers who have subscribed for rights
the opportunity to cancel such subscriptions and issue a refund of
any money advanced by such stockholder and recirculate an updated
prospectus after the post-effective amendment is declared effective
by the SEC. In addition, upon such event, we may extend the
Expiration Date of the Rights Offering to allow holders of rights
ample time to make new investment decisions and for us to
recirculate updated documentation. Promptly following any such
occurrence, we will issue a press release announcing any changes
with respect to the Rights Offering and the new expiration date.
The terms of the Rights Offering cannot be modified or amended
after the Expiration Date of the Rights Offering. Although we do
not presently intend to do so, we may choose to amend or modify the
terms of the Rights Offering for any reason, including, without
limitation, in order to increase participation in the Rights
Offering. Such amendments or modifications may include a change in
the subscription price, although no such change is presently
contemplated. If we should make any fundamental changes to the
terms set forth in this prospectus, we will (i) file a
post-effective amendment to the registration statement of which
this prospectus forms a part, (ii) offer potential purchasers who
have subscribed for rights the opportunity to cancel such
subscriptions, and (iii) issue a refund of any money advanced by
such stockholder or eligible warrant holder and recirculate an
updated prospectus after the post-effective amendment is declared
effective with the SEC.
If
the Rights Offering is not completed or is terminated, will my
subscription payment be refunded to me?
Yes.
The Subscription Agent will hold all funds it receives in a
segregated bank account until completion of the Rights Offering. If
we do not complete the Rights Offering, all subscription payments
received by the Subscription Agent will be returned within 10
business days after the termination or expiration of the Rights
Offering, without interest or deduction. If you own shares in
“street name,” it may take longer for you to receive your
subscription payment because the Subscription Agent will return
payments through the record holder of your shares. In addition, if
we should make any fundamental changes to the terms set forth in
this prospectus, we will (i) file a post-effective amendment to the
registration statement of which this prospectus forms a part, (ii)
offer potential purchasers who have subscribed for rights the
opportunity to cancel such subscriptions, and (iii) issue a refund
of any money advanced by such stockholder or eligible warrant
holder and recirculate an updated prospectus after the
post-effective amendment is declared effective with the
SEC.
How
do I exercise my Rights if I live outside the United
States?
The
Subscription Agent will hold Rights Certificates for stockholders
having addresses outside the United States. To exercise
Subscription Rights, foreign stockholders must notify the
Subscription Agent and timely follow other procedures described in
the section entitled “The Rights Offering - Foreign
Stockholders.”
What
fees or charges apply if I purchase shares in the Rights
Offering?
We
are not charging any fee or sales commission to issue Subscription
Rights to you or to issue shares of Preferred Stock or Warrants to
you if you exercise your Subscription Rights. If you exercise your
Subscription Rights through a broker, dealer, bank or other
nominee, you are responsible for paying any fees your broker,
dealer, bank or other nominee may charge you.
What
are the U.S. federal income tax consequences of receiving and/or
exercising my Subscription Rights?
For
U.S. federal income tax purposes, we do not believe you should
recognize income or loss in connection with the receipt or exercise
of Subscription Rights in the Rights Offering, but the receipt and
exercise of the Subscription Rights is unclear in certain respects.
You should consult your own tax advisor as to your tax consequences
resulting from the receipt and exercise of Subscription Rights,
including the receipt, ownership and disposition of our Preferred
Stock, Warrants, and common stock received upon the conversion of
Preferred Stock or the exercise of Warrants. For further
information, see “Material U.S. Federal Income Tax
Consequences.”
To
whom should I send my forms and payment?
If
your shares of common stock, Series B Preferred stock, Series C
Preferred stock, or Participating Warrants are held in the name of
a broker, dealer, bank or other nominee, then you should send your
subscription documents and subscription payment to that broker,
dealer, bank or other nominee. If you are the record holder, then
you should send your subscription documents, Rights Certificate,
and subscription payment to the Subscription Agent by hand
delivery, first class mail or courier service to:
If
delivering by mail, hand or overnight courier:
American
Stock Transfer & Trust Company, LLC
Operations
Center
Attn:
Reorganization Department
6201
15th Avenue
Brooklyn,
New York 11219
You
or, if applicable, your nominee are solely responsible for
completing delivery to the Subscription Agent of your subscription
documents, Rights Certificate and payment. You should allow
sufficient time for delivery of your subscription materials to the
Subscription Agent and clearance of payment before the expiration
of the Rights Offering at 5:00 p.m. Eastern Time on October 12,
2022.
Whom
should I contact if I have other questions?
If
you have other questions or need assistance, please contact the
Information Agent: D.F. King & Co., Inc., toll free at (866)
620-2536, by mail at D.F. King & Co., Inc., 48 Wall Street,
22nd Floor, New York, NY 10005 or by email at
sintx@dfking.com.
Who
is the dealer-manager?
Maxim
Group LLC is acting as the sole dealer-manager for the Rights
Offering. Under the terms and subject to the conditions contained
in the dealer-manager agreement, the dealer-manager will use its
best efforts to solicit the exercise of Subscription Rights. We
have agreed to pay the dealer-manager certain fees for acting as
dealer-manager and to reimburse the dealer-manager for certain
out-of-pocket expenses incurred in connection with this offering.
The dealer-manager is not underwriting or placing any of the
Subscription Rights or the shares of our Preferred Stock or
Warrants being issued in the Rights Offering and is not making any
recommendation with respect to such Subscription Rights (including
with respect to the exercise or expiration of such Subscription
Rights), shares of Preferred Stock or Warrants.
RISK FACTORS
Investing
in our securities involves a high degree of risk. Before making an
investment decision with respect to our securities, we urge you to
carefully consider the risks described in the “Risk Factors”
section of our Annual Report on Form 10-K for the year ended
December 31, 2021 and our subsequent Quarterly Reports on Form
10-Q, which are incorporated by reference into this prospectus.
These risk factors relate to our business, intellectual property,
regulatory matters, and ownership of our common stock. In addition,
the following risk factors present material risks and uncertainties
associated with the Rights Offering. The risks and uncertainties
incorporated by reference into this prospectus or described below
are not the only ones we face. Additional risks and uncertainties
not presently known or which we consider immaterial as of the date
hereof may also have an adverse effect on our business. If any of
the matters discussed in the following risk factors were to occur,
our business, financial condition, results of operations, cash
flows or prospects could be materially adversely affected, the
market price of our common stock could decline and you could lose
all or part of your investment in our securities.
Risks
Related to the Rights Offering
Our management will have broad discretion over the use of the net
proceeds from this offering, you may not agree with how we use the
proceeds and the proceeds may not be invested
successfully.
Our
management will have broad discretion as to the use of the net
proceeds from this offering and could use them for purposes other
than those contemplated at the time of commencement of this
offering. Accordingly, you will be relying on the judgment of our
management regarding the use of these net proceeds, and you will
not have the opportunity, as part of your investment decision, to
assess whether the proceeds are being used appropriately. It is
possible that, pending their use, we may invest the net proceeds in
a way that does not yield a favorable, or any, return for us. The
failure of our management to use such funds effectively could have
a material adverse effect on our business, financial condition,
operating results and cash flows.
Your interest in our company may be diluted as a result of this
Rights Offering.
Stockholders
and warrant holders who do not fully exercise their Subscription
Rights should expect that they will, at the completion of this
offering, own a smaller proportional interest in our company on a
fully-diluted basis than would otherwise be the case had they fully
exercised their Subscription Rights. Further, the shares issuable
upon the exercise of the Warrants to be issued pursuant to the
Rights Offering will dilute the ownership interest of stockholders
not participating in this offering or holders of Warrants who have
not exercised them.
Further,
if you purchase Units in this offering at the Subscription Price,
you may suffer immediate and substantial dilution in the net
tangible book value of our common stock. See “Dilution” in this
prospectus for a more detailed discussion of the dilution which may
incur in connection with this offering.
Completion of the Rights Offering is not subject to us raising a
minimum offering amount.
Completion
of the Rights Offering is not subject to us raising a minimum
offering amount and, therefore, proceeds may be insufficient to
meet our objectives, thereby increasing the risk to investors in
this offering, including investing in a company that continues to
require capital. See “Use of Proceeds.”
This Rights Offering may cause the trading price of our common
stock to decrease.
The
Subscription Price, together with the number of shares of common
stock issuable upon conversion of the Preferred Stock and Warrants
we propose to issue and ultimately will issue if this Rights
Offering is completed, may result in an immediate decrease in the
market price of our common stock. This decrease may continue after
the completion of this Rights Offering. If that occurs, you may
have committed to buy shares of our common stock at a price greater
than the prevailing market price. We cannot predict the effect, if
any, that the availability of shares for future sale represented by
the Warrants issued in connection with the Rights Offering will
have on the market price of our common stock from time to time.
Further, if a substantial number of Subscription Rights are
exercised and the holders of the shares received upon exercise of
those Subscription Rights or the related Warrants choose to sell
some or all of the shares underlying the Subscription Rights or the
related Warrants, the resulting sales could depress the market
price of our common stock.
Certain of our outstanding shares of convertible preferred stock
and warrants contain full-ratchet anti-dilution protection, which
may cause significant dilution to our
stockholders.
As of
September 7, 2022, we had outstanding 24,727,789 shares of common
stock. As of that date we had outstanding 26 shares of Series B
convertible preferred stock convertible into an aggregate of 19,306
shares of common stock and warrants issued in May 2018 that are
exercisable for an aggregate of 310,585 shares of common stock. The
Series B convertible preferred stock and May 2018 warrants contain
full-ratchet anti-dilution provisions which, subject to limited
exceptions, would reduce the conversion price of the Series B
preferred stock (and increase the number of shares issuable under
the Series B preferred stock) and reduce the exercise price of the
May 2018 warrants in the event that we in the future issue common
stock, or securities convertible into or exercisable to purchase
common stock, at a price per share lower than the conversion price
or exercise price then in effect. Our outstanding 26 shares of
Series B preferred stock are, prior to this offering, convertible
into 19,306 shares of Common Stock at a conversion price of
$1.4814 per share. The May 2018 warrants currently are exercisable
at an exercise price of $1.4814 per share. These full ratchet
anti-dilution provisions will likely be triggered by the issuance
of the Preferred Stock and the Warrants in the Rights
Offering.
Holders of our Preferred Stock and Warrants will have no rights as
a common stockholder until such holders convert or exercise their
Preferred Stock or Warrants, respectively, and acquire our common
stock.
Until
holders of Preferred Stock or Warrants acquire shares of our common
stock upon conversion or exercise of the Preferred Stock or
Warrants, respectively, holders of such securities will have no
rights with respect to the shares of our common stock underlying
such Preferred Stock or Warrants. Upon conversion or exercise of
the Preferred Stock or Warrants, respectively, the holders thereof
will be entitled to exercise the rights of a common stockholder
only as to matters for which the record date occurs after the
exercise date. Prior to conversion, holders of Preferred Stock will
have limited voting rights.
The number of shares of common stock underlying the Preferred Stock
and Warrants included in the Units will not be known until the
expiration date of the rights offering.
Because
the actual Conversion Price will be determined on the expiration
date, rights holders will not know the Conversion Price, nor will
they know the number of shares underlying the Preferred Stock and
the Warrants, at the time of exercise. The actual number of shares
of common stock underlying the Preferred Stock and the Warrants may
be significantly different from the number expected based on the
current trading price of our common stock.
If we terminate this offering for any reason, we will have no
obligation other than to return subscription monies within 10
business days.
We
may decide, in our sole discretion and for any reason, to cancel or
terminate the Rights Offering at any time prior to the expiration
date. If this offering is cancelled or terminated, we will have no
obligation with respect to Subscription Rights that have been
exercised except to return within 10 business days, without
interest or deduction, all subscription payments deposited with the
Subscription Agent. If we terminate this offering and you have not
exercised any Subscription Rights, such Subscription Rights will
expire and be worthless.
The Subscription Price determined for this offering is not an
indication of the fair value of our common
stock.
In
determining the Subscription Price, our board of directors
considered a number of factors, including, but not limited to, our
need to raise capital in the near term to continue our operations,
the current and historical trading prices of our common stock, a
price that would increase the likelihood of participation in the
Rights Offering, the cost of capital from other sources, the value
of the Preferred Stock and Warrants being issued as components of
the Unit, and comparable precedent transactions. The Subscription
Price does not necessarily bear any relationship to any established
criteria for value. No valuation consultant or investment banker
has opined upon the fairness or adequacy of the Subscription Price.
You should not consider the Subscription Price as an indication of
the value of our company or our common stock.
If you do not act on a timely basis and follow subscription
instructions, your exercise of Subscription Rights may be
rejected.
Holders
of Subscription Rights who desire to purchase shares of our
Preferred Stock and Warrants in this offering must act on a timely
basis to ensure that all required forms and payments are actually
received by the Subscription Agent prior to 5:00 p.m., New York
City time, on the expiration date, unless extended. If you are a
beneficial owner of shares of common stock, Series B Preferred
Stock, Series C Preferred Stock, or Participating Warrants and you
wish to exercise your Subscription Rights, you must act promptly to
ensure that your broker, dealer, bank, trustee or other nominee
acts for you and that all required forms and payments are actually
received by your broker, dealer, bank, trustee or other nominee in
sufficient time to deliver such forms and payments to the
Subscription Agent to exercise the Subscription Rights granted in
this offering that you beneficially own prior to 5:00 p.m., New
York City time on the expiration date, as may be extended. We will
not be responsible if your broker, dealer, bank, trustee or other
nominee fails to ensure that all required forms and payments are
received by the Subscription Agent prior to 5:00 p.m., New York
City time, on the expiration date.
If
you fail to complete and sign the required subscription forms, send
an incorrect payment amount, or otherwise fail to follow the
subscription procedures that apply to your exercise in this Rights
Offering, the Subscription Agent may, depending on the
circumstances, reject your subscription or accept it only to the
extent of the payment received. Neither we nor the Subscription
Agent undertakes to contact you concerning an incomplete or
incorrect subscription form or payment, nor are we under any
obligation to correct such forms or payment. We have the sole
discretion to determine whether a subscription exercise properly
follows the subscription procedures.
You may not receive all of the Units for which you
subscribe.
While we are distributing to holders of our common stock, Series B
Preferred Stock, Series C Preferred Stock, and Participating
Warrants, one Subscription Right for every share of common stock
(including each share of common stock issuable upon conversion of
Series B Preferred Stock, Series C Preferred Stock, and exercise of
Participating Warrants) owned on the Record Date, we are only
seeking to raise $10 million in gross proceeds in this Rights
Offering. As a result, based on 24,727,495 shares of common stock
outstanding as of August 31, 2022, and 19,306 shares of common
stock issuable upon conversion of 26 shares of our Series B
Preferred Stock, 33,753 shares of common stock issuable upon
conversion of 50 shares of our Series C Preferred Stock and
1,115,729 shares of common stock issuable upon exercise of
Participating Warrants, we would grant Subscription Rights to
acquire 25,896,283 Units but will only accept subscriptions for
10,000 Units. Accordingly, enough Units may not be available to
honor your subscription in full. If excess Units are available
after the exercise of Basic Subscription Rights, holders who fully
exercise their Basic Subscription Rights will be entitled to
subscribe for an additional number of Units. Over-Subscription
Privileges will be allocated pro rata among Rights holders who
over-subscribed, based on the number of over-subscription Units to
which they have subscribed. We cannot guarantee that you will
receive any or the entire number of Units for which you subscribed.
If for any reason the number of Units allocated to you is less than
you have subscribed for, then the excess funds held by the
Subscription Agent on your behalf will be returned to you, without
interest, as soon as practicable after the Rights Offering has
expired and all prorating calculations and reductions contemplated
by the terms of the Rights Offering have been effected, and we will
have no further obligations to you.
Unless
we otherwise agree in writing, a person or entity, together with
related persons or entities, may not exercise Subscription Rights
(including Over-Subscription Privileges) to purchase Units that,
when aggregated with their existing ownership, would result in such
person or entity, together with any related persons or entities,
owning in excess of 19.99% of our issued and outstanding shares of
common stock following the closing of the transactions contemplated
by this Rights Offering. If the number of shares allocated to you
is less than your subscription request, then the excess funds held
by the Subscription Agent on your behalf will be returned to you,
without interest, as soon as practicable after the Rights Offering
has expired and all prorating calculations and reductions
contemplated by the terms of the Rights Offering have been
effected, and we will have no further obligations to
you.
If you make payment of the Subscription Price by personal check,
your check may not clear in sufficient time to enable you to
purchase shares in this Rights Offering.
Any
personal check used to pay for shares and Warrants to be issued in
this Rights Offering must clear prior to the expiration date of
this Rights Offering, and the clearing process may require five or
more business days. If you choose to exercise your Subscription
Rights, in whole or in part, and to pay for shares and Warrants by
personal check and your check has not cleared prior to the
expiration date of this Rights Offering, you will not have
satisfied the conditions to exercise your Subscription Rights and
will not receive the shares and Warrants you wish to
purchase.
The receipt of Subscription Rights may be treated as a taxable
distribution to you.
We
believe the distribution of the Subscription Rights in this Rights
Offering should be a non-taxable distribution to holders of shares
of common stock, Series B Preferred Stock, Series C Preferred
Stock, and holders of Participating Warrants, under Section 305(a)
of the Internal Revenue Code of 1986, as amended, or the Code.
Please see the discussion under the heading “Material U.S. Federal
Income Tax Consequences” below. This position is not binding on the
IRS, or the courts, however. If this Rights Offering is deemed to
be part of a “disproportionate distribution” under Section 305 of
the Code, your receipt of Subscription Rights in this Rights
Offering may be treated as the receipt of a taxable distribution to
you equal to the fair market value of the Subscription Rights. Any
such distribution would be treated as dividend income to the extent
of our current and accumulated earnings and profits, if any, with
any excess being treated as a return of capital to the extent
thereof and then as capital gain. Each holder of shares of common
stock or Preferred Stock and each holder of Participating Warrants
is urged to consult his, her or its own tax advisor with respect to
the particular tax consequences of this Rights Offering.
Proposed legislation in the U.S. Congress, including changes in
U.S. tax law, and the recently enacted Inflation Reduction Act of
2022, may adversely impact the Company and the value of our
Subscription Rights, shares of our common stock and Preferred
Stock, and Warrants.
Changes
to U.S. tax laws (which changes may have retroactive application)
could adversely affect the Company or holders of our Subscription
Rights, shares of our common stock and Preferred Stock, and
Warrants. In recent years, many changes to U.S. federal income tax
laws have been proposed and made, and additional changes to U.S.
federal income tax laws are likely to continue to occur in the
future.
The
U.S. Congress is currently considering numerous items of
legislation which may be enacted prospectively or with retroactive
effect, which legislation could adversely impact the Company’s
financial performance and the value of our Subscription Rights,
shares of our common stock and Preferred Stock and Warrants.
Additionally, states in which we operate or own assets may impose
new or increased taxes. If enacted, most of the proposals would be
effective for 2022 or later years. The proposed legislation remains
subject to change, and its impact on the Company and holders of our
Subscription Rights, shares of our common stock and Preferred Stock
and Warrants is uncertain.
In addition, the Inflation Reduction Act of 2022 was recently
signed into law and includes provisions that will impact the U.S.
federal income taxation of corporations. Among other items, this
legislation includes provisions that will impose a minimum tax on
the book income of certain large corporations and an excise tax on
certain corporate stock repurchases that would be imposed on the
corporation repurchasing such stock. It is unclear how this
legislation will be implemented by the U.S. Department of the
Treasury and we cannot predict how this legislation or any future
changes in tax laws might affect the Company or holders of our
Subscription Rights, shares of our common stock and Preferred Stock
and Warrants
Exercising the Subscription Rights limits your ability to engage in
certain hedging transactions that could provide you with financial
benefits.
By
exercising the Subscription Rights, you are representing to us that
you have not entered into any short sale or similar transaction
with respect to our common stock since the Record Date for the
Rights Offering. In addition, the Subscription Rights provide that,
upon exercise of the Subscription Right, you agree not to enter
into any short sale or similar transaction with respect to our
common stock for so long as you continue to hold Warrants issued in
connection with the exercise of the Subscription Right. These
requirements prevent you from pursuing certain investment
strategies that could provide you greater financial benefits than
you might have realized if the Subscription Rights did not contain
these requirements.
The Subscription Rights are not transferable, and there is no
market for the Subscription Rights.
You
may not sell, transfer, assign or give away your Subscription
Rights. Because the Subscription Rights are non-transferable, there
is no market or other means for you to directly realize any value
associated with the Subscription Rights. You must exercise the
Subscription Rights to realize any potential value from your
Subscription Rights.
There is no public market for the Preferred Stock in this
offering.
There
is no established public trading market for the Preferred Stock,
and we do not expect a market to develop. In addition, we do not
currently intend to apply for listing of the Preferred Stock on any
securities exchange or recognized trading system. Purchasers of the
Preferred Stock may be unable to resell their shares of Preferred
Stock or sell them only at an unfavorable price for an extended
period of time, if at all.
Absence of a public trading market for the Warrants may limit your
ability to resell the Warrants.
There
is no established trading market for the Warrants to be issued
pursuant to this offering, and they will not be listed for trading
on Nasdaq or any other securities exchange or market, and the
Warrants may not be widely distributed. Purchasers of the Warrants
may be unable to resell the Warrants or sell them only at an
unfavorable price for an extended period of time, if at
all.
The market price of our common stock may never exceed the exercise
price of the Warrants issued in connection with this
offering.
The
Class A Warrants being issued in connection with this offering
become exercisable upon issuance and will expire five years from
the date of issuance. The Class B Warrants being issued in
connection with this offering become exercisable upon issuance and
will expire three years from the date of issuance. The market price
of our common stock may never exceed the exercise price of the
Warrants prior to their date of expiration. Any Warrants not
exercised by their date of expiration will expire worthless and we
will be under no further obligation to the Warrant
holder.
The Warrants contain features that may reduce your economic benefit
from owning them.
For
so long as you continue to hold warrants, you will not be permitted
to enter into any short sale or similar transaction with respect to
our common stock. This could prevent you from pursuing investment
strategies that could provide you greater financial benefits from
owning the warrant.
The dealer-manager is not underwriting, nor acting as placement
agent of, the Subscription Rights or the securities underlying the
Subscription Rights.
Maxim
Group LLC is acting as sole dealer-manager for the Rights Offering.
As provided in the dealer-manager agreement, the dealer-manager
will provide marketing assistance in connection with this offering.
The dealer-manager is not underwriting or placing any of the
Subscription Rights or the shares of our Preferred Stock or
Warrants being issued in this offering and is not making any
recommendation with respect to such Subscription Rights (including
with respect to the exercise or expiration of such Subscription
Rights), shares or Warrants. The dealer-manager will not be subject
to any liability to us in rendering the services contemplated by
the dealer-manager agreement except for any act of bad faith, gross
negligence or willful misconduct by the dealer-manager. The Rights
Offering may not be successful despite the services of the
dealer-manager to us in this offering.
Since the Warrants are executory contracts, they may have no value
in a bankruptcy or reorganization proceeding.
In
the event a bankruptcy or reorganization proceeding is commenced by
or against us, a bankruptcy court may hold that any unexercised
Warrants are executory contracts that are subject to rejection by
us with the approval of the bankruptcy court. As a result, holders
of the Warrants may, even if we have sufficient funds, not be
entitled to receive any consideration for their Warrants or may
receive an amount less than they would be entitled to if they had
exercised their Warrants prior to the commencement of any such
bankruptcy or reorganization proceeding.
We may amend or modify the terms of the Rights Offering at any time
prior to the expiration of the Rights Offering in our sole
discretion.
Our
board of directors reserves the right to amend or modify the terms
of the Rights Offering in its sole discretion. If we should make
any fundamental changes to the terms of the Rights Offering set
forth in this prospectus, we will file a post-effective amendment
to the registration statement in which this prospectus is included,
offer potential purchasers who have subscribed for rights the
opportunity to cancel such subscriptions and issue a refund of any
money advanced by such stockholder and recirculate an updated
prospectus after the post-effective amendment is declared effective
by the SEC. In addition, upon such event, we may extend the
Expiration Date of the Rights Offering to allow holders of rights
ample time to make new investment decisions and for us to
recirculate updated documentation. Promptly following any such
occurrence, we will issue a press release announcing any changes
with respect to the Rights Offering and the new expiration date.
The terms of the Rights Offering cannot be modified or amended
after the Expiration Date of the Rights Offering. Although we do
not presently intend to do so, we may choose to amend or modify the
terms of the Rights Offering for any reason, including, without
limitation, in order to increase participation in the Rights
Offering. Such amendments or modifications may include a change in
the subscription price, although no such change is presently
contemplated.
Risks
Related to Our Business
Investors
should carefully consider the risks and uncertainties and all other
information contained or incorporated by reference in this
prospectus, including the risks and uncertainties discussed under
“Risk Factors” in our most recent Annual Report on Form
10-K, as may be amended from time to time, and in subsequent
filings that are incorporated herein by reference. All these risk
factors are incorporated by reference herein in their entirety.
These risks and uncertainties are not the only ones facing us. Our
business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading
price of our common stock could decline due to any of these risks,
and you may lose all or part of your investment. This prospectus
and the incorporated documents also contain forward-looking
statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these
forward-looking statements as a result of certain factors,
including the risks mentioned in this prospectus.
FORWARD-LOOKING
STATEMENTS
This
prospectus and the documents incorporated herein by reference
contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
are based on our management’s current beliefs, expectations and
assumptions about future events, conditions and results and on
information currently available to us. Discussions containing these
forward-looking statements may be found, among other places, in the
Sections entitled “Business,” “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” incorporated by reference from our most recent Annual
Report on Form 10-K and our Quarterly Reports on Form 10-Q, as well
as any amendments thereto, filed with the SEC.
All
statements, other than statements of historical fact, included or
incorporated herein regarding our strategy, future operations,
financial position, future revenues, projected costs, plans,
prospects and objectives are forward-looking statements. Words such
as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,”
“estimate,” “think,” “may,” “could,” “will,” “would,” “should,”
“continue,” “potential,” “likely,” “opportunity” and similar
expressions or variations of such words are intended to identify
forward-looking statements but are not the exclusive means of
identifying forward-looking statements. Examples of our
forward-looking statements include:
|
● |
our
ability to achieve sufficient market acceptance of any of our
products or product candidates; |
|
|
|
|
● |
our
ability to enter into and maintain successful OEM arrangements with
third parties; |
|
|
|
|
● |
our
perception of the growth in the size of the potential market for
our products and product candidates; |
|
|
|
|
● |
our
estimate of the advantages of our silicon nitride technology
platform; |
|
|
|
|
● |
our
ability to become a profitable biomaterial technology
company; |
|
|
|
|
● |
our
estimates regarding our needs for additional financing and our
ability to obtain such additional financing on suitable
terms; |
|
|
|
|
● |
our
ability to succeed in obtaining FDA clearance or approvals for our
product candidates; |
|
|
|
|
● |
our
ability to receive CE Marks for our product candidates; |
|
|
|
|
● |
the
timing, costs and other limitations involved in obtaining
regulatory clearance or approval for any of our product candidates
and product candidates and, thereafter, continued compliance with
governmental regulation of our existing products and
activities; |
|
|
|
|
● |
our
ability to protect our intellectual property and operate our
business without infringing upon the intellectual property rights
of others; |
|
|
|
|
● |
our
ability to obtain sufficient quantities and satisfactory quality of
raw materials to meet our manufacturing needs; |
|
|
|
|
● |
the
availability of adequate coverage reimbursement from third-party
payers in the United States; |
|
|
|
|
● |
our
estimates regarding anticipated operating losses, future product
revenue, expenses, capital requirements and liquidity; |
|
|
|
|
● |
our
ability to maintain and continue to develop our sales and marketing
infrastructure; |
|
|
|
|
● |
our
ability to enter into and maintain suitable arrangements with an
adequate number of distributors; |
|
|
|
|
● |
our
manufacturing capacity to meet future demand; |
|
|
|
|
● |
our
ability to develop effective and cost-efficient manufacturing
processes for our products; |
|
|
|
|
● |
our
reliance on third parties to supply us with raw materials and our
non-silicon nitride products and instruments; |
|
|
|
|
● |
the
safety and efficacy of products and product candidates; |
|
|
|
|
● |
the
timing of and our ability to conduct clinical trials; |
|
|
|
|
● |
potential
changes to the healthcare delivery systems and payment methods in
the United States or internationally; |
|
|
|
|
● |
any
potential requirement by regulatory agencies that we restructure
our relationships with referring surgeons; |
|
|
|
|
● |
our
ability to develop and maintain relationships with surgeons,
hospitals and marketers of our products; and |
|
|
|
|
● |
our
ability to attract and retain a qualified management team,
engineering team, sales and marketing team, distribution team,
design surgeons, surgeon advisors and other qualified personnel and
advisors. |
Because
forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified and
some of which are beyond our control, you should not rely on these
forward-looking statements as predictions of future events. The
events and circumstances reflected in our forward-looking
statements may not be achieved or occur and actual results could
differ materially from those projected in the forward- looking
statements. Moreover, we operate in an evolving environment. New
risk factors and uncertainties may emerge from time to time, and it
is not possible for management to predict all risk factors and
uncertainties. Except as required by applicable law, we do not plan
to publicly update or revise any forward- looking statements
contained herein, whether as a result of any new information,
future events, changed circumstances or otherwise.
This
prospectus and the documents incorporated herein by reference also
refer to estimates and other statistical data made by independent
parties and by us relating to market size and growth and other data
about our industry. This data involves a number of assumptions and
limitations, and you are cautioned not to give undue weight to such
estimates. In addition, projections, assumptions and estimates of
our future performance and the future performance of the markets in
which we operate are necessarily subject to a high degree of
uncertainty and risk.
USE OF PROCEEDS
Assuming that all Units are subscribed for in the Rights Offering,
we estimate that the net proceeds from the Rights Offering will be
approximately $9.2 million, after deducting expenses relating to
this offering payable by us estimated at approximately $0.8
million, including dealer-manager fees and expenses which include
fees payable to Ascendiant Capital Markets, LLC, for certain
financial advisor services provided in connection with the Rights
Offering, before deducting other estimated expenses payable by us
and excluding any proceeds received upon exercise of any
Warrants.
We
intend to use the net proceeds from the exercise of Subscription
Rights for general corporate purposes, which may include research
and development expenses, capital expenditures, working capital and
general and administrative expenses, and potential acquisitions of
or investments in businesses, products and technologies that
complement our business, although we have no present commitments or
agreements to make any such acquisitions or investments as of the
date of this prospectus. We expect to use any proceeds we receive
from the exercise of Warrants for substantially the same purposes
and in substantially the same manner. Pending these uses, we intend
to invest the funds in short-term, investment grade,
interest-bearing securities. It is possible that, pending their
use, we may invest the net proceeds in a way that does not yield a
favorable, or any, return for us.
Our
management will have broad discretion as to the allocation of the
net proceeds from this offering and could use them for purposes
other than those contemplated at the time of commencement of this
offering.
DILUTION
Purchasers
of Units in the Rights Offering will experience an immediate
dilution of the net tangible book value per share of our common
stock. Our net tangible book value as of June 30, 2022, was
approximately $12,020,000, or $0.49 per share of our common stock
(based upon 24,719,574 shares of our common stock outstanding). Net
tangible book value per share is equal to our total tangible assets
less our total liabilities, divided by the number of shares of our
outstanding common stock.
Dilution
per share of common stock equals the difference between the amount
paid by purchasers of Units in the Rights Offering (ascribing no
value to the Warrants contained in the Units) and the net tangible
book value per share of our common stock immediately after the
Rights Offering.
Based
on the sale by us in this Rights Offering of a maximum of Units at
the Subscription Price of $1,000 per Unit (assuming no exercise of
the Warrants), and after deducting estimated offering expenses and
dealer-manager fees and expenses payable by us, our pro forma net
tangible book value as of June 30, 2022, would have been
approximately $21,009,000 million, or $0.41 per share. This
represents an immediate decrease in pro forma net tangible book
value to existing stockholders of ($0.08) per share and an
immediate increase to purchasers in the Rights Offering of $0.07
per share. The following table illustrates this per-share
dilution:
Subscription
Price |
|
$ |
1,000.00 |
|
Net
tangible book value per share as of June 30, 2022 |
|
$ |
0.49 |
|
Decrease in net tangible book value per share attributable to
Rights Offering |
|
$ |
(0.08 |
) |
Pro
forma net tangible book value per share as of June 30, 2022, after
giving effect to Rights Offering |
|
$ |
0.41 |
|
Increase
in
net tangible book value per share to purchasers in the Rights
Offering |
|
$ |
0.07 |
|
The
information above is as of June 30, 2022 and excludes:
|
● |
1,291,207
shares of our common stock issuable upon the exercise of stock
options, with a weighted-average exercise price of $2.38 per share,
and vesting of restricted stock units; |
|
● |
19,306
shares of our common stock issuable upon the conversion of
outstanding shares of Series B Preferred Stock; |
|
● |
34,428
shares
of our common stock issuable upon the conversion of outstanding
shares of Series C Preferred Stock; |
|
● |
1,117,575
shares of our common stock issuable upon the exercise of
outstanding warrants, with a weighted-average exercise price of
$6.30 per share; |
|
● |
626,799
other shares of our common stock reserved for future issuance under
our 2020 Equity Incentive Plan. |
MARKET PRICE AND DIVIDEND
POLICY
Our shares of common stock are currently quoted on The Nasdaq
Capital Market under the symbol “SINT”. On September 21, 2022, the
last reported sales price of our common stock on Nasdaq was
$0.4005.
Holders
of Record
As of
September 9, 2022, we had approximately 158 holders of record of
our common stock. Because many of our shares of common stock are
held by brokers and other institutions on behalf of stockholders,
this number is not indicative of the total number of stockholders
represented by these stockholders of record.
Dividends
We
have not declared or paid dividends to stockholders since inception
and do not plan to pay cash dividends in the foreseeable future. We
currently intend to retain earnings, if any, to finance our
growth.
Issuer
Purchases of Equity Securities
None
THE RIGHTS OFFERING
The
Subscription Rights
We
are distributing to the record holders of our common stock, Series
B Preferred Stock, Series C Preferred Stock and Participating
Warrants, at no charge, non-transferable Subscription Rights to
purchase one Unit at a subscription price of $1,000 per Unit. Each
Basic Subscription Right will entitle you to purchase one share of
our preferred stock and, based on the Estimated Conversion Price,
5,426 Warrants. Each share of Preferred Stock will be convertible
at the option of the holder at any time, into the number of shares
of our common stock determined by dividing the $1,000 stated value
per share of the Preferred Stock by the Conversion Price determined
on the expiration date. Based on the Estimated Conversion Price,
the Preferred Stock included in the Units would be initially
convertible into an aggregate of 27,130,000 shares of common stock.
The actual number of shares that the Preferred Stock may be
converted into will depend on the Conversion Price determined on
the expiration date. Each Class A Warrant will be exercisable for
one share of our common stock at a per share exercise price equal
to the Conversion Price from the date of issuance through the
expiration five years from the date of issuance. Each Class B
Warrant will be exercisable for one share of our common stock at a
per share exercise price equal to the Conversion Price from the
date of issuance through the expiration three years from the date
of issuance. Based on the Estimated Conversion Price, the Warrants
included in the Units would be initially exercisable for an
aggregate of 54,260,000 shares of common stock. The actual number
of shares that the Warrants may be exercised for will depend on the
Conversion Price determined on the expiration date. The actual
number of Class A Warrants included in each Unit will be calculated
as the quotient obtained by dividing $1,000 by the Conversion
Price. The actual number of Class B Warrants included in each Unit
will be calculated as the quotient obtained by dividing $1,000 by
the Conversion Price.
Because the actual Conversion Price will be determined on the
expiration date, rights holders will not know the Conversion Price,
nor will they know the number of shares of common stock underlying
the Preferred Stock and the Warrants, at the time of exercise.
Each record holder of our common stock, Series B Preferred Stock,
Series C Preferred Stock, and holders of Participating Warrants,
will receive one Subscription Right for every share of our common
stock (including each share of common stock issuable upon
conversion of Series B Preferred Stock, Series C Preferred Stock,
and exercise of Participating Warrants) owned by such record holder
as of the Record Date. Each Subscription Right entitles the record
holder to a Basic Subscription Right and an Over-Subscription
Privilege.
Basic Subscription Rights
Your Basic Subscription Rights will entitle you to purchase Units,
each comprised of one share of our Preferred Stock and, based on
the Estimated Conversion Price, 5,426 Warrants. For example, if you
owned 100 shares of common stock as of the Record Date, you will
receive 100 Subscription Rights and will have the right to purchase
100 shares of our Preferred Stock and, based on the Estimated
Conversion Price, Warrants to purchase 542,600 shares of our common
stock for $1,000 per Unit, or a total payment of $100,000. You may
exercise all or a portion of your Basic Subscription Rights, or you
may choose not to exercise any of your Basic Subscription Rights.
If you do not exercise your Basic Subscription Rights in full, you
will not be entitled to exercise your Over-Subscription
Privilege.
Additionally, sufficient Units may not be available to honor your
Basic Subscription Right in full. While we are distributing one
subscription right for every share of common stock owned or deemed
owned on the record date, we are only seeking to raise $10 million
in gross proceeds in this Rights Offering. As a result, based on
(1) 24,727,495 shares of common stock outstanding on August 31,
2022 and (2) 1,168,788 shares of common stock deemed to be owned
and outstanding as of August 31, 2022, by holders of our Series B
Preferred Stock, Series C Preferred Stock and Participating
Warrants, we would grant subscription rights to acquire 25,896,283
Units but will only accept subscriptions for 10,000 Units.
If
exercises of Basic Subscription Rights exceed the number of Units
available in the Rights Offering, we will allocate the available
Units pro-rata among the record holders exercising the Basic
Subscription Rights in proportion to the number of shares of our
common stock each of those record holders owned or were deemed to
own on the record date, relative to the number of shares owned or
deemed owned on the record date by all record holders exercising
the basic subscription right. If this pro-rata allocation results
in any record holders receiving a greater number of Units than the
record holder subscribed for pursuant to the exercise of the basic
subscription rights, then such record holder will be allocated only
that number of Units for which the record holder subscribed, and
the remaining Units will be allocated among all other record
holders exercising their Basic Subscription Rights on the same pro
rata basis described above. The proration process will be repeated
until all shares have been allocated.
If
for any reason the number of Units allocated to you is less than
you have subscribed for, then the excess funds held by the
Subscription Agent on your behalf will be returned to you, without
interest, as soon as practicable after the Rights Offering has
expired and all prorating calculations and reductions contemplated
by the terms of the Rights Offering have been effected, and we will
have no further obligations to you.
Over-Subscription Privilege
If
you exercise your Basic Subscription Rights in full, you may also
choose to exercise your Over-Subscription Privilege. Subject to
proration and the limitations described in this prospectus, we will
seek to honor the Over-Subscription Requests in full. If
Over-Subscription Requests exceed the number of Units available,
however, we will allocate the available Units pro rata among the
common and Series B and Series C stockholders and eligible warrant
holders as of the Record Date exercising the Over-Subscription
Privilege in proportion to the number of shares of our common stock
(including each share of common stock issuable upon conversion of
Series B Preferred Stock, Series C Preferred Stock, and exercise of
Participating Warrants) each of those stockholders and/or warrant
holders owned on the Record Date, relative to the number of shares
owned on the Record Date by all stockholders and warrant holders as
of the Record Date exercising the Over-Subscription Privilege. If
this pro rata allocation results in any stockholder or warrant
holder receiving a greater number of Units than the record holder
subscribed for pursuant to the exercise of the Over-Subscription
Privilege, then such record holder will be allocated only that
number of Units for which the record holder oversubscribed, and the
remaining Units will be allocated among all other stockholders or
warrant holders exercising the Over-Subscription Privilege on the
same pro rata basis described above. The proration process will be
repeated until all Units have been allocated. American Stock
Transfer & Trust Company, LLC, the Subscription Agent for the
Rights Offering, will determine the over-subscription allocation
based on the formula described above.
To
the extent the aggregate subscription payment of the actual number
of unsubscribed Units available to you pursuant to the
Over-Subscription Privilege is less than the amount you actually
paid in connection with the exercise of the Over-Subscription
Privilege, you will be allocated only the number of unsubscribed
Units available to you, and any excess subscription payments will
be returned to you, without interest or deduction, with 10 business
days after expiration of the Rights Offering.
We
can provide no assurances that you will be entitled to purchase the
number of Units issuable upon the exercise of your
Over-Subscription Privilege in full at the expiration of the Rights
Offering. We will not be able to satisfy any requests for Units
pursuant to the Over-Subscription Privilege if all of our
stockholders exercise their Basic Subscription Rights in full, and
we will only honor an Over-Subscription Privilege to the extent
sufficient Units are available following the exercise of Basic
Subscription Rights.
Limitation
on the Purchase of Units
You
may only purchase the number of Units purchasable upon exercise of
the number of Basic Subscription Rights distributed to you in the
Rights Offering, plus the Over-Subscription Privilege, if any.
Accordingly, the number of Units that you may purchase in the
Rights Offering is limited by the number of shares of our common
stock (including each share of common stock issuable upon
conversion of Series B Preferred Stock, Series C Preferred Stock,
and exercise of Participating Warrants) you held on the Record Date
and by the extent to which other stockholders or warrant holders
exercise their Basic Subscription Rights and Over-Subscription
Privileges, all of which we cannot determine prior to completion of
the Rights Offering. Unless we otherwise agree in writing, a person
or entity, together with related persons or entities, may not
exercise Subscription Rights (including Over-Subscription
Privileges) to purchase Units that, when aggregated with their
existing ownership, would result in such person or entity, together
with any related persons or entities, owning in excess of 19.99% of
our issued and outstanding shares of common stock following the
closing of the transactions contemplated by this Rights
Offering.
Subscription
Price
The
Subscription Price is $1,000 per Unit. The Subscription Price does
not necessarily bear any relationship to our past or expected
future results of operations, cash flows, current financial
condition, or any other established criteria for value. No change
will be made to the Subscription Price by reason of changes in the
trading price of our common stock or other factor prior to the
expiration of this Rights Offering.
Determination
of Subscription Price
In
the determining the Subscription Price, the board of directors
considered a variety of factors including those listed
below:
|
● |
our
need to raise capital in the near term to continue our
operations; |
|
|
|
|
● |
the
current and historical trading prices of our common
stock; |
|
|
|
|
● |
a
price that would increase the likelihood of participation in the
Rights Offering; |
|
|
|
|
● |
the
cost of capital from other sources; |
|
|
|
|
● |
the
value of the common stock being issued as a component of the
Unit; |
|
|
|
|
● |
the
value of the Warrant being issued as a component of the Unit;
and |
|
|
|
|
● |
comparable
precedent transactions, including the percentage of shares offered,
the terms of the subscription rights being offered, the
subscription price and the discount that the subscription price
represents to the immediately prevailing closing prices for these
offerings. |
The
Subscription Price does not necessarily bear any relationship to
any established criteria for value. No valuation consultant or
investment banker has opined upon the fairness or adequacy of the
Subscription Price. You should not consider the Subscription Price
as an indication of actual value of our company or our common
stock. The market price of our common stock may decline during or
after the Rights Offering. We cannot predict the price at which our
shares of common stock will trade after the Rights Offering. You
should obtain a current price quote for our common stock and
perform an independent assessment of our Warrants before exercising
your Subscription Rights and make your own assessment of our
business and financial condition, our prospects for the future, and
the terms of this Rights Offering. Once made, all exercises of
Subscription Rights are irrevocable.
No
Short-Sales
By
exercising the Subscription Rights, you are representing to us that
you have not entered into any short sale or similar transaction
with respect to our common stock since the Record Date for the
Rights Offering. In addition, the Subscription Rights provide that,
upon exercise of the Subscription Right, you represent that you
have not since the Record Date and, for so long as you continue to
hold Preferred Stock or Warrants issued in connection with the
exercise of the Subscription Right, agree to not to enter into any
short sale or similar transaction with respect to our common stock.
These requirements prevent you from pursuing certain investment
strategies that could provide you greater financial benefits than
you might have realized if the Subscription Rights did not contain
these requirements.
No
Recombination
The
Preferred Stock and Warrants comprising the Units will separate
upon the exercise of the Subscription Rights, and the Units will
not trade as a separate security. Holders may not recombine shares
of Preferred Stock and Warrants to receive a Unit.
Non-Transferability
of Subscription Rights
The
Subscription Rights are non-transferable (other than by operation
of law) and, therefore, you may not sell, transfer, assign or give
away your Subscription Rights to anyone. The Subscription Rights
will not be listed for trading on any stock exchange or
market.
Expiration
Date; Extension
The
subscription period, during which you may exercise your
Subscription Rights, expires at 5:00 p.m., Eastern Time, on October
12, 2022, which is the expiration of the Rights Offering. If you do
not exercise your Subscription Rights before that time, your
Subscription Rights will expire and will no longer be exercisable.
We will not be required to issue shares to you if the Subscription
Agent receives your Rights Certificate or your subscription payment
after that time. We have the option to extend the Rights Offering
in our sole discretion for any reason up to an additional 45 days,
although we do not presently intend to do so. We may extend the
Rights Offering by giving oral or written notice to the
Subscription Agent before the Rights Offering expires. If we elect
to extend the Rights Offering, we will issue a press release
announcing the extension no later than 9:00 a.m., Eastern Time, on
the next business day after the most recently announced expiration
date of the Rights Offering.
If
you hold your shares of common stock, Series B Preferred Stock,
Series C Preferred Stock, or Participating Warrants in the name of
a broker, dealer, bank or other nominee, the nominee will exercise
the Subscription Rights on your behalf in accordance with your
instructions. Please note that the nominee may establish a deadline
that may be before 5:00 p.m., Eastern Time, on October 12, 2022,
which is the expiration date that we have established for the
Rights Offering.
Termination
We
may terminate the Rights Offering at any time and for any reason
prior to the expiration of the Rights Offering. If we terminate the
Rights Offering, we will issue a press release notifying
stockholders and the public of the termination no later than 9:00
a.m., Eastern Time, on the next business day after the most
recently announced expiration date of the Rights
Offering.
Return
of Funds upon Completion or Termination
The
Subscription Agent will hold funds received in payment for shares
in a segregated account pending completion of the Rights Offering.
The Subscription Agent will hold this money until the Rights
Offering is completed or is terminated. To the extent you properly
exercise your Over-Subscription Privilege for an amount of Units
that exceeds the number of unsubscribed Units available to you, any
excess subscription payments will be returned to you within 10
business days after the expiration of the Rights Offering, without
interest or deduction. If the Rights Offering is terminated for any
reason, all subscription payments received by the Subscription
Agent will be returned within 10 business days, without interest or
deduction.
Shares
of Our Capital Stock and Warrants Outstanding After the Rights
Offering
Assuming
no other transactions by us involving our capital stock prior to
the expiration of the Rights Offering, and if the Rights Offering
is fully subscribed, upon consummation of the Rights Offering we
will have 24,727,789 shares of common stock issued and outstanding,
26 shares of Series B Preferred Stock issued and outstanding, 50
shares of Series C Preferred Stock Outstanding, 10,000 shares of
Preferred Stock issued and outstanding, and, based on the Estimated
Conversion Price, 54,260,000 Warrants to purchase additional shares
of our common stock issued and outstanding. The exact number of
shares of Preferred Stock and Warrants that we will issue in this
offering will depend on the number of Units that are subscribed for
in the Rights Offering.
Methods
for Exercising Subscription Rights
The
exercise of Subscription Rights is irrevocable and may not be
cancelled or modified. You may exercise your Subscription Rights as
follows:
Subscription by Record Holders
If,
as of the Record Date, you are a holder of record of common stock,
Series B Preferred Stock, Series C Preferred Stock, or
Participating Warrants, the number of Units you may purchase
pursuant to your Subscription Rights is indicated on the enclosed
Rights Certificate. You may exercise your Subscription Rights by
properly completing and executing the Rights Certificate and
forwarding it, together with your full payment, to the Subscription
Agent at the address given below under “Subscription Agent,” to be
received before 5:00 p.m., Eastern Time, on October 12,
2022.
Subscription by Beneficial Owners
If as
of the Record Date you are a beneficial owner of shares of our
common stock, Series B Preferred Stock, Series C Preferred Stock,
or Participating Warrants that are registered in the name of a
broker, dealer, bank or other nominee, you will not receive a
Rights Certificate. Instead, we will issue one Subscription Right
to such nominee record holder for all shares of our common stock,
Series B Preferred Stock, Series C Preferred Stock, or
Participating Warrants held by such nominee at the Record Date. If
you are not contacted by your nominee, you should promptly contact
your nominee in order to subscribe for shares in the Rights
Offering and follow the instructions provided by your
nominee.
To
properly exercise your Over-Subscription Privilege, you must
deliver the subscription payment related to your Over-Subscription
Privilege before the Rights Offering expires. Because we will not
know the total number of unsubscribed Units before the Rights
Offering expires, if you wish to maximize the number of shares you
purchase pursuant to your Over-Subscription Privilege, you will
need to deliver payment in an amount equal to the aggregate
subscription payment for the maximum number of Units that you wish
to purchase.
Payment
Method
Payments
must be made in full in U.S. currency by personal check, certified
check or bank draft, or by wire transfer, and payable to “American
Stock Transfer and Trust Company, LLC, as Subscription Agent for
SINTX Technologies, Inc.” You must timely pay the full subscription
payment, including payment for the Over-Subscription Privilege, for
the full number of shares of our common stock you wish to acquire
pursuant to the exercise of Subscription Rights by delivering
a:
|
● |
certified
or personal check drawn against a U.S. bank payable to “American
Stock Transfer and Trust Company, LLC, as Subscription Agent for
SINTX Technologies, Inc.”; |
|
● |
U.S.
Postal money order payable to “American Stock Transfer and Trust
Company, LLC, as Subscription Agent for SINTX Technologies, Inc.”;
or |
|
|
|
|
● |
wire
transfer of immediately available funds directly to the account
maintained by American Stock Transfer and Trust Company, LLC, as
Subscription Agent, for purposes of accepting subscriptions in this
Rights Offering at: |
If
you elect to exercise your Subscription Rights, you should consider
using a wire transfer or certified check drawn on a U.S. bank to
ensure that the Subscription Agent receives your funds before the
Rights Offering expires. If you send a personal check, payment will
not be deemed to have been received by the Subscription Agent until
the check has cleared. The clearinghouse may require five or more
business days to clear a personal check. Accordingly, holders who
wish to pay the Subscription Price by means of a personal check
should make payment sufficiently in advance of the expiration of
the Rights Offering to ensure that the payment is received and
clears by that date. If you send a certified check, payment will be
deemed to have been received by the Subscription Agent immediately
upon receipt of such instrument.
You
should read the instruction letter accompanying the Rights
Certificate carefully and strictly follow it. DO NOT SEND RIGHTS
CERTIFICATES OR PAYMENTS DIRECTLY TO US. We will not consider
your subscription received until the Subscription Agent has
received delivery of a properly completed and duly executed Rights
Certificate and payment of the full subscription
payment.
The
method of delivery of Rights Certificates and payment of the
subscription payment to the Subscription Agent will be at the risk
of the holders of Subscription Rights. If sent by mail, we
recommend that you send those certificates and payments by
registered mail, properly insured, with return receipt requested,
or by overnight courier, and that you allow a sufficient number of
days to ensure delivery to the Subscription Agent and clearance of
payment before the Rights Offering expires.
Missing
or Incomplete Subscription Forms or Payment
If
you fail to complete and sign the Rights Certificate or otherwise
fail to follow the subscription procedures that apply to the
exercise of your Subscription Rights before the Rights Offering
expires, the Subscription Agent will reject your subscription or
accept it to the extent of the payment received. Neither we nor our
Subscription Agent undertakes any responsibility or action to
contact you concerning an incomplete or incorrect subscription
form, nor are we under any obligation to correct such forms. We
have the sole discretion to determine whether a subscription
exercise properly complies with the subscription
procedures.
If
you send a payment that is insufficient to purchase the number of
shares you requested, or if the number of shares you requested is
not specified in the forms, the payment received will be applied to
exercise your Subscription Rights to the fullest extent possible
based on the amount of the payment received. Any excess
subscription payments received by the Subscription Agent will be
returned, without interest or deduction, within 10 business days
following the expiration of the Rights Offering.
Issuance
of Preferred Stock and Warrants
The
shares of Preferred Stock and Warrants that are purchased in the
Rights Offering as part of the Units will be issued in book-entry,
or uncertificated, form meaning that you will receive a DRS account
statement from our transfer agent reflecting ownership of these
securities if you are a holder of record. If you hold your shares
of common stock, Series B Preferred Stock, Series C Preferred
Stock, or Participating Warrants in the name of a bank, broker,
dealer, or other nominee, DTC will credit your account with your
nominee with the securities you purchased in the Rights
Offering.
Subscription
and Information Agent
The
Subscription Agent for the Rights Offering is American Stock
Transfer & Trust Company, LLC and the Information Agent is D.F.
King & Co., Inc. The address to which Rights Certificates and
payments should be mailed or delivered by overnight courier is
provided below. If sent by mail, we recommend that you send
documents and payments by registered mail, properly insured, with
return receipt requested, and that you allow a sufficient number of
days to ensure delivery to the Subscription Agent and clearance or
payment before the Rights Offering expires. Do not send or deliver
these materials to us.
If
delivering by mail, hand or overnight courier:
American
Stock Transfer & Trust Company, LLC
Operations
Center
Attn:
Reorganization Department
6201
15th Avenue
Brooklyn,
New York 11219
If
you deliver the Rights Certificates in a manner different than that
described in this prospectus, we may not honor the exercise of your
Subscription Rights.
You
should direct any questions or requests for assistance concerning
the method of subscribing for the shares of our common stock or for
additional copies of this prospectus to the Information Agent, D.F.
King & Co., Inc., toll free at (866) 620-2536, or by mail at
D.F. King & Co., Inc., 48 Wall Street, 22nd Floor, New York, NY
10005.
Warrant
Agent
The
warrant agent for the Warrants is American Stock Transfer &
Trust Company, LLC.
No
Fractional Shares
We
will not issue fractional shares of common stock in the Rights
Offering. We will only distribute Subscription Rights to acquire
whole Units, rounded down to the nearest whole number of underlying
common shares giving rise to such Subscription Rights. Any excess
subscription payments received by the Subscription Agent will be
returned within 10 business days after expiration of the Rights
Offering, without interest or deduction. Similarly, no fractional
shares of common stock will be issued in connection with the
conversion of the Preferred Stock or the exercise of a Warrant.
Instead, for any such fractional share that would otherwise have
been issuable upon conversion of shares of Preferred Stock, we may,
at our election, pay a cash payment equal to such fraction
multiplied by the conversion price or round up to the next whole
share, and for any such fractional share that would have otherwise
been issued upon exercise of Warrants, we will round up such
fraction to the next whole share.
Notice
to Brokers and Nominees
If
you are a broker, dealer, bank or other nominee holder that holds
shares of our common stock, Series B Preferred Stock, Series C
Preferred Stock, or Participating Warrants for the account of
others on the Record Date, you should notify the beneficial owners
for whom you are the nominee of the Rights Offering as soon as
possible to learn their intentions with respect to exercising their
Subscription Rights. If a beneficial owner of our common stock,
Series B Preferred Stock, Series C Preferred Stock or Participating
Warrants so instructs, you should complete the Rights Certificate
and submit it to the Subscription Agent with the proper
subscription payment by the expiration date. You may exercise the
number of Subscription Rights to which all beneficial owners in the
aggregate otherwise would have been entitled had they been direct
holders of our common stock on the Record Date, provided that you,
as a nominee record holder, make a proper showing to the
Subscription Agent by submitting the form entitled “Nominee Holder
Certification,” which is provided with your Rights Offering
materials. If you did not receive this form, you should contact our
Subscription Agent to request a copy.
Validity
of Subscriptions
We
will resolve all questions regarding the validity and form of the
exercise of your Subscription Rights, including time of receipt and
eligibility to participate in the Rights Offering. Our
determination will be final and binding. Once made, subscriptions
are irrevocable; we will not accept any alternative, conditional,
or contingent subscriptions. We reserve the absolute right to
reject any subscriptions not properly submitted or the acceptance
of which would be unlawful. You must resolve any irregularities in
connection with your subscriptions before the expiration date of
the Rights Offering, unless we waive them in our sole discretion.
Neither we nor the Subscription Agent is under any duty to notify
you or your representative of defects in your subscriptions. A
subscription will be considered accepted, subject to our right to
withdraw or terminate the Rights Offering, only when the
Subscription Agent receives a properly completed and duly executed
Rights Certificate and any other required documents and the full
subscription payment including final clearance of any personal
check. Our interpretations of the terms and conditions of the
Rights Offering will be final and binding.
Stockholder
Rights
You
will have no rights as a holder of the shares of our common stock
issuable upon conversion of the Preferred Stock issued in the
Rights Offering until such Preferred Stock is converted into common
stock and issued in book-entry form or your account at your broker,
dealer, bank or other nominee is credited with the shares of our
common stock. Holders of Warrants issued in connection with the
Rights Offering will not have rights as holders of our common stock
until such Warrants are exercised and the shares of common stock
underlying the Warrants are issued to the holder.
Foreign
Stockholders
We
will not mail this prospectus or Rights Certificates to
stockholders with addresses that are outside the United States or
that have an army post office or foreign post office address. The
Subscription Agent will hold these Rights Certificates for their
account. To exercise Subscription Rights, our foreign stockholders
must notify the Subscription Agent prior to 5:00 p.m., Eastern
Time, on October 5, 2022, the third business day prior to the
expiration date, of your exercise of Subscription Rights and
provide evidence satisfactory to us, such as a legal opinion from
local counsel, that the exercise of such Subscription Rights does
not violate the laws of the jurisdiction in which such stockholder
resides and payment by a U.S. bank in U.S. dollars before the
expiration of the offer. If no notice is received by such time or
the evidence presented is not satisfactory to us, the Subscription
Rights represented thereby will expire.
No
Revocation or Change
Once
you submit the Rights Certificate or have instructed your nominee
of your subscription request, you are not allowed to revoke or
change the exercise or request a refund of monies paid. All
exercises of Subscription Rights are irrevocable, even if you learn
information about us that you consider to be unfavorable. You
should not exercise your Subscription Rights unless you are certain
that you wish to purchase shares at the Subscription Price. If we
should make any fundamental changes to the terms set forth in this
prospectus, we will (i) file a post-effective amendment to the
registration statement of which this prospectus forms a part, (ii)
offer potential purchasers who have subscribed for rights the
opportunity to cancel such subscriptions, and (iii) issue a refund
of any money advanced by such stockholder or eligible warrant
holder and recirculate an updated prospectus after the
post-effective amendment is declared effective with the
SEC.
U.S.
Federal Income Tax Treatment of Rights Distribution
For
U.S. federal income tax purposes, we do not believe holders of
shares of our common stock, Series B Preferred Stock, Series C
Preferred Stock or Participating Warrants should recognize income
or loss upon receipt or exercise of a Subscription Right, but the
receipt and exercise of the Subscription Rights is unclear in
certain respects. See “Material U.S. Federal Income Tax
Consequences.”
No
Recommendation to Rights Holders
Our
board of directors is not making a recommendation regarding your
exercise of the Subscription Rights. Stockholders who exercise
Subscription Rights risk investment loss on money invested. We
cannot predict the price at which our shares of common stock will
trade after the Rights Offering. You should make your investment
decision based on your assessment of our business and financial
condition, our prospects for the future and the terms of this
Rights Offering. Please see “Risk Factors” for a discussion of some
of the risks involved in investing in our common stock.
Fees
and Expenses
We
will pay all fees charged by the Subscription Agent and the
Information Agent, and by the dealer-manager. You are responsible
for paying any other commissions, fees, taxes or other expenses
incurred in connection with the exercise of your Subscription
Rights.
Listing
The
Subscription Rights may not be sold, transferred, assigned or given
away to anyone, and will not be listed for trading on any stock
exchange or market. There is no public trading market for the
Preferred Stock or the Warrants and they will not be listed for
trading on Nasdaq or any other securities exchange or market. The
shares of our common stock issuable upon the conversion of the
Preferred Stock and the exercise of the Warrants to be issued in
the Rights Offering are traded on Nasdaq under the symbol
“SINT.”
Important
Do
not send Rights Certificates directly to us. You are responsible
for choosing the payment and delivery method for your Rights
Certificate and you bear the risks associated with such delivery.
If you choose to deliver your Rights Certificate and payment by
mail, we recommend that you use registered mail, properly insured,
with return receipt requested. We also recommend that you allow a
sufficient number of days to ensure delivery to the Subscription
Agent and clearance of payment prior to the expiration
time.
Distribution
Arrangements
Maxim
Group LLC will act as dealer-manager for the Rights Offering. The
dealer-manager will provide marketing assistance and advice to us
in connection with the Rights Offering and will use its best
efforts to solicit the exercise of Subscription Rights and
participation in the Over-Subscription Privilege. The
dealer-manager is not underwriting or placing any of the
Subscription Rights or the shares of our Preferred Stock or
Warrants to be issued in the Rights Offering and does not make any
recommendation with respect to such Subscription Rights (including
with respect to the exercise or expiration of such Subscription
Rights), shares or Warrants. We have agreed to pay the
dealer-manager certain fees and to reimburse the dealer-manager for
certain out-of-pocket expenses incurred in connection with this
offering. See “Plan of Distribution.”
Other
Matters
We
are not making the Rights Offering in any state or other
jurisdiction in which it is unlawful to do so, nor are we
distributing or accepting any offers to purchase any units from
subscription rights holders who are residents of those states or
other jurisdictions or who are otherwise prohibited by federal or
state laws or regulations from accepting or exercising the
subscription rights. We may delay the commencement of the Rights
Offering in those states or other jurisdictions, or change the
terms of the Rights Offering, in whole or in part, in order to
comply with the securities laws or other legal requirements of
those states or other jurisdictions. Subject to state securities
laws and regulations, we also have the discretion to delay
allocation and distribution of any shares you may elect to purchase
by exercise of your subscription privileges in order to comply with
state securities laws. We may decline to make modifications to the
terms of the Rights Offering requested by those states or other
jurisdictions, in which case, if you are a resident in those states
or jurisdictions or if you are otherwise prohibited by federal or
state laws or regulations from accepting or exercising the
subscription rights, you will not be eligible to participate in the
Rights Offering. However, we are not currently aware of any states
or jurisdictions that would preclude participation in the Rights
Offering.
MATERIAL U.S. FEDERAL INCOME TAX
CONSEQUENCES
The
following discussion describes the material U.S. federal income tax
consequences of the receipt and exercise (or expiration) of the
Subscription Rights acquired through the Rights Offering, the
ownership and disposition of shares of our Preferred Stock and
Warrants received upon exercise of the Subscription Rights and the
ownership and disposition of the shares of common stock received
upon the conversion of our Preferred Stock or the exercise of the
Warrants. This discussion does not purport to be a complete
analysis of all potential tax consequences. The effects of other
U.S. federal tax laws, such as estate and gift tax laws,
alternative minimum tax laws, net investment income tax laws, and
any applicable state, local or non-U.S. tax laws are not discussed.
This discussion is based on the U.S. Internal Revenue Code of 1986,
as amended, or the Code, U.S. Treasury Regulations promulgated
thereunder, judicial decisions, and published rulings and
administrative pronouncements of the U.S. Internal Revenue Service,
or the IRS, in each case in effect as of the date hereof. These
authorities may change or be subject to differing interpretations.
Any such change or differing interpretation may be applied
retroactively in a manner that could adversely affect a holder of
the Subscription Rights, shares of our Preferred Stock, Warrants or
shares of our common stock. This summary does not discuss the
potential effects, whether adverse or beneficial, of any proposed
legislation that, if enacted, could be applied on a retroactive or
prospective basis. We have not sought and will not seek any rulings
from the IRS regarding the matters discussed below. There can be no
assurance the IRS or a court will not take a contrary position to
that discussed below regarding the tax consequences of the receipt
of Subscription Rights through the Rights Offering by persons
holding shares of our common stock, Preferred Stock and Warrants,
the exercise (or expiration) of the Subscription Rights, the
acquisition, ownership and disposition of shares of our Preferred
Stock, and the acquisition, ownership and disposition (or
expiration) of Warrants, each acquired upon exercise of the
Subscription Rights, and the acquisition, ownership and disposition
of shares of our common stock acquired upon conversion of our
Preferred Stock or exercise of the Warrants.
This
discussion is limited to the Subscription Rights acquired through
the Rights Offering, shares of our Preferred Stock and Warrants
acquired upon exercise of Subscription Rights and shares of our
common stock acquired upon conversion of our Preferred Stock or
exercise of the Warrants, in each case, that are held as a “capital
asset” within the meaning of Section 1221 of the Code (generally,
property held for investment). This discussion does not address all
U.S. federal income tax consequences relevant to a holder’s
particular circumstances, including the impact of the alternative
minimum tax or the unearned income Medicare contribution tax. In
addition, it does not address consequences relevant to holders
subject to particular rules, including, without
limitation:
|
● |
U.S.
expatriates and former citizens or long-term residents of the
United States; |
|
|
|
|
● |
U.S.
holders (as defined below) that are subject to taxing jurisdictions
other than, or in addition to, the United States or otherwise hold
our common stock, the Subscription Rights, shares of our Preferred
Stock, Warrants or shares of our common stock in connection with a
trade or business, permanent establishment, or fixed base outside
the United States; |
|
|
|
|
● |
corporations
organized outside the United States, any state thereof, or the
District of Columbia that are nonetheless treated as U.S. persons
for U.S. federal income tax purposes; |
|
|
|
|
● |
persons
holding our common stock, the Subscription Rights, shares of our
Preferred Stock, Warrants or shares of our common stock as part of
a hedge, straddle or other risk reduction strategy or as part of a
conversion transaction or other integrated investment; |
|
|
|
|
● |
banks,
insurance companies, underwriters, and other financial
institutions; |
|
|
|
|
● |
brokers,
dealers or traders in securities or currencies or traders that
elect to mark-to-market their securities; |
|
|
|
|
● |
“controlled
foreign corporations,” “passive foreign investment companies,” and
corporations that accumulate earnings to avoid U.S. federal income
tax; |
|
|
|
|
● |
partnerships
or other entities or arrangements treated as partnerships or other
pass-through entities for U.S. federal income tax purposes (and
investors therein) and S corporations (and shareholders
thereof); |
|
● |
real
estate investment trusts, regulated investment companies, grantor
trusts, tax-exempt organizations or governmental
organizations; |
|
|
|
|
● |
persons
deemed to sell the Subscription Rights, shares of Preferred Stock,
or Warrants or shares of our common stock under the constructive
sale provisions of the Code; |
|
|
|
|
● |
persons
subject to special tax accounting rules as a result of any item of
gross income being taken into account in an applicable financial
statement (as defined in the Code); |
|
|
|
|
● |
persons
for whom our stock constitutes “qualified small business stock”
within the meaning of Section 1202 of the Code; |
|
|
|
|
● |
persons
who received, hold or will receive shares of our common stock,
Participating Warrants, the Subscription Rights, shares of our
Preferred Stock or Warrants pursuant to the exercise of any
employee stock option or otherwise as compensation and persons who
hold restricted common stock; |
|
|
|
|
● |
tax-qualified
retirement plans, individual retirement accounts, or other
tax-deferred accounts; |
|
|
|
|
● |
persons
subject to the alternative minimum tax; and |
|
|
|
|
● |
U.S.
holders that have a functional currency other than the U.S.
dollar. |
If an
entity treated as a partnership for U.S. federal income tax
purposes holds shares of our common stock, the Subscription Rights,
shares of our Preferred Stock and Warrants acquired upon exercise
of Subscription Rights or shares of our common stock acquired upon
conversion of our Preferred Stock or exercise of the Warrants, as
the case may be, the tax treatment of a partner in the partnership
will depend on the status of the partner, the activities of the
partnership and certain determinations made at the partner level.
Accordingly, partnerships and the partners in such partnerships
should consult their own tax advisors regarding the U.S. federal
income tax consequences to them.
THIS
DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE.
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR
SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE RECEIPT,
OWNERSHIP AND EXERCISE OF SUBSCRIPTION RIGHTS, THE ACQUISITION,
OWNERSHIP, AND DISPOSITION OF SHARES OF OUR PREFERRED STOCK AND
WARRANTS ACQUIRED UPON EXERCISE OF SUBSCRIPTION RIGHTS, AND SHARES
OF OUR COMMON STOCK ACQUIRED UPON CONVERSION OF PREFERRED STOCK OR
EXERCISE OF WARRANTS ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT
TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING
JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX
TREATY.
Tax Considerations Applicable to U.S. Holders
Definition
of a U.S. Holder
For
purposes of this discussion, a “U.S. holder” is any beneficial
owner of shares of our common stock, our Subscription Rights,
shares of our Preferred Stock and Warrants acquired upon exercise
of Subscription Rights or shares of our common stock acquired upon
conversion of our Preferred Stock or exercise of Warrants, as the
case may be, that, for U.S. federal income tax purposes,
is:
|
● |
an
individual who is a citizen or resident of the United
States; |
|
|
|
|
● |
a
corporation (or other entity treated as a corporation for U.S.
federal income tax purposes) created or organized under the laws of
the United States, any state thereof, or the District of
Columbia; |
|
|
|
|
● |
an
estate, the income of which is subject to U.S. federal income tax
regardless of its source; or |
|
|
|
|
● |
a
trust that (1) is subject to the primary supervision of a U.S.
court and the control of one or more United States persons (within
the meaning of Section 7701(a)(30) of the Code), or (2) has made a
valid election under applicable U.S. Treasury Regulations to
continue to be treated as a United States person. |
Receipt
of Subscription Rights
Although
the authorities governing transactions such as this Rights Offering
are complex and do not speak directly to the consequences of
certain aspects of this Rights Offering, including the inclusion of
the right to purchase Warrants in the Subscription Rights (rather
than the right to purchase only shares of our Preferred Stock), the
distribution of Subscription Rights to holders of Participating
Warrants and the effects of the Over-Subscription Privilege, we do
not believe a U.S. holder’s receipt of Subscription Rights pursuant
to the Rights Offering should be treated as a taxable distribution
with respect to its existing shares of common stock, Series B
Preferred Stock, Series C Preferred Stock or Participating
Warrants, as applicable, for U.S. federal income tax purposes.
Section 305(a) of the Code generally provides that the receipt by a
stockholder, or a holder of rights to acquire stock, of a right to
acquire stock or warrants is not included in the taxable income of
the stockholder; however, the general non-recognition rule in
Section 305(a) of the Code is subject to exceptions described in
Section 305(b) of the Code, which include “disproportionate
distributions.” A disproportionate distribution is generally a
distribution or a series of distributions, including deemed
distributions, that has the effect of the receipt of cash or other
property by some stockholders (including holders of rights to
acquire stock and holders of debt instruments convertible into
stock) and an increase in the proportionate interest of other
stockholders (including holders of rights to acquire stock and
holders of debt instruments convertible into stock) in a
corporation’s assets or earnings and profits. During the last 36
months, we have not made any distributions of cash or property
(other than stock or rights to acquire stock) with respect to: (i)
our common stock or (ii) options or warrants to acquire our common
stock. Currently we do not intend to make any future distributions
of cash or property (other than stock or rights to acquire stock)
with respect to: (i) our common stock or (ii) options or warrants
to acquire our common stock; however, there is no guarantee that we
will not make such distributions in the future. In addition, we do
not currently have any convertible debt outstanding nor do we
currently intend to issue any convertible debt.
The
position regarding the non-taxable treatment of the Subscription
Right distribution is not binding on the IRS, or the courts. If
this position is finally determined by the IRS or a court to be
incorrect, whether because, contrary to our expectations,
distributions of cash or property (other than stock or rights to
acquire stock) are made with respect to our common stock, options
or warrants, because the issuance of the Subscription Rights is a
“disproportionate distribution” or otherwise, the fair market value
of the Subscription Rights would be taxable to U.S. holders of our
common stock as a dividend to the extent of the U.S. holder’s pro
rata share of our current and accumulated earnings and profits, if
any, with any excess being treated as a return of capital to the
extent thereof and then as capital gain. Although no assurance
can be given, we anticipate that we will not have current and
accumulated earnings and profits through the end of 2022.
Further, if the position regarding the non-taxable treatment of the
Subscription Rights distribution is incorrect, the treatment of
holders of Participating Warrants is not clear, and it may differ
from, and may be more adverse than, the treatment of the
Subscription Rights distribution to the holders of common
stock.
The
following discussion is based upon the treatment of the
Subscription Right issuance as a non-taxable distribution with
respect to a U.S. holder’s’ existing shares of common stock, Series
B Preferred Stock, Series C Preferred Stock or Participating
Warrants for U.S. federal income tax purposes.
Tax
Basis in the Subscription Rights
If
the fair market value of the Subscription Rights a U.S. holder
receives is less than 15% of the fair market value of the U.S.
holder’s existing shares of common stock, Series B Preferred Stock,
Series C Preferred Stock or Participating Warrants (in each case,
with respect to which the Subscription Rights are distributed) on
the date the U.S. holder receives the Subscription Rights, the
Subscription Rights will be allocated a zero tax basis for U.S.
federal income tax purposes, unless the U.S. holder elects to
allocate the tax basis in the holder’s existing shares of common
stock, Series B Preferred Stock, Series C Preferred Stock or
Participating Warrants between the existing shares of common stock,
Series B Preferred Stock, Series C Preferred Stock or Participating
Warrants and the Subscription Rights in proportion to the relative
fair market values of the existing shares of common stock, Series B
Preferred Stock, Series C Preferred Stock or Participating Warrants
and the Subscription Rights determined on the date of receipt of
the Subscription Rights. If a U.S. holder chooses to allocate tax
basis between the holder’s existing common stock, Series B
Preferred Stock, Series C Preferred Stock or Participating Warrants
and the Subscription Rights, the U.S. holder must make this
election on a statement included with the holder’s timely filed
U.S. federal income tax return (including extensions) for the
taxable year in which the U.S. holder receives the Subscription
Rights. Such an election is irrevocable.
However,
if the fair market value of the Subscription Rights a U.S. holder
receives is 15% or more of the fair market value of the holder’s
existing shares of common stock, Series B Preferred Stock, Series C
Preferred Stock or Participating Warrants on the date the U.S.
holder receives the Subscription Rights, then the U.S. holder must
allocate tax basis in the existing shares of common stock, Series B
Preferred Stock, Series C Preferred Stock or Participating Warrants
between those shares or warrants and the Subscription Rights the
U.S. holder receives in proportion to their fair market values
determined on the date the U.S. holder receives the Subscription
Rights. Please refer to the discussion below regarding the U.S. tax
treatment of a U.S. holder that, at the time of the receipt of the
Subscription Right, no longer holds the common stock, Series B
Preferred Stock, Series C Preferred Stock or Participating Warrants
with respect to which the Subscription Right was
distributed.
The
fair market value of the Subscription Rights on the date that the
Subscription Rights are distributed is uncertain and the fair
market value of the Participating Warrants is uncertain, and we
have not obtained, and do not intend to obtain, an appraisal of the
fair market value of the Subscription Rights or the Participating
Warrants on that date. In determining the fair market value of the
Subscription Rights, U.S. holders should consider all relevant
facts and circumstances, including without limitation any
difference between the Subscription Price of the Subscription
Rights and the trading price of our shares of common stock on the
date that the Subscription Rights are distributed, the fair market
value and the conversion terms of the Preferred Stock, the exercise
price of the Warrants, the length of the period during which the
Subscription Rights may be exercised and the fact that the
Subscription Rights are non-transferable. In determining the fair
market value of the Participating Warrants, U.S. holders should
consider all relevant facts and circumstances, including without
limitation the difference between the exercise price of the
Participating Warrants and the trading price of our common stock on
the date that the Subscription Rights are distributed, the length
of the period during which the Participating Warrants may be
exercised, the nature of the adjustment provisions in the
Participating Warrants that may affect the economics of the
exercise of such Participating Warrants and any limitations of the
transferability of the Participating Warrants.
Exercise
of Subscription Rights
A
U.S. holder will not recognize gain or loss upon the exercise of a
Subscription Right received in the Rights Offering. A U.S. holder’s
adjusted tax basis, if any, in the Subscription Right plus the
Subscription Price should be allocated between the share of
Preferred Stock and the Warrants acquired upon exercise of the
Subscription Right. We believe that the tax basis in the common
stock or Participating Warrants upon which the Subscription Rights
were issued which is allocated to the Subscription Rights under the
prior section entitled “—Tax Basis in the Subscription Rights”
should be further allocated between the shares of Preferred Stock
and the Warrants acquired upon exercise of the Subscription Right
in proportion to their relative fair market values on the date the
Subscription Rights were distributed. The Subscription Price should
be allocated between the shares of Preferred Stock and the Warrants
acquired upon exercise of the Subscription Right in proportion to
their relative fair market values on the exercise date. These
allocations will establish the U.S. holder’s initial tax basis for
U.S. federal income tax purposes in the shares of Preferred Stock
and Warrants received upon exercise of such U.S. holder’s
Subscription Right. The holding period of a share of Preferred
Stock or a Warrant acquired upon exercise of a Subscription Right
in the Rights Offering will begin on the date of
exercise.
If,
at the time of the receipt or exercise of the Subscription Right,
the U.S. holder no longer holds the common stock, Series B
Preferred Stock, Series C Preferred Stock or Participating Warrant
with respect to which the Subscription Right was distributed, then
certain aspects of the tax treatment of the receipt and exercise of
the Subscription Right are unclear, including (1) the allocation of
the tax basis between the shares of our common stock, Series B
Preferred Stock, Series C Preferred Stock or Participating Warrants
previously sold and the Subscription Right, (2) the impact of such
allocation on the amount and timing of gain or loss recognized with
respect to the shares of our common stock, Series B Preferred
Stock, Series C Preferred Stock or Participating Warrants
previously sold, and (3) the impact of such allocation on the tax
basis of the shares of our Preferred Stock and Warrants acquired
upon exercise of the Subscription Right. If a U.S. holder exercises
a Subscription Right received in the Rights Offering after
disposing of shares of our common stock, Series B Preferred Stock,
Series C Preferred Stock or Participating Warrants with respect to
which the Subscription Right is received, the U.S. holder should
consult its own tax advisor.
Expiration
of Subscription Rights
If a
U.S. holder allows Subscription Rights received in the Rights
Offering to expire, the U.S. holder should not recognize any gain
or loss for U.S. federal income tax purposes, and the U.S. holder
should re-allocate any portion of the tax basis in its existing
common shares, Series B Preferred Stock, Series C Preferred Stock
or Participating Warrants previously allocated to the Subscription
Rights that have expired to such U.S. holder’s existing common
shares, Series B Preferred Stock, Series C Preferred Stock or
Participating Warrants, as applicable.
Sale
or Other Disposition, Exercise or Expiration of
Warrants
As of the date of this prospectus, the exercise price of each
Warrant that may be received upon exercise of a Subscription Right
is not yet determinable. The tax authorities that apply to warrants
with an exercise price less than the fair market value of the
underlying security which will be received upon exercise thereof
are complex and subject to differing interpretations. Accordingly,
the tax treatment of the Warrants which may be received upon
exercise of a Subscription Right is uncertain. If the exercise
price of a Warrant as of the date of receipt by a U.S. holder that
exercises a Subscription Right is substantially less than the fair
market value of the underlying share of our common stock which may
be received upon exercise of such Warrant, the Warrant may be
classified for U.S. federal income tax purposes as of the date of
receipt by a U.S. holder as a share of our common stock. If a
Warrant is properly classified as a share of common stock for U.S.
federal income tax purposes, a U.S. holder will not be required to
recognize income, gain or loss upon exercise of such Warrant and a
U.S. holder’s tax basis in a share of our common stock will be
equal to the sum of (1) the U.S. holder’s tax basis in the Warrants
exchanged therefor and (2) the exercise price of such Warrants. A
U.S. holder’s holding period in the shares of our common stock
received upon exercise should generally include the holding period
of such U.S. holder in the Warrants. For the U.S. federal income
tax consequences of a sale or other taxable disposition (other than
by exercise), or distributions (including constructive
distributions) paid on the Warrants if they are properly classified
as shares of our common stock for U.S. federal income tax purposes,
see the discussions below under the headings “—Constructive
Dividends on Warrants”, “—Distributions on Preferred Stock and
Common Stock”, and “—Sale, Exchange or other Disposition of
Preferred Stock and Common Stock”. U.S. holders should consult
their own tax advisors regarding the proper U.S. federal income tax
classification of the Warrants. The remainder of this discussion
assumes the Warrants are properly classified as warrants for U.S.
federal income tax purposes.
Upon
the sale or other taxable disposition of a Warrant (other than by
exercise) received upon exercise of a Subscription Right, a U.S.
holder will generally recognize capital gain or loss equal to the
difference between the amount realized on the sale or other taxable
disposition and the U.S. holder’s adjusted tax basis in the
Warrant. A U.S. Holder’s adjusted tax basis in a Warrant will
generally equal its initial tax basis (discussed above under
“—Exercise of Subscription Rights”), as adjusted for any
constructive dividends on the Warrant described below. This capital
gain or loss will be long-term capital gain or loss if the U.S.
holder’s holding period in such Warrant is more than one year at
the time of the sale or other taxable disposition. The
deductibility of capital losses is subject to certain
limitations.
A
U.S. holder will not be required to recognize income, gain or loss
upon exercise of a Warrant received upon exercise of a Subscription
Right. A U.S. holder’s tax basis in a share of our common stock
received upon exercise of the Warrants for cash will be equal to
the sum of (1) the U.S. holder’s tax basis in the Warrants
exchanged therefor and (2) the exercise price of such Warrants. A
U.S. holder’s holding period in the shares of our common stock
received upon exercise will commence on the day after such U.S.
holder exercises the Warrants.
In
certain circumstances, the Warrants will be exercisable on a
cashless basis. The U.S. federal income tax treatment of an
exercise of a Warrant on a cashless basis is not clear, and could
differ from the consequences described above. It is possible that a
cashless exercise could be a taxable event. U.S. holders are urged
to consult their own tax advisors as to the consequences of an
exercise of a Warrant on a cashless basis, including with respect
to whether the exercise is a taxable event, and their holding
period and tax basis in the common stock received.
If a
Warrant expires without being exercised, a U.S. holder will
recognize a capital loss in an amount equal to such holder’s
adjusted tax basis in the Warrant. Such loss will be long-term
capital loss if, at the time of the expiration, the U.S. holder’s
holding period in such Warrant is more than one year. The
deductibility of capital losses is subject to certain
limitations.
Constructive
Dividends on Warrants
As
described in the section entitled “Dividend Policy,” we do not
anticipate declaring or paying dividends to holders of our common
stock or our Preferred Stock in the foreseeable future. However, if
at any time during the period in which a U.S. holder holds Warrants
received upon exercise of a Subscription Right, we were to pay a
taxable dividend to our stockholders and, in accordance with the
anti-dilution provisions of the Warrants, the exercise price of the
Warrants were decreased, that decrease would be deemed to be the
payment of a taxable dividend to a U.S. holder of the Warrants to
the extent of our earnings and profits, notwithstanding the fact
that such holder will not receive a cash payment. If the exercise
price is adjusted in certain other circumstances (or in certain
circumstances, there is a failure to make appropriate adjustments),
or there is an adjustment to the number of common shares that will
be issued on exercise of the Warrants, such adjustments may also
result in the deemed payment of a taxable dividend to a U.S.
holder. U.S. holders should consult their own tax advisors
regarding the proper treatment of any adjustments to the exercise
price of the Warrants. We are currently required to report the
amount of any deemed distributions to the IRS, as well as either on
our website or to holders not exempt from reporting.
Distributions
on Preferred Stock and Common Stock
As
described in the section entitled “Dividend Policy,” we do not
anticipate declaring or paying dividends to holders of our
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
or common stock in the foreseeable future. However, if we do make
distributions of cash or property on our Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or common stock, such
distributions will constitute dividends to the extent paid out of
our current or accumulated earnings and profits, as determined for
U.S. federal income tax purposes. Dividends received by a corporate
U.S. holder may be eligible for a dividends received deduction,
subject to applicable limitations. Dividends received by certain
non-corporate U.S. holders, including individuals, are generally
taxed at the lower applicable capital gains rate provided certain
holding period and other requirements are satisfied. Distributions
in excess of our current and accumulated earnings and profits will
constitute a return of capital and first be applied against and
reduce a U.S. holder’s adjusted tax basis in its Preferred Stock or
common stock, as the case may be, but not below zero. Any excess
will be treated as capital gain and will be treated as described
below in the section relating to the sale or disposition of our
common stock.
Sale,
Exchange or Other Disposition of Preferred Stock and Common
Stock
Upon
a sale, exchange, or other taxable disposition of our Preferred
Stock (other than by conversion) or our common stock, a U.S. holder
generally will recognize capital gain or loss equal to the
difference between the amount realized (not including any amount
attributable to declared and unpaid dividends, which will be
taxable as described above to U.S. holders of record who have not
previously included such dividends in income) and the U.S. holder’s
adjusted tax basis in our Preferred Stock or our common stock. The
U.S. holder’s adjusted tax basis in our Preferred Stock generally
will equal its initial tax basis (discussed above under
“—Exercise of Subscription Rights”), as adjusted for
applicable distributions (including constructive dividends
described below). A U.S. holder’s adjusted tax basis in our common
stock generally will equal its initial tax basis in our common
stock (discussed below under “—Conversion of the Preferred Stock
into Our Common Stock”), as adjusted for applicable distributions
(including constructive dividends described below). Such capital
gain or loss generally will be long-term capital gain or loss if
the U.S. holder’s holding period for our Preferred Stock or our
common stock exceeded one year at the time of disposition (see the
discussion below under “—Conversion of Our Preferred Stock into Our
Common Stock” regarding a U.S. holder’s holding period for our
common stock). Long-term capital gains recognized by certain
non-corporate U.S. holders, including individuals, generally are
subject to reduced rates of taxation. The deductibility of capital
losses is subject to limitations.
Conversion
of Our Preferred Stock into Our Common Stock
A
U.S. holder will not recognize any gain or loss in respect of the
receipt of our common stock upon the conversion of our Preferred
Stock (except to the extent the U.S. holder receives a cash payment
for any fractional share that would otherwise have been issuable
upon conversion of the Preferred Stock). The adjusted tax basis of
our common stock that a U.S. holder receives on conversion will
equal the adjusted tax basis of the Preferred Stock converted
(decreased by the adjusted tax basis allocable to any fractional
share that would otherwise have been issued upon conversion of the
Preferred Stock), and the holding period of such common stock
received on conversion will include the period during which the
U.S. holder held the Preferred Stock prior to
conversion.
In
the event a U.S. holder’s Preferred Stock is converted pursuant to
an election by such U.S. holder in the case of certain acquisitions
or fundamental changes or pursuant to certain other transactions
(including our consolidation or merger into another person), the
tax treatment of such a conversion will depend upon the facts
underlying the particular transaction triggering such a conversion.
In this regard, it is possible that any related adjustments of the
conversion rate would be treated as a constructive distribution to
the U.S. holder as described below under “—Constructive
Dividends on Preferred Stock.” U.S. holders should consult
their own tax advisors to determine the specific tax treatment of a
conversion under such circumstances.
Constructive
Dividends on Preferred Stock or Common Stock
The
conversion rate of our Preferred Stock is subject to adjustment
under certain circumstances, as described below under “Description
of Securities—Preferred Stock—Preferred Stock.” Section
305(c) of the Code and U.S. Treasury Regulations thereunder may
treat a U.S. holder of our Preferred Stock as having received a
constructive distribution includable in such U.S. holder’s income
in the manner as described above under “—Distributions on
Preferred Stock and Common Stock,” if and to the extent that
certain adjustments in the conversion rate (or failures to make
such an adjustment) increase the proportionate interest of such
U.S. holder in our earnings and profits. In certain other
circumstances, an adjustment to the conversion rate of our
Preferred Stock or a failure to make such an adjustment could
potentially give rise to constructive distributions to U.S. holders
of our common stock. Thus, under certain circumstances, U.S.
holders may recognize income in the event of a constructive
distribution even though they may not receive any cash or property.
We are currently required to report the amount of any deemed
distributions to the IRS, as well as either on our website or to
holders not exempt from reporting.
Information
Reporting and Backup Withholding
A
U.S. holder may be subject to information reporting and backup
withholding when such holder receives dividend payments (including
constructive dividends) or receives proceeds from the sale or other
taxable disposition of the Warrants, shares of our Preferred Stock
acquired through the exercise of Subscription Rights or shares of
our common stock acquired through conversion of our Preferred Stock
or exercise of the Warrants. Certain U.S. holders are exempt from
backup withholding, including certain corporations and certain
tax-exempt organizations. A U.S. holder will be subject to backup
withholding if such holder is not otherwise exempt (or fails to
properly establish an exemption) and such holder:
|
● |
fails
to furnish the holder’s taxpayer identification number, which for
an individual is ordinarily his or her social security
number; |
|
|
|
|
● |
furnishes
an incorrect taxpayer identification number; |
|
|
|
|
● |
is
notified by the IRS that the holder previously failed to properly
report payments of interest or dividends; or |
|
|
|
|
● |
fails
to certify under penalties of perjury that the holder has furnished
a correct taxpayer identification number and that the IRS has not
notified the holder that the holder is subject to backup
withholding. |
Backup
withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be allowed as a refund or a credit
against a U.S. holder’s U.S. federal income tax liability, provided
the required information is timely furnished to the IRS. U.S.
holders should consult their own tax advisors regarding their
qualification for an exemption from backup withholding and the
procedures for obtaining such an exemption.
Tax Considerations Applicable to Non-U.S.
Holders
For
purposes of this discussion, a “non-U.S. holder” is a beneficial
owner of shares of our common stock, Series B Preferred Stock,
Series C Preferred Stock, Participating Warrants, our Subscription
Rights, shares of our Preferred Stock and Warrants acquired upon
exercise of Subscription Rights or shares of our common stock
acquired upon conversion of our Preferred Stock or exercise of
Warrants, as the case may be, that is neither a U.S. holder nor an
entity treated as a partnership for U.S. federal income tax
purposes.
Receipt,
Exercise and Expiration of the Subscription Rights
The
discussion assumes that the receipt of Subscription Rights will be
treated as a nontaxable distribution. See “—Tax
Considerations Applicable to U.S. Holders—Receipt of Subscription
Rights” above. In such case, non-U.S. holders will not be subject
to U.S. federal income tax (or any withholding thereof) on the
receipt, exercise or expiration of the Subscription
Rights.
Exercise
of Warrants
A
non-U.S. holder will not be subject to U.S. federal income tax on
the cash exercise of Warrants into shares of our common stock. As
discussed above in “—Tax Considerations Applicable to U.S.
Holders—Sale or Other Disposition, Exercise or Expiration of
Warrants,” the U.S. federal income tax classification of the
Warrants and the treatment of an exercise of a Warrant on a
cashless basis is not clear. Non-U.S. holders are urged to consult
their own tax advisors as to the proper U.S. federal income tax
classification of the Warrants and the consequences of an exercise
of a Warrant on a cashless basis, including with respect to whether
the exercise is a taxable event, and their holding period and tax
basis in the common stock received.
Constructive
Dividends on Warrants
As
described in the section entitled “Dividend Policy,” we do not
anticipate declaring or paying dividends to holders of our
Preferred Stock or common stock in the foreseeable future. However,
if at any time during the period in which a non-U.S. holder holds
Warrants we were to pay a taxable dividend to our stockholders and,
in accordance with the anti-dilution provisions of the Warrants,
the exercise price of the Warrants were decreased, that decrease
would be deemed to be the payment of a taxable dividend to a
non-U.S. holder to the extent of our earnings and profits,
notwithstanding the fact that such holder will not receive a cash
payment. If the exercise price is adjusted in certain other
circumstances (or in certain circumstances, there is a failure to
make appropriate adjustments), or there is an adjustment to the
number of common shares that will be issued on exercise of the
Warrants, such adjustments may also result in the deemed payment of
a taxable dividend to a non-U.S. holder. Any resulting withholding
tax attributable to deemed dividends may be collected from other
amounts payable or distributable to the non-U.S. holder. Non-U.S.
holders should consult their own tax advisors regarding the proper
treatment of any adjustments to the Warrants.
Distributions
on Preferred Stock and Common Stock
As
described in the section entitled “Dividend Policy,” we do not
anticipate declaring or paying dividends to holders of our
Preferred Stock or common stock in the foreseeable future. However,
if we do make distributions of cash or property on our Preferred
Stock or common stock, such distributions will constitute dividends
for U.S. federal income tax purposes to the extent paid from our
current or accumulated earnings and profits, as determined under
U.S. federal income tax principles. Amounts not treated as
dividends for U.S. federal income tax purposes will constitute a
return of capital and first be applied against and reduce a
non-U.S. holder’s adjusted tax basis in its Preferred Stock or
common stock, as the case may be, but not below zero. Any excess
will be treated as capital gain and will be treated as described
below in the section relating to the sale or disposition of our
Preferred Stock, Warrants, or common stock. Because we may not know
the extent to which a distribution is a dividend for U.S. federal
income tax purposes at the time it is made, for purposes of the
withholding rules discussed below we or the applicable withholding
agent may treat the entire distribution as a dividend.
Subject
to the discussion below on backup withholding and foreign accounts,
dividends paid to a non-U.S. holder of our Preferred Stock or
common stock that are not effectively connected with the non-U.S.
holder’s conduct of a trade or business within the United States
will be subject to U.S. federal withholding tax at a rate of 30% of
the gross amount of the dividends (or such lower rate specified by
an applicable income tax treaty).
Non-U.S.
holders will be entitled to a reduction in or an exemption from
withholding on dividends as a result of either (1) an applicable
income tax treaty or (2) the non-U.S. holder holding our Preferred
Stock or common stock in connection with the conduct of a trade or
business within the United States and such dividends being
effectively connected with that trade or business. To claim such a
reduction in or exemption from withholding, the non-U.S. holder
must provide the applicable withholding agent with a properly
executed (a) IRS Form W-8BEN or W-8BEN-E (or other applicable
documentation) claiming an exemption from or reduction of the
withholding tax pursuant to the benefits of an income tax treaty
between the United States and the country in which the non-U.S.
holder resides or is established, or (b) IRS Form W-8ECI stating
that the dividends are not subject to withholding tax because they
are effectively connected with the conduct by the non-U.S. holder
of a trade or business within the United States, as may be
applicable. These certifications must be provided to the applicable
withholding agent prior to the payment of dividends and must be
updated periodically. Non-U.S. holders that do not timely provide
the applicable withholding agent with the required certification,
but that qualify for a reduced rate under an applicable income tax
treaty, may obtain a refund of any excess amounts withheld by
timely filing an appropriate claim for refund with the
IRS.
If
dividends paid to a non-U.S. holder are effectively connected with
the non-U.S. holder’s conduct of a trade or business within the
United States (and, if required by an applicable income tax treaty,
the non-U.S. holder maintains a permanent establishment in the
United States to which such dividends are attributable), then,
although exempt from U.S. federal withholding tax (provided the
non-U.S. holder provides appropriate certification, as described
above, and subject to the discussion below on backup withholding
and foreign accounts), the non-U.S. holder will be subject to U.S.
federal income tax on such dividends on a net income basis at the
regular graduated U.S. federal income tax rates. In addition, a
non-U.S. holder that is a corporation may be subject to a branch
profits tax at a rate of 30% (or such lower rate specified by an
applicable income tax treaty) on its effectively connected earnings
and profits for the taxable year that are attributable to such
dividends, as adjusted for certain items. Non-U.S. holders should
consult their own tax advisors regarding their entitlement to
benefits under any applicable income tax treaty.
Sale
or Other Disposition of Preferred Stock, Warrants or Common
Stock
Subject
to the discussions below on backup withholding and foreign
accounts, a non-U.S. holder will not be subject to U.S. federal
income tax on any gain realized upon the sale or other taxable
disposition of our Preferred Stock, Warrants or common stock
unless:
|
● |
the
gain is effectively connected with the non-U.S. holder’s conduct of
a trade or business within the United States (and, if required by
an applicable income tax treaty, the non-U.S. holder maintains a
permanent establishment in the United States to which such gain is
attributable); |
|
|
|
|
● |
the
non-U.S. holder is a nonresident alien individual present in the
United States for 183 days or more during the taxable year of the
disposition and certain other requirements are met; or |
|
|
|
|
● |
our
Preferred Stock, Warrants or common stock constitutes a U.S. real
property interest, or USRPI, by reason of our status as a U.S. real
property holding corporation, or USRPHC, for U.S. federal income
tax purposes. |
Gain
described in the first bullet point above generally will be subject
to U.S. federal income tax on a net income basis at the regular
graduated rates. A Non-U.S. holder that is a corporation also may
be subject to a branch profits tax at a rate of 30% (or such lower
rate specified by an applicable income tax treaty) on such
effectively connected gain, as adjusted for certain
items.
Gain
described in the second bullet point above will be subject to U.S.
federal income tax at a rate of 30% (or such lower rate specified
by an applicable income tax treaty) on any gain derived from the
disposition, which may be offset by U.S. source capital losses of
the non-U.S. holder (even though the individual is not considered a
resident of the United States), provided the non-U.S. holder has
timely filed U.S. federal income tax returns with respect to such
losses.
With
respect to the third bullet point above, we believe we are not
currently and do not anticipate becoming a USRPHC. Because the
determination of whether we are a USRPHC depends on the fair market
value of our USRPIs relative to the fair market value of our other
business assets and our non-U.S. real property interests, however,
there can be no assurance we are not a USRPHC or will not become
one in the future.
Non-U.S.
holders should consult their own tax advisors regarding potentially
applicable income tax treaties that may provide for different
rules.
Conversion
of Our Preferred Stock into Our Common Stock
A
non-U.S. holder will not recognize any gain or loss in respect of
the receipt of our common stock upon the conversion of our
Preferred Stock (except to the extent the non-U.S. holder receives
a cash payment for any fractional share that would otherwise have
been issuable upon conversion of the Preferred Stock).
Constructive
Dividends on Preferred Stock
As
described above under “—Tax Considerations Applicable to U.S.
Holders—Constructive Dividends on Preferred Stock or Common Stock,”
in certain circumstances, a non-U.S. holder will be deemed to
receive a constructive distribution from us. Adjustments in the
conversion rate (or failures to adjust the conversion rate) that
increase the proportionate interest of a non-U.S. holder in our
earnings and profits could result in deemed distributions to the
non-U.S. holder that are treated as dividends for U.S. federal
income tax purposes. Any constructive dividend deemed paid to a
non-U.S. holder will be subject to U.S. federal income tax or
withholding tax in the manner described above under “—Tax
Considerations Applicable to Non-U.S. Holders—Distributions on
Preferred Stock and Common Stock.” It is possible that U.S. federal
tax on the constructive dividend would be withheld, if applicable,
from subsequent payments on the Preferred Stock or our common
stock.
Information
Reporting and Backup Withholding
Subject
to the discussion below on foreign accounts, a non-U.S. holder will
not be subject to backup withholding with respect to distributions
on our Preferred Stock, Warrants or common stock we make to the
non-U.S. holder, provided the applicable withholding agent does not
have actual knowledge or reason to know such holder is a United
States person and the holder timely certifies its non-U.S. status,
such as by providing a valid IRS Form W-8BEN, W- 8BEN-E or W-8ECI,
or other applicable certification. However, information returns
generally will be filed with the IRS in connection with any
distributions (including deemed distributions) made on our
Preferred Stock, Warrants and common stock to the non-U.S. holder,
regardless of whether any tax was actually withheld. Copies of
these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax authorities
of the country in which the non-U.S. holder resides or is
established.
Information
reporting and backup withholding may apply to the proceeds of a
sale or other taxable disposition of our Preferred Stock, Warrants
or common stock within the United States, and information reporting
may (although backup withholding generally will not) apply to the
proceeds of a sale or other taxable disposition of our Preferred
Stock, Warrants or common stock outside the United States conducted
through certain U.S.-related financial intermediaries, in each
case, unless the beneficial owner timely certifies under penalty of
perjury that it is a non-U.S. holder on IRS Form W-8BEN or
W-8BEN-E, or other applicable form (and the payor does not have
actual knowledge or reason to know that the beneficial owner is a
U.S. person) or such owner otherwise timely establishes an
exemption. Proceeds of a disposition of our Preferred Stock,
Warrants or common stock conducted through a non-U.S. office of a
non-U.S. broker generally will not be subject to backup withholding
or information reporting.
Backup
withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be allowed as a refund or a credit
against a non-U.S. holder’s U.S. federal income tax liability,
provided the required information is timely furnished to the
IRS.
Additional
Withholding Tax on Payments Made to Foreign Accounts
Withholding
taxes may be imposed under the Foreign Account Tax Compliance Act,
or FATCA, on certain types of payments made to non-U.S. financial
institutions and certain other non-U.S. entities. Specifically, a
30% withholding tax may be imposed on dividends (including deemed
dividends) paid on our Preferred Stock, Warrants or common stock,
or gross proceeds from the sale or other disposition of our
Preferred Stock, Warrants or common stock paid to a “foreign
financial institution” or a “non-financial foreign entity” (each as
defined in the Code), unless (1) the foreign financial institution
undertakes certain diligence and reporting obligations, (2) the
non-financial foreign entity either certifies it does not have any
“substantial United States owners” (as defined in the Code) or
furnishes identifying information regarding each substantial United
States owner, or (3) the foreign financial institution or
non-financial foreign entity otherwise qualifies for an exemption
from these rules. If the payee is a foreign financial institution
and is subject to the diligence and reporting requirements in (1)
above, it must enter into an agreement with the U.S. Department of
the Treasury requiring, among other things, that it undertake to
identify accounts held by certain “specified United States persons”
or “United States-owned foreign entities” (each as defined in the
Code), annually report certain information about such accounts, and
withhold 30% on certain payments to non-compliant foreign financial
institutions and certain other account holders. Non-U.S. holders
typically will be required to furnish certifications (generally on
the applicable IRS Form W-8) or other documentation to provide the
information required by FATCA or to establish compliance with or an
exemption from withholding under FATCA. FATCA withholding may apply
where payments are made through a non-U.S. intermediary that is not
FATCA compliant, even where the non-U.S. holder satisfies the
holder’s own FATCA obligations. Foreign financial institutions
located in jurisdictions that have an intergovernmental agreement
with the United States governing FATCA may be subject to different
rules.
Withholding
under FATCA also potentially applies to payments of gross proceeds
from the sale or other disposition of our common stock. Proposed
regulations, however, would eliminate withholding under FATCA on
such payments, and the U.S. Treasury Department has indicated that
taxpayers may rely on this aspect of the proposed regulations until
final regulations are issued. Because we may not know the extent to
which a distribution is a dividend for U.S. federal income tax
purposes at the time it is made, for purposes of these withholding
rules we or the applicable withholding agent may treat the entire
distribution as a dividend. Prospective investors should consult
their own tax advisors regarding the potential application of these
withholding provisions.
DESCRIPTION OF
SECURITIES
As of
the date of this prospectus, our Restated Certificate of
Incorporation authorizes us to issue 250,000,000 shares of common
stock, par value $0.01 per share, and 130,000,000 shares of
preferred stock, par value $0.01 per share. The following is a
summary of the rights of our common and preferred stock and some of
the provisions of our Restated Certificate of Incorporation and
Amended and Restated Bylaws, our outstanding warrants, our
registration rights agreements and the Delaware General Corporation
Law. Because it is only a summary, it does not contain all the
information that may be important to you and is subject to and
qualified in its entirety by our Restated Certificate of
Incorporation and our Restated Bylaws, a copy of each of which has
been incorporated as an exhibit to the registration statement of
which this prospectus forms a part.
Our
Restated Certificate of Incorporation and our Amended and Restated
Bylaws contain certain provisions that are intended to enhance the
likelihood of continuity and stability in the composition of the
board of directors, which may have the effect of delaying,
deferring or preventing a future takeover or change in control of
the Company unless such takeover or change in control is approved
by our board of directors.
Common
Stock
As of August 31, 2022, there were 24,727,495 shares of common stock
outstanding. In addition, as of August 31, 2022 there were: (i)
1,291,207 shares of common stock subject to outstanding options and
restricted stock units; (ii) 626,799 shares of common stock
reserved for future issuance under our 2020 Equity Incentive Plan;
(iii) 1,115,742 shares of common stock reserved for future issuance
under outstanding common stock warrants; (iv) 19,306 shares of
common stock reserved for issuance on conversion of 26 shares of
the Series B Preferred Stock; and (v) 33,753 shares of common stock
reserved for issuance on conversion of 50 shares of the Series C
Preferred Stock. Each outstanding share of common stock entitles
the holder thereof to one vote per share on all matters. Our
Amended and Restated Bylaws provide that any vacancy occurring in
the board of directors may be filled by the affirmative vote of a
majority of the remaining directors. Stockholders do not have
preemptive rights to purchase shares in any future issuance of our
common stock. In the event of our liquidation, dissolution or
winding up, holders of our common stock are entitled to receive,
ratably, the net assets available to stockholders after payment of
all creditors.
Holders
of our common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders, and
do not have cumulative voting rights. Accordingly, the holders of a
majority of the shares of our common stock entitled to vote can
elect all of the directors standing for election. Subject to
preferences that may be applicable to any outstanding shares of
preferred stock, holders of our common stock are entitled to
receive ratably such dividends, if any, as may be declared from
time to time by our board of directors out of funds legally
available for dividend payments. All outstanding shares of our
common stock are fully paid and nonassessable, and any shares of
our common stock to be sold pursuant to this prospectus will be
fully paid and nonassessable. The holders of common stock have no
preferences or rights of conversion, exchange, pre-emption or other
subscription rights. There are no redemption or sinking fund
provisions applicable to our common stock. In the event of any
liquidation, dissolution or winding-up of our affairs, holders of
our common stock will be entitled to share ratably in our assets
that are remaining after payment or provision for payment of all of
our debts and obligations and after liquidation payments to holders
of outstanding shares of preferred stock, if any.
The
transfer agent and registrar for our common stock is American Stock
Transfer and Trust Company. The transfer agent and the registrar’s
address is 59 Maiden Lane, New York, New York 10038. Their
telephone number is 1-800-937-5449. Our common stock is listed on
The NASDAQ Capital Market under the symbol “SINT”.
Preferred
Stock
Our
Board of directors has the authority under our Restated Certificate
of Incorporation, without further action by our stockholders, to
issue up to 130,000,000 shares of preferred stock in one or more
series, to establish from time to time the number of shares to be
included in each such series, to fix the rights, preferences,
privileges and restrictions of the shares of each wholly unissued
series, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preference and sinking
fund terms, and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then
outstanding). Our board of directors may authorize the issuance of
preferred stock with voting or conversion rights that could have
the effect of restricting dividends on our common stock, diluting
the voting power of our common stock, impairing the liquidation
rights of our common stock or otherwise adversely affecting the
rights of holders of our common stock. The issuance of preferred
stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other
things, have the effect of delaying, deferring or preventing a
change of control and may adversely affect the market price of our
common stock.
Series B Preferred Stock.
Our
board of directors designated 15,000 shares of our preferred stock
as Series B Preferred Stock. As of August 31, 2022, there were 26
shares of Series B Preferred stock outstanding. The Series B
Preferred Stock ranks senior to our common stock and other classes
of capital stock with respect to redemption, unless the holders of
a majority of the outstanding shares of Series B Preferred Stock
consent to the creation of parity stock or senior preferred
stock.
Conversion
Each
share of Series B Preferred Stock is convertible into shares of our
common stock at any time at the holder’s option at the Series B
Conversion Price described below. We may not effect any conversion
of Series B Preferred Stock, with certain exceptions, to the extent
that, after giving effect to an attempted conversion, the holder of
Series B Preferred Stock (together with such holder’s affiliates,
and any persons acting as a group together with such holder or any
of such holder’s affiliates) would beneficially own a number of
shares of common stock in excess of 4.99% (or, at the election of
the holder, 9.99%) of the shares of our common stock then
outstanding after giving effect to such conversion, referred to as
the Preferred Stock Beneficial Ownership Limitation; provided,
however, that upon notice to us, the holder may increase or
decrease the Preferred Stock Beneficial Ownership Limitation,
provided that in no event may the Preferred Stock Beneficial
Ownership Limitation exceed 9.99% and any increase in the Preferred
Stock Beneficial Ownership Limitation will not be effective until
61 days following notice of such increase from the holder to
us.
Subject
to certain ownership limitations as described below and certain
equity conditions being met, if during any 30 consecutive trading
days, the volume weighted average price of our common stock exceeds
$130.61 and the daily dollar trading volume during such period
exceeds $500,000 per trading day, we have the right to force the
conversion of the Series B Preferred Stock into common
stock.
Conversion
Price.
The
Series B Preferred Stock is convertible into shares of common stock
by dividing the stated value of the Series B Preferred Stock
($1,100) by $1.4814 (the “Series B Conversion Price”). The Series B
Conversion Price is subject to adjustment for stock splits, stock
dividends, and distributions of common stock or securities
convertible, exercisable or exchangeable for common stock,
subdivisions, combinations and reclassifications.
Subject
to certain exclusions contained in the Series B Certificate of
Designation, if we in any manner grant or sell any rights, warrants
or options and the lowest price per share for which one share of
common stock is at any time issuable upon the exercise of any such
option or upon conversion, exercise or exchange of any Common Stock
Equivalents (as defined in the Series B Certificate of Designation)
issuable upon exercise of any such option, exercise or exchange of
any Common Stock Equivalent issuable upon the exercise of such
option or otherwise pursuant to the terms thereof is less than the
Series B Conversion Price, then such share of common stock will be
deemed to be outstanding and to have been issued and sold by us at
the time of the granting or sale of such option for such price per
share. For purposes of this paragraph only, the “lowest price per
share for which one share of common stock is issuable upon the
exercise of any such options or upon conversion, exercise or
exchange of any Common Stock Equivalent issuable upon exercise of
any such option or otherwise pursuant to the terms thereof” will be
equal to (1) the lower of (x) the sum of the lowest amounts of
consideration (if any) received or receivable by us with respect to
any one share of common stock upon the granting or sale of such
option, upon exercise of such option and upon conversion, exercise
or exchange of any Common Stock Equivalents issuable upon exercise
of such option or otherwise pursuant to the terms thereof and (y)
the lowest exercise price set forth in such option for which one
share of common stock is issuable upon the exercise of any such
options or upon conversion, exercise or exchange of any Common
Stock Equivalents issuable upon exercise of any such option or
otherwise pursuant to the terms thereof. Except as contemplated by
the terms of the Series B Certificate of Designation, no further
adjustment of the Series B Conversion Price will be made upon the
actual issuance of such shares of common stock or of such
convertible securities upon the exercise of such options or
otherwise pursuant to the terms of or upon the actual issuance of
such Common Stock Equivalents.
Subject
to certain exclusions contained in the Series B Certificate of
Designation, if we in any manner issue or sell any Common Stock
Equivalents and the lowest price per share for which one share of
common stock is at any time issuable upon the conversion, exercise
or exchange thereof or otherwise pursuant to the terms thereof is
less than the Series B Conversion Price, then such share of common
stock will be deemed to be outstanding and to have been issued and
sold by us at the time of the issuance or sale of such convertible
securities for such price per share. For purposes of this paragraph
only, the “lowest price per share for which one share of common
stock is issuable upon the conversion, exercise or exchange thereof
or otherwise pursuant to the terms thereof” will be equal to (1)
the lower of (x) the sum of the lowest amounts of consideration
(if any) received or receivable by us with respect to one share of
common stock upon the issuance or sale of the Common Stock
Equivalent and upon conversion, exercise or exchange of such
convertible security or otherwise pursuant to the terms thereof and
(y) the lowest conversion price set forth in such convertible
security for which one share of common stock is issuable upon
conversion, exercise or exchange thereof or otherwise pursuant to
the terms thereof minus (2) the sum of all amounts paid or payable
to the holder of such Common Stock Equivalent (or any other person)
upon the issuance or sale of such Common Stock Equivalent plus the
value of any other consideration received or receivable by, or
benefit conferred on, the holder of such Common Stock Equivalent
(or any other person). Except as contemplated by the terms of the
Series B Certificate of Designation, no further adjustment of the
Series B Conversion Price will be made upon the actual issuance of
such shares of common stock upon conversion, exercise or exchange
of such Common Stock Equivalents or otherwise pursuant to the terms
thereof, and if any such issuance or sale of such Common Stock
Equivalents is made upon exercise of any options for which
adjustment of the Series B Conversion Price has been or is to be
made, except as contemplated by the terms of the Series B
Certificate of Designation, no further adjustment of the Series B
Conversion Price will be made by reason of such issuance or
sale.
If
the purchase or exercise price provided for in any options, the
additional consideration, if any, payable upon the issue,
conversion, exercise or exchange of any convertible securities, or
the rate at which any convertible securities are convertible into
or exercisable or exchangeable for shares of common stock increases
or decreases at any time (other than proportional changes in
conversion or exercise prices, as applicable, in connection with
stock dividends, splits or combination of outstanding common stock)
the Conversion Price in effect at the time of such increase or
decrease will be adjusted to the Series B Conversion Price which
would have been in effect at such time had such options or
convertible securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased
conversion rate, as the case may be, at the time initially granted,
issued or sold. If the terms of any option or convertible security
that was outstanding as of the date of issuance of the Preferred
Stock and related Warrants are increased or decreased in the manner
described in the immediately preceding sentence, then such option
or convertible security and the shares of common stock deemed
issuable upon exercise, conversion or exchange thereof will be
deemed to have been issued as of the date of such increase or
decrease. No adjustment will be made if such adjustment would
result in an increase of the Series B Conversion Price then in
effect.
If
any option and/or convertible security and/or Adjustment Right is
issued in connection with the issuance or sale or deemed issuance
or sale of any other securities of the Company (as determined by
the holder of Preferred Stock, the “Primary Security”, and such
option and/or convertible security and/or Adjustment Right (as
defined below), the “Secondary Securities” and together with the
Primary Security, each a “unit”), together comprising one
integrated transaction, the aggregate consideration per share of
common stock with respect to such Primary Security will be deemed
to be the lower of (x) the purchase price of such unit, (y) if
such Primary Security is an option and/or convertible security, the
lowest price per share for which one share of common stock is at
any time issuable upon the exercise or conversion of the Primary
Security in accordance with the paragraphs above and (z) the lowest
volume-weighted average price of the common stock on any trading
day during the four trading day period immediately following the
public announcement of such dilutive issuance. If any shares of
common stock, options or convertible securities are issued or sold
or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount of
consideration received by us therefor. If any shares of common
stock, options or convertible securities are issued or sold for a
consideration other than cash, the amount of such consideration
received by us will be the fair value of such consideration, except
where such consideration consists of publicly traded securities, in
which case the amount of consideration received by us for such
securities will be the arithmetic average of the volume-weighted
average prices of such security for each of the five (5) trading
days immediately preceding the date of receipt. If any shares of
common stock, options or convertible securities are issued to the
owners of the non-surviving entity in connection with any merger in
which we are the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is
attributable to such shares of common stock, options or convertible
securities (as the case may be). The fair value of any
consideration other than cash or publicly traded securities will be
determined jointly by us and the holder. If such parties are unable
to reach agreement within ten (10) days after the occurrence of an
event requiring valuation (the “Valuation Event”), the fair value
of such consideration will be determined within five trading days
after the tenth day following such Valuation Event by an
independent, reputable appraiser jointly selected by us and the
holder. “Adjustment Right” means any right granted with respect to
any securities issued in connection with, or with respect to, any
issuance or sale (or deemed issuance or sale in accordance with the
paragraph above) of shares of common stock that could result in a
decrease in the net consideration received by us in connection
with, or with respect to, such securities (including, without
limitation, any cash settlement rights, cash adjustment or other
similar rights).
The foregoing conversion price adjustment provisions will likely be
triggered by the issuance of the Preferred Stock and Warrants in
the Rights Offering.
In
addition, holders of Preferred Stock may be eligible to elect an
alternative price in the event we issue certain variable price
securities.
Liquidation;
Dividends; Repurchases.
In
the event of a liquidation, the holders of Series B Preferred Stock
are entitled to participate on an as-converted-to-common stock
basis with holders of the common stock in any distribution of
assets of the Company to the holders of common stock.
Redemption
Right.
We
hold an option to redeem some or all of the Series B Preferred
Stock at any time after the six-month anniversary of its issuance
date at a 25% premium to the stated value of the Series B Preferred
Stock subject to redemption, upon 30 days prior written notice to
the holder of the Series B Preferred Stock. The Series B Preferred
Stock would be redeemed by us for cash.
Fundamental
Transactions.
In
the event of any fundamental transaction, generally including any
merger with or into another entity, sale of all or substantially
all of our assets, tender offer or exchange offer, or
reclassification of our common stock, then upon any subsequent
conversion of the Series B Preferred Stock, the holder will have
the right to receive as alternative consideration, for each share
of our common stock that would have been issuable upon such
conversion immediately prior to the occurrence of such fundamental
transaction, the number of shares of common stock of the successor
or acquiring corporation or of our company, if it is the surviving
corporation, and any additional consideration receivable upon or as
a result of such transaction by a holder of the number of shares of
our common stock for which the Series B Preferred Stock is
convertible immediately prior to such event.
Voting
Rights.
With
certain exceptions, the holders of shares of Series B Preferred
Stock have no voting rights. However, as long as any shares of
Series B Preferred Stock remain outstanding, we may not, without
the affirmative vote of holders of a majority of the
then-outstanding Series B Preferred Stock, (a) alter or change
adversely the powers, preferences or rights given to the Series B
Preferred Stock or alter or amend the Series B Certificate of
Designation, (b) increase the number of authorized shares of Series
B Preferred Stock, (c) amend our Certificate of Incorporation or
other charter documents in any manner that adversely affects any
rights of holders of Series B Preferred Stock disproportionately to
the rights of holders of our other capital stock, or (d) enter into
any agreement with respect to any of the foregoing.
Jurisdiction
and Waiver of Trial by Jury
Other
than with respect to suits, actions or proceedings arising under
the federal securities laws, the Series B Certificate of
Designation provides for investors to consent to exclusive
jurisdiction to courts located in New York, New York and provides
for a waiver of the right to a trial by jury. It also provides that
disputes are governed by Delaware law.
Series C Preferred Stock.
Our
board of directors designated 9,440 shares of our preferred stock
as Series C Preferred Stock. As of August 31, 2022, there were 50
shares of Series C Preferred stock outstanding.
Conversion.
Each share of Series C Preferred Stock is convertible at our option
at any time or at the option of the holder at any time, into the
number of shares of our common stock determined by dividing the
$1,000 stated value per share of the Preferred Stock by a
conversion price of $1.4814 per share. In addition, the conversion
price per share is subject to adjustment for stock dividends,
distributions, subdivisions, combinations or reclassifications.
Subject to limited exceptions, a holder of the Series C Preferred
Stock will not have the right to convert any portion of the Series
C Preferred Stock to the extent that, after giving effect to the
conversion, the holder, together with its affiliates, would
beneficially own in excess of 4.99% of the number of shares of our
common stock outstanding immediately after giving effect to its
conversion. A holder of the Series C Preferred Stock, upon notice
to the Company, may increase or decrease the beneficial ownership
limitation provisions of such holder’s Series C Preferred Stock,
provided that in no event shall the limitation exceed 9.99% of the
number of shares of our common stock outstanding immediately after
giving effect to its conversion. In the event that a conversion is
effected at our option, we will exercise such option to convert
shares of Series C Preferred Stock on a pro rata basis among all of
the holders based on such holders’ shares of Series C Preferred
Stock.
Fundamental
Transactions. In the event we effect certain mergers,
consolidations, sales of substantially all of our assets, tender or
exchange offers, reclassifications or share exchanges in which our
common stock is effectively converted into or exchanged for other
securities, cash or property, we consummate a business combination
in which another person acquires 50% of the outstanding shares of
our common stock, or any person or group becomes the beneficial
owner of 50% of the aggregate ordinary voting power represented by
our issued and outstanding common stock, then, upon any subsequent
conversion of the Series C Preferred Stock, the holders of the
Series C Preferred Stock will have the right to receive any shares
of the acquiring corporation or other consideration it would have
been entitled to receive if it had been a holder of the number of
shares of common stock then issuable upon conversion in full of the
Series C Preferred Stock.
Dividends.
Holders of Series C Preferred Stock shall be entitled to receive
dividends (on an as-if-converted-to-common-stock basis) in the same
form as dividends actually paid on shares of the common stock when,
as and if such dividends are paid on shares of common
stock.
Voting Rights. Except as otherwise provided in the Series C
Certificate of Designation or as otherwise required by law, the
Series C Preferred Stock has no voting rights.
Liquidation
Preference. Upon our liquidation, dissolution or
winding-up, whether voluntary or involuntary, holders of Series C
Preferred Stock will be entitled to receive out of our assets,
whether capital or surplus, the same amount that a holder of common
stock would receive if the Series C Preferred Stock were fully
converted (disregarding for such purpose any conversion limitations
under the Series C Certificate of Designation) to common stock,
which amounts shall be paid pari passu with all holders of common
stock.
Redemption
Rights. We are not obligated to redeem or repurchase any shares
of Series C Preferred Stock. Shares of Series C Preferred Stock are
not otherwise entitled to any redemption rights, or mandatory
sinking fund or analogous provisions.
Future Preferred Stock.
Our Restated Certificate of Incorporation provides that our board
of directors is authorized to issue, without stockholder approval,
blank check preferred stock. Our board of directors will fix the
rights, preferences, privileges, qualifications and restrictions of
any such preferred stock issued in the certificate of designation
relating to that series. Such certificate of designation will
include:
|
● |
the
title and stated value; |
|
|
|
|
● |
the
number of shares we are offering; |
|
● |
the
liquidation preference per share; |
|
|
|
|
● |
the
purchase price per share; |
|
● |
the
dividend rate per share, dividend period and payment dates and
method of calculation for dividends; |
|
|
|
|
● |
whether
dividends will be cumulative or non-cumulative and, if cumulative,
the date from which dividends will accumulate; |
|
|
|
|
● |
our
right, if any, to defer payment of dividends and the maximum length
of any such deferral period; |
|
|
|
|
● |
the
procedures for any auction and remarketing, if any; |
|
|
|
|
● |
the
provisions for a sinking fund, if any; |
|
|
|
|
● |
the
provisions for redemption or repurchase, if applicable, and any
restrictions on our ability to exercise those redemption and
repurchase rights; |
|
|
|
|
● |
any
listing of the preferred stock on any securities exchange or
market; |
|
|
|
|
● |
whether
the preferred stock will be convertible into our common stock or
other securities of ours, including warrants, and, if applicable,
the conversion period, the conversion price, or how it will be
calculated, and under what circumstances it may be
adjusted; |
|
|
|
|
● |
voting
rights, if any, of the preferred stock; |
|
|
|
|
● |
preemption
rights, if any; |
|
|
|
|
● |
restrictions
on transfer, sale or other assignment, if any; |
|
|
|
|
● |
a
discussion of any material or special United States federal income
tax considerations applicable to the preferred stock; |
|
|
|
|
● |
the
relative ranking and preferences of the preferred stock as to
dividend rights and rights if we liquidate, dissolve or wind up our
affairs; |
|
|
|
|
● |
any
limitations on issuances of any class or series of preferred stock
ranking senior to or on a parity with the series of preferred stock
being issued as to dividend rights and rights if we liquidate,
dissolve or wind up our affairs; and |
|
|
|
|
● |
any
other specific terms, rights, preferences, privileges,
qualifications or restrictions of the preferred stock. |
When
we issue shares of preferred stock, the shares will be fully paid
and nonassessable and will not have, or be subject to, any
preemptive or similar rights.
The
General Corporation Law of the State of Delaware, the state of our
incorporation, provides that the holders of preferred stock will
have the right to vote separately as a class on any proposal
involving fundamental changes in the rights of holders of that
preferred stock. This right is in addition to any voting rights
that may be provided for in the applicable certificate of
designation.
Description
of Other Outstanding Securities of the Company
Warrants
As of August 31, 2022, there were 1,115,742 common stock purchase
warrants outstanding, which expire between December 2022 and
February 2025. Each of these warrants entitles the holder to
purchase one share of common stock at prices ranging between
$278,370 and $1.4814, as converted, per share, with a weighted
average exercise price of $6.07 per share. Certain of these
warrants have a net exercise provision under which its holder may,
in lieu of payment of the exercise price in cash, surrender the
warrant and receive a net amount of shares based on the fair market
value of our common stock at the time of exercise of the warrant
after deduction of the aggregate exercise price. Each of these
warrants also contains provisions for the adjustment of the
exercise price and the aggregate number of shares issuable upon the
exercise of the warrant in the event of dividends, share splits,
reorganizations and reclassifications and consolidations. Certain
of these warrants contain a provision requiring a reduction to the
exercise price in the event we issue common stock, or securities
convertible into or exercisable for common stock, at a price per
share lower than the warrant exercise price.
The
holders of certain of these warrants have registration rights that
are outlined below under the heading “Registration
Rights.”
February
2020 Rights Offering Warrants
On
February 6, 2020, we issued 6,372,000 common stock warrants (the
“February 2020 Warrants”) in a rights offering to our stockholders.
The material terms and provisions of the February 2020 Warrants are
summarized below. This summary of the February 2020 Warrants is not
complete. For the complete terms of the February 2020 Warrants, you
should refer to the form of February 2020 Warrant filed as an
exhibit to the registration statement of which this prospectus
forms a part.
Pursuant
to a warrant agency agreement between us and American Stock
Transfer & Trust Company, LLC, as warrant agent, the February
2020 Warrants were issued in book-entry form and are represented
only by one or more global warrants deposited with the warrant
agent, as custodian on behalf of The Depository Trust Company, or
DTC, and registered in the name of Cede & Co., a nominee of
DTC, or as otherwise directed by DTC.
Exercisability.
Each February 2020 Warrant became exercisable at the time of
issuance and will expire five years from their issuance date. The
February 2020 Warrants are exercisable, at the option of each
holder, in whole or in part by delivering to us a duly executed
exercise notice and payment in full for the number of shares of our
common stock purchased upon such exercise, except in the case of a
cashless exercise as discussed below. The number of shares of
common stock issuable upon exercise of the February 2020 Warrants
is subject to adjustment in certain circumstances, including a
stock split of, stock dividend on, or a subdivision, combination or
recapitalization of the common stock. If we effect a merger,
consolidation, sale of substantially all of our assets, or other
similar transaction, then, upon any subsequent exercise of a
February 2020 Warrant, the February 2020 Warrant holder will have
the right to receive any shares of the acquiring corporation or
other consideration it would have been entitled to receive if it
had been a holder of the number of shares of common stock then
issuable upon exercise in full of the February 2020
Warrant.
Cashless
Exercise. After the earlier of (a) the date that is 30 days
after the initial exercise date of the February 2020 Warrants or
(b) such trading day that the aggregate volume of shares of common
stock sold since the expiration of the Offering exceeds three times
the number of shares of common stock and common stock equivalents
sold in the Offering, the holder shall be permitted to exercise the
February 2020 Warrant, on a cashless basis, regardless of the then
applicable trading price of the common stock on Nasdaq, for an
aggregate number of shares of common stock equal to the product of
(i) the aggregate number of shares of common stock that would be
issuable upon exercise of the Warrant if such exercise were by
means of a cash exercise and (ii) 0.70.
Additionally,
if at any time there is no effective registration statement
registering, or the prospectus contained therein is not available
for issuance of, the shares issuable upon exercise of the warrant,
the holder may exercise the warrant on a cashless basis, in which a
portion of the warrant is cancelled in payment of the purchase
price payable in respect of the number of shares of our common
stock purchasable upon such exercise.
Exercise
Price. Each February 2020 Warrant represents the right to
purchase one share of common stock at an exercise price of $1.50
per share. In addition, the exercise price per share is subject to
adjustment for stock dividends, distributions, subdivisions,
combinations, or reclassifications, and for certain dilutive
issuances. Subject to limited exceptions, a holder of warrants will
not have the right to exercise any portion of the warrant to the
extent that, after giving effect to the exercise, the holder,
together with its affiliates, and any other person acting as a
group together with the holder or any of its affiliates, would
beneficially own in excess of 4.99% of the number of shares of our
common stock outstanding immediately after giving effect to its
exercise. The holder, upon notice to the Company, may increase or
decrease the beneficial ownership limitation provisions of the
warrant, provided that in no event shall the limitation exceed
9.99% of the number of shares of our common stock outstanding
immediately after giving effect to the exercise of the
warrant.
Fundamental
Transactions. In the event we consummate a merger or
consolidation with or into another person or other reorganization
event in which our common shares are converted or exchanged for
securities, cash or other property, or we sell, lease, license,
assign, transfer, convey or otherwise dispose of all or
substantially all of our assets or we or another person acquires
50% or more of our outstanding shares of common stock, referred to
as a fundamental transaction, then following such event, the
holders will have the option, which may be exercised within 30 days
after the consummation of the fundamental transaction, to require
the Company or the successor entity purchase the Warrant from the
holder by paying to the holder an amount of cash equal to the Black
Scholes value of the remaining unexercised portion of the warrant
on the date of the consummation of the fundamental transaction.
However, if the fundamental transaction is not within the Company’s
control, including not approved by the Company’s Board of
Directors, the holder will only be entitled to receive from the
Company or any successor entity, as of the date of consummation of
such fundamental transaction, the same type or form of
consideration (and in the same proportion), at the Black Scholes
value of the unexercised portion of the Warrant, that is being
offered and paid to the holders of common stock of the Company in
connection with the fundamental transaction, whether that
consideration be in the form of cash, stock or any combination
thereof, or whether the holders of common stock are given the
choice to receive from among alternative forms of consideration in
connection with the fundamental transaction.
Transferability.
Subject to applicable laws and restrictions, a holder may transfer
a warrant upon surrender of the warrant to us with a completed and
signed assignment in the form attached to the warrant. The
transferring holder will be responsible for any tax that liability
that may arise as a result of the transfer.
No
Market. There is no public trading market for the February 2020
Warrants, and they are not listed for trading on Nasdaq or any
other securities exchange or market.
Rights
as Stockholder. Except as set forth in the February 2020
Warrants, the holder of a warrant, solely in such holder’s capacity
as a holder of a February 2020 Warrant, will not be entitled to
vote, to receive dividends, or to any of the other rights of our
stockholders.
Redemption
Rights. We may redeem the warrants for $0.01 per warrant if our
common stock closes above $8.00 per share for ten consecutive
trading days, provided that we may not do so prior to the first
anniversary of expiration of the Rights Offering.
Amendments
and Waivers. The provisions of each February 2020 Warrant may
be modified or amended or the provisions thereof waived with the
written consent of us and the holder.
Maxim
and Ascendiant Warrants
Also
on February 6, 2020, in connection with a rights offering, we
issued 203,904 common stock warrants (the “Maxim Warrants”) to
Maxim Group LLC, as the dealer manager in such rights offering, and
50,976 common stock warrants (the “Ascendiant Warrants”) to
Ascendiant Capital Markets, LLC, as a financial advisor to us in
such rights offering. The Maxim Warrants and Ascendiant Warrants
have the same material terms as the February 2020 Warrants, except
as described below.
The
Maxim Warrants and Ascendiant Warrants became exercisable 6 months
from February 6, 2020 and will expire on January 17, 2025. The
Maxim Warrants and Ascendiant Warrants are exercisable at a price
of $1.6295 per share, subject to adjustment for stock dividends,
distributions, subdivisions, combinations, or reclassifications,
and for certain dilutive issuances. Subject to limited exceptions,
a holder of the Maxim Warrants and Ascendiant Warrants will not
have the right to exercise any portion of such warrant to the
extent that, after giving effect to the exercise, the holder,
together with its affiliates, and any other person acting as a
group together with the holder or any of its affiliates, would
beneficially own in excess of 4.99% of the number of shares of our
common stock outstanding immediately after giving effect to its
exercise. The holder, upon notice to us, may increase or decrease
the beneficial ownership limitation provisions of the warrant,
provided that in no event shall the limitation exceed 9.99% of the
number of shares of our common stock outstanding immediately after
giving effect to the exercise of the warrant.
The
Maxim Warrants and Ascendiant Warrants contain the same provisions
regarding fundamental transactions as those contained in the
February 2020 Warrants, except that the Maxim Warrants and
Ascendiant Warrants do not provide the holders thereof with the
option to require us, or a successor entity, to pay an amount equal
to the Black Scholes value of the warrants in the event of certain
fundamental transactions.
The
Maxim Warrants and Ascendiant Warrants are not redeemable. The
Maxim Warrants and Ascendiant Warrants contain unlimited
“piggyback” registration rights for a period of five years after
February 6, 2020 (but not longer than 7 years from January 17,
2020) at our expense, subject to certain exceptions. We relied on
the exemption from registration available under Section 4(a)(2) of
the Securities Act of 1933, as amended, in connection with the
issuance of the warrants to Maxim and Ascendiant.
This
summary of the Maxim Warrants and Ascendiant Warrants is not
complete. For the complete terms of the Maxim Warrants and
Ascendiant Warrants, you should refer to the form of Maxim Warrants
and Ascendiant Warrants filed as an exhibit to the registration
statement of which this prospectus forms a part.
May
2018 Public Offering Warrants
On
May 14, 2018, we issued 379,000 common stock warrants (the “May
2018 Warrants”) in a public offering. The material terms and
provisions of the May 2018 Warrants are summarized below. This
summary of the May 2018 Warrants is not complete. For the complete
terms of the May 2018 Warrants, you should refer to the form of May
2018 Warrant filed as an exhibit to the registration statement of
which this prospectus forms a part.
Pursuant
to a warrant agency agreement between us and American Stock
Transfer & Trust Company, LLC, as warrant agent, the May 2018
Warrants were issued in book-entry form and are represented only by
one or more global warrants deposited with the warrant agent, as
custodian on behalf of The Depository Trust Company, or DTC, and
registered in the name of Cede & Co., a nominee of DTC, or as
otherwise directed by DTC.
Exercisability,
Exercise Price and Term. The May 2018 Warrants entitle the
holder to purchase shares of our common stock at an exercise price
equal to $1.4814 per share. The May 2018 Warrants were exercisable
immediately and expire on the five-year anniversary of the issuance
date. The holder of a May 2018 Warrant will not be deemed a holder
of our underlying common stock until the May 2018 Warrant is
exercised, except as set forth in the May 2018 Warrants.
The
exercise price and the number of shares issuable upon exercise of
the May 2018 Warrants is subject to appropriate adjustment, similar
to that described with respect to the Series B Preferred Stock
above, in the event of recapitalization events, stock dividends,
stock splits, stock combinations, reclassifications,
reorganizations or similar events affecting our common stock.
Subject to certain exclusions contained in the May 2018 Warrant,
the exercise price is also subject to adjustment in the event that
we sell or grant any option to purchase, or sell or grant any right
to reprice, or otherwise dispose of or issue (or announce any
offer, sale, grant or any option to purchase or other disposition)
any common stock or common stock equivalents (as defined in the May
2018 Warrants), at an effective price per share less than the
exercise price then in effect (including in the event we issued
Series B Preferred Stock at a conversion price lower than the
initial conversion price of the Series B Preferred Stock). The
foregoing exercise price adjustment provisions will likely be
triggered by the issuance of the Preferred Stock and Warrants in
the Rights Offering. In addition, May 2018 Warrant holders may be
eligible to elect an alternative price in the event we issue
certain variable price securities. The May 2018 Warrant holders
must pay the exercise price in cash upon exercise of the May 2018
Warrants, unless such May 2018 Warrant holders are utilizing the
cashless exercise provision of the May 2018 Warrants, which is only
available in certain circumstances such as if the underlying shares
are not registered with the SEC pursuant to an effective
registration statement.
Fundamental
Transactions. In addition, in the event we consummate a merger
or consolidation with or into another person or other
reorganization event in which our common shares are converted or
exchanged for securities, cash or other property, or we sell,
lease, license, assign, transfer, convey or otherwise dispose of
all or substantially all of our assets or we or another person
acquires 50% or more of our outstanding shares of common stock,
referred to as a fundamental transaction, then following such
event, the holders of the May 2018 Warrants will be entitled to
receive upon exercise of the May 2018 Warrants the same kind and
amount of securities, cash or property which the holders would have
received had they exercised the May 2018 Warrants immediately prior
to such fundamental transaction. Any successor to us or surviving
entity is required to assume the obligations under the warrants.
Notwithstanding the foregoing, in the event of a fundamental
transaction, the holders will have the option, which may be
exercised within 30 days after the consummation of the fundamental
transaction, to require us or the successor entity purchase the
Warrant from the holder by paying to the holder an amount of cash
equal to the Black Scholes value of the remaining unexercised
portion of the warrant on the date of the consummation of the
fundamental transaction. However, if the fundamental transaction is
not within our control, including not approved by our Board of
Directors, the holder will only be entitled to receive from us or
any successor entity, as of the date of consummation of such
fundamental transaction, the same type or form of consideration
(and in the same proportion), at the Black Scholes value of the
unexercised portion of the May 2018 Warrant, that is being offered
and paid to the holders of our common stock in connection with the
fundamental transaction, whether that consideration be in the form
of cash, stock or any combination thereof, or whether the holders
of common stock are given the choice to receive from among
alternative forms of consideration in connection with the
fundamental transaction.
Upon
the holder’s exercise of a May 2018 Warrant, we will issue the
shares of common stock issuable upon exercise of the May 2018
Warrant within two trading days following our receipt of a notice
of exercise, provided that payment of the exercise price has been
made (unless exercised via the “cashless” exercise
provision).
Prior
to the exercise of any May 2018 Warrants to purchase common stock,
holders of the May 2018 Warrants will not have any of the rights of
holders of the common stock purchasable upon exercise, including
the right to vote, except as set forth therein.
May
2018 Warrant holders may exercise the May 2018 Warrants only if the
issuance of the shares of common stock upon exercise of the May
2018 Warrants is covered by an effective registration statement, or
an exemption from registration is available under the Securities
Act and the securities laws of the state in which the holder
resides. The May 2018 Warrant holders must pay the exercise price
in cash upon exercise of the May 2018 Warrants unless there is not
an effective registration statement or, if required, there is not
an effective state law registration or exemption covering the
issuance of the shares underlying the May 2018 Warrants (in which
case, the May 2018 Warrants may only be exercised via a “cashless”
exercise provision).
Beneficial
Ownership Limitation. The May 2018 Warrant provides that we may
not effect any exercise of the May 2018 Warrants, with certain
exceptions, to the extent that, after giving effect to an attempted
exercise, the holder (together with such holder’s affiliates, and
any persons acting as a group together with such holder or any of
such holder’s affiliates) would beneficially own a number of shares
of common stock in excess of 4.99% (or, at the election of the
holder, 9.99%) of the shares of our common stock then outstanding
after giving effect to such exercise, referred to as the May 2018
Warrant Beneficial Ownership Limitation; provided, however, that
upon notice to us, the holder may increase or decrease the May 2018
Warrant Beneficial Ownership Limitation, provided that in no event
may the May 2018 Warrant Beneficial Ownership Limitation exceed
9.99% and any increase in the May 2018 Warrant Beneficial Ownership
Limitation will not be effective until 61 days following notice of
such increase from the holder to us.
Cashless
Exercise. If a May 2018 Warrant is exercised via the “cashless”
exercise provision, the holder will receive the number of shares
equal to the quotient obtained by dividing (i) the difference
between the VWAP (as determined pursuant to the terms of the May
2018 Warrants) and the exercise price of the May 2018 Warrant
multiplied by the number of shares issuable under the May 2018
Warrant if such exercise were by means of a cash exercise by (ii)
the VWAP (as determined pursuant to the terms of the May 2018
Warrants).
Jurisdiction
and Waiver of Trial by Jury. Other than with respect to suits,
actions or proceedings arising under the federal securities laws,
the May 2018 Warrant provides for investors to consent to exclusive
jurisdiction to courts located in New York, New York and provides
for a waiver of the right to a trial by jury. It also provides that
disputes are governed by New York law.
Repricing
of Series E Warrants and Issuance of New Warrants
On
March 6, 2018, we entered into a Warrant Amendment Agreement (the
“Amendment Agreement”) with the holders of previously issued Series
E Common Stock Purchase Warrants (collectively, the “Series E
Investors”).
In
connection with that certain Series E Common Stock Purchase Warrant
between us and Series E Investors dated July 8, 2016, (the “Series
E Warrant Agreement”) we issued to the Series E Investors warrants
to purchase up to 22,278 shares of common stock (the “Warrant
Shares”) at an exercise price of $60.00 per share, (the “Series E
Investor Warrants”). Under the terms of the Amendment Agreement, in
consideration of the Series E Investors exercising 22,278 of the
Series E Investor Warrants (the “Series E Warrant Exercise”), the
exercise price per share of the Series E Investor Warrants was
reduced to $63.75 per share. In addition, and as further
consideration, we issued to the Series E Investors warrants to
purchase up to the number of shares of common stock equal to 100%
of the number of Series E Warrant Shares issued pursuant to the
Series E Warrant Exercise at an exercise price per share equal to
$60.00 per share, the closing bid price for our common stock on
March 5, 2018 (the “New Warrants”). The Series E Investors may
exercise the remaining 33,899 Series E Investor Warrants at their
discretion. The Amendment Agreement incorporated portions of the
Series E Warrant Agreement, which contained customary
representations, warranties and covenants by each of us and the
Series E Investors.
The
New Warrants are exercisable for up to five years from the
Effective Date. The exercise price and number of shares issuable
upon exercise of the New Warrants are subject to adjustment for
stock splits, combinations, recapitalization events and certain
dilutive issuances. The New Warrants are required to be exercised
for cash, provided that if during the term of the New Warrants
there is not an effective registration statement under the
Securities Act covering the resale of the shares issuable upon
exercise of the New Warrants, then the New Warrants may be
exercised on a cashless (net exercise) basis. The New Warrant is
attached as an exhibit to the registration statement of which this
prospectus forms a part and is incorporated herein by
reference.
Outstanding
December 2012 Warrants
On
December 17, 2012, in connection with entering into a commercial
lending transaction, we issued warrants to purchase a total of
270,000 shares of our Series F convertible preferred stock to two
of our institutional lenders. These warrants are exercisable for
ten years after the date of issuance. As a result of our reverse
stock splits since these warrants were issued and other corporate
changes, these warrants are exercisable for 13 shares of common
stock as of the date of this prospectus, at an exercise price of
$278,370 per share. These warrants have a net exercise provision
under which the holder may, in lieu of payment of the exercise
price in cash, surrender the warrant and receive a net number of
shares of common stock based on the fair market value of our common
stock at the time of exercise of the warrant after deduction of the
aggregate exercise price. Each of these warrants also contains
provisions for the adjustment of the exercise price and the
aggregate number of shares of common stock issuable upon the
exercise of the warrant in the event of dividends, share splits,
reorganizations, reclassifications and consolidations. These
warrants are attached as exhibits to the registration statement of
which this prospectus is a part and are incorporated herein by
reference.
Series
D Preferred Stock Included in Units Issuable in the Rights
Offering
We
will authorize the Series D Preferred Stock by filing a certificate
of designation with the Secretary of State of Delaware. The
certificate of designation may be authorized by our Board without
approval by our stockholders.
Conversion.
Each share of Preferred Stock will be convertible at the option of
the holder at any time, into the number of shares of our common
stock determined by dividing the $1,000 stated value per share of
the Preferred Stock by a conversion price equal to the Conversion
Price determined on the expiration date. In addition, the
conversion price per share is subject to adjustment for stock
dividends, distributions, subdivisions, combinations or
reclassifications. Subject to limited exceptions, a holder of the
Preferred Stock will not have the right to convert any portion of
the Preferred Stock to the extent that, after giving effect to the
conversion, the holder, together with its affiliates, would
beneficially own in excess of 4.99% of the number of shares of our
common stock outstanding immediately after giving effect to its
conversion. A holder of the Preferred Stock, upon notice to us, may
increase or decrease the beneficial ownership limitation provisions
of such holder’s Preferred Stock, provided that in no event shall
the limitation exceed 9.99% of the number of shares of our common
stock outstanding immediately after giving effect to its
conversion.
Fundamental
Transactions. In the event we effect certain mergers,
consolidations, sales of substantially all of our assets, tender or
exchange offers, reclassifications or share exchanges in which our
common stock is effectively converted into or exchanged for other
securities, cash or property, we consummate a business combination
in which another person acquires 50% of the outstanding shares of
our common stock, or any person or group becomes the beneficial
owner of 50% of the aggregate ordinary voting power represented by
our issued and outstanding common stock, then, upon any subsequent
conversion of the Preferred Stock, the holders of the Preferred
Stock will have the right to receive any shares of the acquiring
corporation or other consideration it would have been entitled to
receive if it had been a holder of the number of shares of common
stock then issuable upon conversion in full of the Preferred
Stock.
Dividends.
Holders of Preferred Stock shall be entitled to receive dividends
(on an as-if-converted-to-common-stock basis) in the same form as
dividends actually paid on shares of the common stock when, as and
if such dividends are paid on shares of common stock.
Voting
Rights. Except as otherwise provided in the certificate of
designation or as otherwise required by law, the Preferred Stock
has no voting rights. However, as long as any shares of Preferred
Stock remain outstanding, we may not, without the affirmative vote
of holders of a majority of the then-outstanding Preferred Stock,
(a) alter or change adversely the powers, preferences or rights
given to the Preferred Stock or alter or amend the certificate of
designation, (b) increase the number of authorized shares of
Preferred Stock, (c) amend our Certificate of Incorporation or
other charter documents in any manner that adversely affects any
rights of holders of Preferred Stock disproportionately to the
rights of holders of our other capital stock, or (d) enter into any
agreement with respect to any of the foregoing.
Liquidation
Preference. Upon our liquidation, dissolution or
winding-up, whether voluntary or involuntary, holders of Preferred
Stock will be entitled to receive out of our assets, whether
capital or surplus, the same amount that a holder of common stock
would receive if the Preferred Stock were fully converted
(disregarding for such purpose any conversion limitations under the
certificate of designation) to common stock, which amounts shall be
paid pari passu with all holders of common stock.
Redemption
Rights. We are not obligated to redeem or repurchase any shares
of Preferred Stock. Shares of Preferred Stock are not otherwise
entitled to any redemption rights, or mandatory sinking fund or
analogous provisions.
Warrants
Included in Units Issuable in the Rights Offering
The
Warrants to be issued as a part of this Rights Offering will be
designated as our “Class A” and “Class B” warrants. The Class A
Warrants and Class B Warrants have the same terms, except that the
Class A Warrants expire five years from the date of issuance and
the Class B Warrants expire three years from the date of issuance.
These Warrants will be separately transferable following their
issuance and through their expiration. Each Warrant will entitle
the holder to purchase one share of our common stock at a per share
exercise price equal to the Conversion Price from the date of
issuance through its expiration. There is no public trading market
for the Warrants and they will not be listed for trading on Nasdaq
or any other securities exchange or market. The common stock
underlying the Warrants, upon issuance, will also be traded on
Nasdaq under the symbol “SINT.”
All
Warrants that are purchased in the Rights Offering as part of the
Units will be issued in book-entry, or uncertificated, form meaning
that you will receive a DRS account statement from our transfer
agent reflecting ownership of Warrants if you are a holder of
record. The Subscription Agent will arrange for the issuance of the
Warrants as soon as practicable after the closing, which will occur
as soon as practicable after the Rights Offering has expired but
which may occur up to five business days thereafter. At closing,
all prorating calculations and reductions contemplated by the terms
of the Rights Offering will have been effected and payment to us
for the subscribed-for Units will have cleared. If you hold your
shares of common stock in the name of a bank, broker, dealer, or
other nominee, DTC will credit your account with your nominee with
the Warrants you purchased in the Rights Offering.
Exercisability
Each
Class A Warrant will be exercisable at any time and will expire
five years from the date of issuance. Each Class B Warrant will be
exercisable at any time and will expire three years from the date
of issuance. The Warrants will be exercisable, at the option of
each holder, in whole or in part by delivering to us a duly
executed exercise notice and payment in full for the number of
shares of our common stock purchased upon such exercise, except in
the case of a cashless exercise as discussed below. The number of
shares of common stock issuable upon exercise of the Warrants is
subject to adjustment in certain circumstances, including a stock
split of, stock dividend on, or a subdivision, combination or
recapitalization of the common stock. If we effect a merger,
consolidation, sale of substantially all of our assets, or other
similar transaction, then, upon any subsequent exercise of a
Warrants, the Warrant holder will have the right to receive any
shares of the acquiring corporation or other consideration it would
have been entitled to receive if it had been a holder of the number
of shares of common stock then issuable upon exercise in full of
the Warrant.
Cashless
Exercise
If at
any time there is no effective registration statement registering,
or the prospectus contained therein is not available for issuance
of, the shares issuable upon exercise of the warrant, the holder
may exercise the warrant on a cashless basis. When exercised on a
cashless basis, a portion of the warrant is cancelled in payment of
the purchase price payable in respect of the number of shares of
our common stock purchasable upon such exercise.
Exercise
Price
Each
warrant represents the right to purchase one share of common stock
at an exercise price equal to the Conversion Price. In addition,
the exercise price per share is subject to adjustment for stock
dividends, distributions, subdivisions, combinations, or
reclassifications, and for certain dilutive issuances. The exercise
price is also subject to adjustment in the event that we sell,
issue, or grant any option to purchase, or sell or issue any right
to reprice, or otherwise dispose of or issue (or enter into any
agreement relating to the offer, sale, grant or any option to
purchase or other disposition) any common stock or convertible
securities (as defined in the warrants), at an effective price per
share less than the exercise price then in effect. In addition, if
at any time there occurs a stock dividend, distribution,
subdivision, combination, or reclassification and the volume
weighted average price of the shares of common stock for the five
trading days following such event is less than the exercise price
then in effect (after giving effect to the adjustment of the
exercise price pursuant to such event under the terms of the
Warrants), then on the fifth trading day following such event, the
exercise price shall be reduced to the volume weighted average
price of the shares of common stock for the five trading days
following such event.
Subject
to limited exceptions, a holder of warrants will not have the right
to exercise any portion of the warrant to the extent that, after
giving effect to the exercise, the holder, together with its
affiliates, and any other person acting as a group together with
the holder or any of its affiliates, would beneficially own in
excess of 4.99% of the number of shares of our common stock
outstanding immediately after giving effect to its exercise. The
holder, upon notice to us, may increase or decrease the beneficial
ownership limitation provisions of the warrant, provided that in no
event shall the limitation exceed 9.99% of the number of shares of
our common stock outstanding immediately after giving effect to the
exercise of the warrant.
Transferability
Subject
to applicable laws and restrictions, a holder may transfer a
warrant upon surrender of the warrant to us with a completed and
signed assignment in the form attached to the warrant. The
transferring holder will be responsible for any tax that liability
that may arise as a result of the transfer.
No
Market
There
is no public trading market for the Warrants and they will not be
listed for trading on Nasdaq or any other securities exchange or
market.
Rights
as Stockholder
Except
as set forth in the Warrant, the holder of a Warrant, solely in
such holder’s capacity as a holder of a Warrant, will not be
entitled to vote, to receive dividends, or to any of the other
rights of our stockholders.
Amendments
and Waivers
The
provisions of each Warrant may be modified or amended or the
provisions thereof waived with the written consent of us and the
holder.
The
Warrants will be issued pursuant to a warrant agent agreement by
and between us and America Stock Transfer & Trust Company, the
warrant agent.
Effects
of Anti-Takeover Provisions of Our Restated Certificate of
Incorporation, Our Restated Bylaws and Delaware Law
The
provisions of (1) Delaware law, (2) our Restated Certificate of
Incorporation and (3) our Restated Bylaws discussed below could
discourage or make it more difficult to prevail in a proxy contest
or effect other change in our management or the acquisition of
control by a holder of a substantial amount of our voting stock. It
is possible that these provisions could make it more difficult to
accomplish, or could deter, transactions that stockholders may
otherwise consider to be in their best interests or our best
interests. These provisions are intended to enhance the likelihood
of continuity and stability in the composition of our board of
directors and in the policies formulated by the board of directors
and to discourage certain types of transactions that may involve an
actual or threatened change in control of our company. These
provisions are designed to reduce our vulnerability to an
unsolicited acquisition proposal. These provisions also are
intended to discourage certain tactics that may be used in proxy
fights. These provisions also may have the effect of preventing
changes in our management.
Delaware
Statutory Business Combinations Provision. We are subject to
the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law. In general, Section 203 prohibits a publicly-held
Delaware corporation from engaging in a “business combination” with
an “interested stockholder” for a period of three years after the
date of the transaction in which the person became an interested
stockholder, unless the business combination is, or the transaction
in which the person became an interested stockholder was, approved
in a prescribed manner or another prescribed exception applies. For
purposes of Section 203, a “business combination” is defined
broadly to include a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder,
and, subject to certain exceptions, an “interested stockholder” is
a person who, together with his or her affiliates and associates,
owns (or within three years prior, did own) 15% or more of the
corporation’s voting stock.
Classified
Board of Directors; Appointment of Directors to Fill Vacancies;
Removal of Directors for Cause. Our Restated Certificate of
Incorporation provides that our board of directors will be divided
into three classes as nearly equal in number as possible. Each year
the stockholders will elect the members of one of the three classes
to a three-year term of office. All directors elected to our
classified board of directors will serve until the election and
qualification of their respective successors or their earlier
resignation or removal. The board of directors is authorized to
create new directorships and to fill any positions so created and
is permitted to specify the class to which any new position is
assigned. The person filling any of these positions would serve for
the term applicable to that class. The board of directors (or its
remaining members, even if less than a quorum) is also empowered to
fill vacancies on the board of directors occurring for any reason
for the remainder of the term of the class of directors in which
the vacancy occurred. Members of the board of directors may only be
removed for cause and only by the affirmative vote of holders of at
least 80% of our outstanding voting stock. These provisions are
likely to increase the time required for stockholders to change the
composition of the board of directors. For example, in general, at
least two annual meetings will be necessary for stockholders to
effect a change in a majority of the members of the board of
directors.
Authorization
of Blank Check Preferred Stock. Our Restated Certificate of
Incorporation provides that our board of directors is authorized to
issue, without stockholder approval, blank check preferred stock.
Blank check preferred stock can operate as a defensive measure
known as a “poison pill” by diluting the stock ownership of a
potential hostile acquirer to prevent an acquisition that is not
approved by our board of directors.
Advance
Notice Provisions for Stockholder Proposals and Stockholder
Nominations of Directors. Our Restated Bylaws provide that, for
nominations to the board of directors or for other business to be
properly brought by a stockholder before a meeting of stockholders,
the stockholder must first have given timely notice of the proposal
in writing to our Secretary. For an annual meeting, a stockholder’s
notice generally must be delivered not less than 90 days nor more
than 120 days prior to the anniversary of the mailing date of the
proxy statement for the previous year’s annual meeting. For a
special meeting, the notice must generally be delivered no less
than 60 days nor more than 90 days prior to the special meeting or
ten days following the day on which public announcement of the
meeting is first made. Detailed requirements as to the form of the
notice and information required in the notice are specified in our
Restated Bylaws. If it is determined that business was not properly
brought before a meeting in accordance with our bylaw provisions,
this business will not be conducted at the meeting.
Special
Meetings of Stockholders. Special meetings of the stockholders
may be called only by our board of directors pursuant to a
resolution adopted by a majority of the total number of
directors.
No
Stockholder Action by Written Consent. Our Restated Certificate
of Incorporation does not permit our stockholders to act by written
consent. As a result, any action to be effected by our stockholders
must be effected at a duly called annual or special meeting of the
stockholders.
Super-Majority
Stockholder Vote required for Certain Actions. The Delaware
General Corporation Law provides generally that the affirmative
vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation’s certificate of incorporation or
bylaws, unless the corporation’s certificate of incorporation or
bylaws, as the case may be, requires a greater percentage. Our
Restated Certificate of Incorporation requires the affirmative vote
of the holders of at least 80% of our outstanding voting stock to
amend or repeal any of the provisions discussed in this section of
this prospectus entitled “Effect of Anti-Takeover Provisions of Our
Restated Certificate of Incorporation, Our Restated Bylaws and
Delaware Law” or to reduce the number of authorized shares of
common stock or preferred stock. This 80% stockholder vote would be
in addition to any separate class vote that might in the future be
required pursuant to the terms of any preferred stock that might
then be outstanding. An 80% vote is also required for any amendment
to, or repeal of, our Restated Bylaws by the stockholders. Our
Restated Bylaws may be amended or repealed by a simple majority
vote of the board of directors.
Potential
Effects of Authorized but Unissued Stock
We
have shares of common stock and preferred stock available for
future issuance without stockholder approval. We may utilize these
additional shares for a variety of corporate purposes, including
future public offerings to raise additional capital, to facilitate
corporate acquisitions or payment as a dividend on the capital
stock.
The
existence of unissued and unreserved common stock and preferred
stock may enable our board of directors to issue shares to persons
friendly to current management or to issue preferred stock with
terms that could render more difficult or discourage a third-party
attempt to obtain control of us by means of a merger, tender offer,
proxy contest or otherwise, thereby protecting the continuity of
our management. In addition, the board of directors has the
discretion to determine designations, rights, preferences,
privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation
preferences of each series of preferred stock, all to the fullest
extent permissible under the Delaware General Corporation Law and
subject to any limitations set forth in our certificate of
incorporation. The purpose of authorizing the board of directors to
issue preferred stock and to determine the rights and preferences
applicable to such preferred stock is to eliminate delays
associated with a stockholder vote on specific issuances. The
issuance of preferred stock, while providing desirable flexibility
in connection with possible financings, acquisitions and other
corporate purposes, could have the effect of making it more
difficult for a third-party to acquire, or could discourage a
third-party from acquiring, a majority of our outstanding voting
stock.
Transfer
Agent and Warrant Agent
The
transfer agent and registrar for our common stock and the warrant
agent for the Warrants is American Stock Transfer & Trust
Company, LLC. The transfer agent and the registrar’s address is 59
Maiden Lane, New York, New York 10038.
PLAN OF DISTRIBUTION
Promptly
following the effective date of the registration statement of which
this prospectus form is a part, we will distribute the Subscription
Rights, Rights Certificates and copies of this prospectus to the
holders of our common stock, Series B Preferred Stock, Series C
Preferred Stock, and Participating Warrants on the Record Date.
Subscription Rights holders who wish to exercise their Subscription
Rights and purchase Units must complete the Subscription Rights
Certificate and return it with payment for the shares to the
Subscription Agent at the following address:
If delivering by mail, hand or overnight courier:
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219
If you have any questions, you should contact our Information Agent
for the Rights Offering: D.F. King & Co, Inc., toll free at
(866) 620-2536, by mail at D.F. King & Co., Inc., 48 Wall
Street, 22nd Floor, New York, NY 10005 or by email at
sintx@dfking.com.
Other
than as described in this prospectus, we do not know of any
existing agreements between any stockholder, broker, dealer,
underwriter or agent relating to the sale or distribution of the
underlying securities.
Maxim
Group LLC will act as dealer-manager for the Rights Offering. In
such capacity, the dealer-manager will provide marketing assistance
and financial advice (including determining the Subscription Price
and the structure of the Rights Offering) to us in connection with
this offering and will solicit the exercise of Subscription Rights
and participation in the Over-Subscription Privilege. The
dealer-manager will provide us with updated investor feedback and
recommendations on pricing and structure through to the end of the
subscription period. The dealer- manager is not underwriting or
placing any of the Subscription Rights or the shares of our
Preferred Stock or Warrants being issued in this offering and do
not make any recommendation with respect to such Subscription
Rights (including with respect to the exercise or expiration of
such Subscription Rights), shares or Warrants.
In
connection with this Rights Offering, we have agreed to pay fees to
Maxim Group LLC as dealer-manager an aggregate cash fee equal to
7.0% of the gross proceeds received by us directly from exercises
of the Subscription Rights. We advanced $20,000 (the “Advance”) to
Maxim Group LLC as an advance against the expense allowance upon
their engagement as dealer-manager and agreed to reimburse the
reasonable fees and expenses of the dealer-manager up to $100,000
(including the Advance). Any portion of the Advance not used for
Maxim’s actual out-of-pocket expenses shall be promptly reimbursed
to us. Additionally, we agreed to grant to Maxim (or its designated
affiliates) share purchase warrants (the “Dealer Warrants”)
covering a number of shares of our common stock equal to 4.0% of
the common stock issuable upon exercise of the Preferred Stock sold
in the Rights Offering. In the event that we engage Ascendiant
Capital Markets, LLC as a financial advisor in connection with the
Offering, Maxim agrees that Ascendiant shall be entitled to 15% of
the total fee earned by Maxim under the dealer-management agreement
and 15% of the Dealer Warrants issuable upon Closing (i.e., Maxim
will receive 85% of the cash fee and Dealer Warrants, and
Ascendiant shall receive 15% of the cash fee and Dealer Warrants).
The Dealer Warrants will be non-exercisable for six (6) months
after the date of the Closing and will expire five years after the
commencement of sales of the offering. The Dealer Warrants will be
exercisable at a price equal to 110.0% of the conversion price of
the Convertible Preferred. The Warrants shall not be redeemable.
The Dealer Warrants may not be sold, transferred, assigned, pledged
or hypothecated or be the subject of any hedging, short sale,
derivative, put, or call transaction that would result in the
effective economic disposition of the securities for a period of
180 days beginning on the date of the commencement of sales of the
offering, except that they may be assigned, in whole or in part, to
any officer or partner, registered person or affiliate of Maxim (or
to Ascendiant) subject to the terms of the lock-up. The Dealer
Warrants may be exercised as to all or a lesser number of shares of
our common stock, will contain unlimited “piggyback” registration
rights for a period of five years after the commencement of sales
of the offering at our expense.
Upon
the successful completion of the Rights Offering for gross proceeds
of at least six million dollars ($6,000,000), for a period of nine
(9) months from the final Closing, we will grant Maxim Group LLC
the right of first refusal to act as lead managing underwriter,
lead book runner or lead placement agent for any and all future
public and private equity and any public debt or equity-linked debt
offerings.
We
have also agreed to indemnify the dealer-manager and their
respective affiliates against certain liabilities arising under the
Securities Act. The dealer-manager participation in this offering
are subject to customary conditions contained in the dealer-manager
agreement, including the receipt by the dealer-manager of an
opinion of our counsel. The dealer-manager and their affiliates may
provide to us from time to time in the future in the ordinary
course of their business certain financial advisory, investment
banking and other services for which they will be entitled to
receive fees.
Subject
to certain exceptions, we have agreed not to offer, issue, sell,
contract to sell, encumber, grant any option for the sale of or
otherwise dispose of any common shares or other securities
convertible into or exercisable or exchangeable for common shares
for a period of ninety (90) days after the expiration of this
Rights Offering.
Our
common stock is listed on the Nasdaq Capital Market, or Nasdaq,
under the symbol “SINT.”
EXPERTS
The
consolidated financial statements of SINTX Technologies, Inc., as
of December 31, 2021 and 2020, and for each of the years in the
two-year period ended December 31, 2021, have been incorporated by
reference herein in reliance on the report of Tanner LLC, an
independent registered public accounting firm (the report on the
consolidated financial statements contains an explanatory paragraph
regarding the Company’s ability to continue as a going concern),
given on the authority of said firm as experts in auditing and
accounting.
LEGAL MATTERS
The
validity of the securities offered hereby will be passed upon for
us by Dorsey & Whitney LLP, Salt Lake City, Utah. The
dealer-manager is being represented by Ellenoff Grossman &
Schole LLP, New York, New York.
Subscription
Rights to Purchase Up to 10,000 Units
Consisting
of an Aggregate of Up to 10,000 Shares of Series D Convertible
Preferred Stock
and
54,260,000 Warrants to Purchase Shares of Common
Stock
at
a Subscription Price of $1,000 Per Unit and
Up
to 27,110,000 Shares of Common Stock Issuable upon the Conversion
of
Series
D Convertible Preferred Stock Included in the Units
and
Up
to 54,260,000 Shares of Common Stock Issuable upon the Exercise
of
Warrants
Included in the Units

PROSPECTUS
Dealer-Manager
Maxim
Group LLC
,
2022
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution
The
following is a statement of estimated expenses in connection with
the issuance and distribution of the securities being registered,
excluding dealer-manager fees. All expenses incurred with respect
to the registration of the common stock will be borne by us. All
amounts are estimates except the SEC registration fee and the FINRA
filing fee.
Item |
|
Amount to be
Paid
|
SEC registration fee |
|
$ |
2,781
|
|
FINRA filing fee |
|
|
5,000
|
|
Printing expenses |
|
|
5,000
|
|
Legal fees and expenses |
|
|
175,000 |
|
Accounting fees and expenses |
|
|
70,000 |
|
Subscription Agent, Information Agent
and Warrant Agent Fees and Expenses |
|
|
46,000 |
|
Miscellaneous
expenses |
|
|
10,000 |
|
Total |
|
$ |
313,781 |
|
* To
be provided by amendment.
Item
14. Indemnification of Directors and Officers
Section
145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation’s board of directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities,
including reimbursement for expenses incurred, arising under the
Securities Act.
The
Registrant’s amended certificate of incorporation provides for
indemnification of its directors and executive officers to the
maximum extent permitted by the Delaware General Corporation Law,
and the Registrant’s amended and restated bylaws provide for
indemnification of its directors and executive officers to the
maximum extent permitted by the Delaware General Corporation
Law.
In
addition, the Registrant has entered into indemnification
agreements with each of its current directors and executive
officers. These agreements will require the Registrant to indemnify
these individuals to the fullest extent permitted under Delaware
law against liabilities that may arise by reason of their service
to the Registrant and to advance expenses incurred as a result of
any proceeding against them as to which they could be indemnified.
The Registrant also intends to enter into indemnification
agreements with its future directors and executive
officers.
Item
15. Recent Sales of Unregistered Securities.
None.
Item
16. Exhibits and Financial Statement Schedules.
(a)
Exhibits
The
following exhibits are being filed with this Registration
Statement:
Exhibit
Number
|
|
Exhibit
Description |
|
Filed
with
this
Report
|
|
Incorporated
by
Reference
herein from
Form
or Schedule
|
|
Filing
Date |
|
SEC
File/Reg.
Number
|
1.1 |
|
Form
of Dealer Manager Agreement |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1+ |
|
Asset
Purchase Agreement by and among Amedica Corporation, CTL
Corporation and US Spine Inc. dated as of September 5,
2018 |
|
|
|
Form
8-K (Exhibit 2.1) |
|
10/5/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
2.2+† |
|
Asset
Purchase Agreement by and among SINTX Technologies, Inc. and B4C,
LLC, dated July 20, 2021. |
|
|
|
Form
8-K (Exhibit 2.1) |
|
7/26/21 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
2.3+† |
|
Stock Purchase Agreement by and
between Larry Fehrenbacher, Sharon Fehrenbacher, and SINTX
Technologies, Inc. dated June 30, 2022. |
|
|
|
Form 8-K (Exhibit 2.1) |
|
07/06/22 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Restated
Certificate of Incorporation of the Registrant |
|
|
|
Form
8-K (Exhibit 3.1) |
|
2/20/14 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1.1 |
|
Certificate
of Amendment to the Restated Certificate of
Incorporation |
|
|
|
Form
8-K (Exhibit 3.1) |
|
1/22/16 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1.2 |
|
Certificate
of Amendment to the Restated Certificate of
Incorporation |
|
|
|
Form
8-K (Exhibit 3.1) |
|
11/16/17 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1.3 |
|
Certificate
of Designation of Series B Preferred Stock |
|
|
|
Form
8-K (Exhibit 3.1)
|
|
5/15/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1.4 |
|
Certificate of Amendment to the
Restated Certificate of Incorporation |
|
|
|
Form
8-K (Exhibit 3.1)
|
|
11/02/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1.5 |
|
Certificate
of Amendment to the Restated Certificate of Incorporation of SINTX
Technologies, Inc. |
|
|
|
Form
8-K (Exhibit 3.1)
|
|
7/26/19 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1.6 |
|
Certificate
of Designation of Series C Preferred Stock |
|
|
|
Form
8-K (Exhibit 3.1) |
|
2/07/20 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
3.1.7 |
|
Certificate
of Designation of Series D Preferred Stock |
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
Amended
and Restated Bylaws of SINTX Technologies, Inc. |
|
|
|
Form
8-K (Exhibit 3.1) |
|
10/01/21 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
4.1 |
|
Form
of Common Stock Certificate of the Registrant |
|
|
|
Amendment
No. 3 to Form S-1 (Exhibit 4.1) |
|
1/29/14 |
|
333-192232 |
|
|
|
|
|
|
|
|
|
|
|
4.2 |
|
Warrant
to Purchase Shares of Series F Convertible Preferred Stock by and
between the Registrant and GE Capital Equity Investments, Inc.,
dated as of December 17, 2012 |
|
|
|
Form
S-1 (Exhibit 4.10) |
|
11/8/13 |
|
333-192232 |
4.3 |
|
Warrant
to Purchase Shares of Series F Convertible Preferred Stock by and
between the Registrant and Zions First National Bank, dated as of
December 17, 2012 |
|
|
|
Form
S-1 (Exhibit 4.11) |
|
11/8/13 |
|
333-192232 |
|
|
|
|
|
|
|
|
|
|
|
4.4 |
|
Common
Stock Purchase Warrant |
|
|
|
Form
8-K (Exhibit 4.1) |
|
5/15/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
4.5 |
|
Form of Warrant Agency Agreement
between Amedica Corporation and American Stock Transfer and Trust
Company, LLC |
|
|
|
Form S-1 (Exhibit 4.28)
|
|
4/26/18
|
|
333-223032
|
|
|
|
|
|
|
|
|
|
|
|
4.6 |
|
Form
of Common Stock Warrant |
|
|
|
Form
S-1/A |
|
1/15/20 |
|
333-234438 |
|
|
|
|
|
|
|
|
|
|
|
4.7 |
|
Form
of Warrant Agency Agreement between Amedica Corporation and
American Stock Transfer and Trust Company, LLC, dated February 6,
2020 |
|
|
|
Form
8-K (Exhibit 10.1) |
|
2/07/20 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
4.8 |
|
Warrant Issued to Maxim Group LLC on
February 6, 2020 |
|
|
|
Form 8-K (Exhibit 4.1)
|
|
2/07/20 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
4.9 |
|
Warrant
Issued to Ascendiant Capital Markets, LLC on February 6,
2020 |
|
|
|
Form
8-K (Exhibit 4.2) |
|
2/07/20 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
4.10 |
|
Form
of Indenture |
|
|
|
Form
S-3 (Exhibit 4.2)
|
|
3/25/19 |
|
333-230492 |
|
|
|
|
|
|
|
|
|
|
|
4.11 |
|
Form
of Class A Common Stock Warrant |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.12 |
|
Form of Class B Common Stock Warrant |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.13 |
|
Form
of Warrant Agency Agreement between Amedica Corporation and
American Stock Transfer and Trust Company, LLC |
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.14 |
|
Form
of Non-Transferrable Subscription Rights
Certificate |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.15 |
|
Form of Dealer-Manager
Warrant |
|
|
|
Form S-1/A (Exhibit 4.14) |
|
9/12/2022 |
|
333-266070 |
|
|
|
|
|
|
|
|
|
|
|
5.1 |
|
Opinion
of Dorsey & Whitney LLP |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.1 |
|
Tax Opinion of Dorsey & Whitney
LLP |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1 |
|
Centrepointe
Business Park Lease Agreement Net by and between the Registrant and
Centrepointe Properties, LLC, dated as of April 21,
2009 |
|
|
|
Form
S-1 (Exhibit 10.10) |
|
11/8/13 |
|
333-192232 |
10.2 |
|
First
Addendum to Centrepointe Business Park Lease Agreement Net by and
between the Registrant and Centrepointe Properties, LLC, dated as
of January 31, 2012 |
|
|
|
Form
S-1 (Exhibit 10.11) |
|
11/8/13 |
|
333-192232 |
|
|
|
|
|
|
|
|
|
|
|
10.3 |
|
Form
of Change of Control Agreement* |
|
|
|
Form
8-K (Exhibit 10.1) |
|
7/22/15 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.4 |
|
Form
of Indemnification Agreement by and between the Registrant and its
officers and directors |
|
|
|
Amendment
No. 2
to
Form S-1 (Exhibit 10.14)
|
|
12/20/13 |
|
333-192232 |
|
|
|
|
|
|
|
|
|
|
|
10.5 |
|
Exchange
Agreement dated April 4, 2016, by and among SINTX Corporation and
Riverside Merchant Partners, LLC |
|
|
|
Form
8-K (Exhibit 10.2) |
|
5/05/16 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.6 |
|
Security
Agreement, dated July 28, 2017 |
|
|
|
Form
8-K (Exhibit 10.1) |
|
8/3/17 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.7 |
|
Form
of Warrant Amendment Agreement |
|
|
|
Form
S-1 (Exhibit 10.26)
|
|
4/26/18 |
|
333-223032 |
|
|
|
|
|
|
|
|
|
|
|
10.8 |
|
Amendment
to Centrepointe Business Park Lease Agreement, dated June 7, 2019,
between SINTX Technologies, Inc. and Centrepointe Properties,
LLC. |
|
|
|
Form
8-K (Exhibit 10.1)
|
|
6/10/19 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.9 |
|
Promissory
Note issued by CTL Corporation in favor of Amedica Corporation
dated as of October 1, 2018. |
|
|
|
Form
8-K (Exhibit 10.1)
|
|
10/5/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.10 |
|
Security
Agreement between Amedica Corporation and CTL Corporation dated as
of October 1, 2018. |
|
|
|
Form
8-K (Exhibit 10.2)
|
|
10/5/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.11 |
|
Guaranty
between Amedica Corporation and Daniel Chon dated as of October 1,
2018. |
|
|
|
Form
8-K (Exhibit 10.3)
|
|
10/5/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.12 |
|
ROFN
Security Agreement between Amedica Corporation and CTL Corporation
dated as of October 1, 2018. |
|
|
|
From
8-K (Exhibit 10.4)
|
|
10/5/18 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.13 |
|
Promissory
Note, dated April 28, 2020 between SINTX Technologies, Inc. and
First State Community Bank. |
|
|
|
Form
8-K (Exhibit 10.1) |
|
4/30/20 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.14 |
|
Form
of Share Purchase Agreement |
|
|
|
Form
8-K (Exhibit 99.1) |
|
6/29/20 |
|
001-33624 |
|
|
|
|
|
|
|
|
|
|
|
10.15 |
|
Placement
Agency Agreement |
|
|
|
Form
8-K (Exhibit 99.2) |
|
6/29/20 |
|
001-33624 |