As filed with the Securities and Exchange Commission on JuneSeptember 7, 20172018
Registration No. 333-__________333-____________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
REAL GOODS SOLAR, INC.
(Exact name of registrant as specified in its charter)
Colorado
incorporation or organization) | 26-1851813
Identification No.) |
110 16th Street, 3rd Floor
Denver, Colorado 80202
(303) 222-8300
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Alan Fine
Real Goods Solar, Inc.
110 16th Street, 3rd Floor
Denver, Colorado 80202
(303) 222-8300
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
Rikard Lundberg, Esq.
Brownstein Hyatt Farber Schreck, LLP
410 Seventeenth Street, Suite 2200
Denver, Colorado 80202
(303) 223-1100
Approximate date of commencement of proposed sale to the public: From time to time or at one time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.¨o
If any of the securities being registered on this form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨o
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.¨o
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.¨o
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.¨o
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,”filer”, “smaller reporting company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | |
¨ | |||
Non-accelerated filer | þ | Smaller reporting company | þ |
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.¨
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered | Amount to be registered(1) | Proposed maximum offering price per share(2) | Proposed maximum aggregate offering price(2)(3) | Amount of registration fee(4) | ||||||||||||
Class A common stock, par value $.0001 per share under Series A, Series C, and Series I Warrants | 616,684 | $ | 1.27 | $ | 783,189 | |||||||||||
Class A common stock, par value $.0001 per share under Series M Warrants | 1,800,000 | $ | 2.40 | $ | 4,320,000 | |||||||||||
Class A common stock, par value $.0001 per share under Series K Warrants | 3,710,000 | $ | 3.10 | $ | 11,501,000 | |||||||||||
Class A common stock, par value $.0001 per share under Series F Warrants | 720 | $ | 744.00 | $ | 535,680 | |||||||||||
Total | 6,127,404 | $ | 17,139,869 | $ | 1,986.51 |
Title of each class of securities to be registered | Amount to be registered (1) | Proposed maximum offering price per share | Proposed maximum aggregate offering price | Amount of fee (3) | ||||||||||||
Class A common stock, par value $0.0001 per share | 54,647,379 | (2) | $ | 0.43 | (3) | $ | 23,498,372.97 | $ | 2,925.55 |
(1) |
(2) |
(3) |
The registrantRegistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrantRegistrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Sectionsection 8(a) of the Securities Act, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Sectionsection 8(a), may determine.
The information in this prospectus is not complete and may be changed. Wechanged without notice. The selling shareholders 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 itthe selling shareholders named in this prospectus is not soliciting an offeroffers to buy these securities in any state where the offer or sale of these securities is not permitted.
Subject to completion, dated JuneSeptember 7, 20172018
PRELIMINARY PROSPECTUS
REAL GOODS SOLAR, INC.
6,127,40454,647,379 shares of Class A Common Stockcommon stock
We are offeringThis prospectus relates to the offer and sale by the selling shareholders identified in the prospectus, and any of their respective pledgees, donees, transferees, or other successors in interest of up to 6,127,40454,647,379 shares of Class A common stock of Real Goods Solar, Inc. (“Common Stock”) upon exerciseThe number of existing Series A Warrants, Series C Warrants, Series F Warrants, Series I Warrants, Series K Warrants, and Series M Warrants (collectively,shares the “Warrants”). The Warrants were originally issued pursuant to an effective registration statement on Form S-3 File No. 333-193718 filed on February 3, 2014 (the “Original Registration Statement”), which was declared effective on February 10, 2014 and expired on February 10, 2017 pursuant to Rule 415(a)(5) underselling shareholders may sell consist of (a) 135% of the Securities Act of 1933 (the “Securities Act”). On February 9, 2017, Form S-3 File No. 333-215985 was filed to replace the Original Registration Statement and trigger the grace period afforded by Rule 415(a)(5) so that securities covered by the Original Registration Statement could continue to be offered and sold during the grace period in accordance with Rule 415(a)(5) and Rule 415(a)(6). The table below indicates the current exercise price andaggregate estimated number of shares of Common Stock the Warrants are exercisable for (as adjusted for the Reverse Stock Splits (as defined below)Class A common stock issuable (i) upon conversion of, and other adjustmentsfrom time-to time under the terms of, our Series A senior convertible notes due April 9, 2019 (the “Series A Notes”), (ii) upon conversion of, and from time-to time under the Warrants, as applicable),terms of, our Series B senior secured convertible notes due April 9, 2019 (the “Series B Notes,” and, together with the issuance date(s)Series A Notes, the “Notes”), and expiration date(s)(iii) upon the exercise of our Series Q warrants to purchase Class A common stock; (b) 128,000 shares of Class A common stock issuable upon the Warrantsexercise of warrants to purchase Class A common stock, which were acquired by Series.certain selling shareholders in a private placement on January 4, 2018, and (c) 730,160 shares of Class A common stock issuable upon the exercise of warrants to purchase Class A common stock, which were acquired by certain selling shareholders in a private placement on April 9, 2018. We previously registered 51,038,634 shares of Class A common stock issuable under the terms of our Series A Notes, Series B Notes and Series Q warrants to purchase Class A common stock and this prospectus relates to additional shares of Class A common stock that may be issuable under the terms of these convertible notes and warrants (and other warrants).
Warrant Series | Current Exercise Price | Number of Shares | Issuance Date(s) | Expiration Date(s) | ||||||||
Series A | $ | 1.27 | 2 | February 26, 2015 | August 26, 2020 | |||||||
Series C | $ | 1.27 | 7 | February 26, 2015 | August 26, 2020 | |||||||
Series F | $ | 744.00 | 720 | June 30, 2015 or July 1, 2015 | December 30, 2020 or January 2, 2020 | |||||||
Series I | $ | 1.27 | 616,675 | December 13, 2016 | December 13, 2021 | |||||||
Series K | $ | 3.10 | 3,710,000 | February 6, 2017 | February 7, 2022 | |||||||
Series M | $ | 2.40 | 1,800,000 | February 9, 2017 | February 9, 2022 |
We will receive proceeds from payments in cash ofare filing the exercise price of the Warrants. If all of the Warrants are exercised for cash, we will receive total proceeds, before expenses, of $17,139,869. If at any time after there is no effective registration statement on file with the SEC registering, or no currentof which this prospectus available for, the issuance or resale of the shares of our Common Stock issuable upon exercise of the Warrants, the Warrants may be exercised by means ofis a “cashless exercise” and wepart at this time to fulfill contractual obligations to do so, as described in this prospectus. We will not receive any of the proceeds from the sale of the Class A common stock by the selling shareholders.
The selling shareholders and their respective pledgees, donees, transferees, or other successors in interest may offer the shares of Class A common stock in one or more transactions at such time.fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, at negotiated prices, or in trading markets for our Class A common stock. Additional information on the selling shareholders, and the times and manner in which they may offer and sell shares of our Class A common stock under this prospectus, is provided under “Selling Shareholders” and “Plan of Distribution” in this prospectus.
Our Common StockClass A common stock is quoted on The Nasdaq Capital Market under the symbol “RGSE.” On JuneSeptember 6, 2017,2018, the last reported sale price of our Common StockClass A common stock was $0.88$0.42 per share.
Investing in our securitiesClass A common stock involves certain risks. See “RISK FACTORS”“Risk Factors” beginning on page 5 of this prospectus for the risks that you should consider. You should read this entire prospectus carefully before you make your investment decision.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is June 7, 2017._______ __, 2018
Table of ContentsTABLE OF CONTENTS
i
Except where the context requires otherwise, in this prospectus the terms “Company,” “our company,” “Real Goods Solar,” “we,” “us,” “its,” and “our” refer to Real Goods Solar, Inc., a Colorado corporation, and where appropriate, its direct and indirect subsidiaries.
You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other person to provide you with different information or to make any representations other than those contained in this prospectus.information. If anyone provides you with different or inconsistent information, you should not rely on it. We take no responsibility for, and provide no assurance as to the reliability of, any other information that others may give you. For further information, please see the section of this prospectus entitled “Where You Can Find More Information.”
We The selling shareholders are not making an offer to sell or soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus and the documents and information incorporated by reference into this prospectus, and any free writing prospectus that we have authorized for use in connection with this offering, are accurate only as of their respective dates, regardless of time of delivery of this prospectus or of any sale of the shares.
You should not assume that the information appearing in this prospectus is accurate as of any date other than the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations, and prospects may have changed since those dates. We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference into this prospectus were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
This prospectus and the information incorporated herein by reference containcontains trademarks, tradenames, service marks, and service names owned by us or other companies. All trademarks, service marks and trade names included or incorporated by reference into this prospectus areof the property of their respective owners.Company.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties.uncertainties, including statements regarding the Company’s results of operations and financial positions, and the Company’s business and financial strategies. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they provide our current beliefs, expectations, assumptions and forecasts about future events, and include statements regarding our future results of operations and financial position, business strategy, budgets, projected costs, and plans and objectives of management for future operations. The words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “future,” “intend,” “strategy,” “likely,” “seek,” “may,” “will” and similar expressions as they relate to us are intended to identify such forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.
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Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, without limitation, the following: our history of operating losses; our ability to implement our revenue growth strategy; our history of operating losses; our ability to achieve profitability; our ability to generate breakeven cash flow to fund our operations; our success in implementing our plans to increase future sales, and installations and revenue; restrictions on certain transactions and potential premiums and penalties under our outstanding warrants; rules, regulations and policies pertaining to electricity pricing and technical interconnection of customer-owned electricity generation such as net energy metering; the continuation and level of government subsidies and incentives for solar energy; existing and new regulations impacting solar installations including electric codes; future shortages in supplies for solar energy systems; our failure to timely or accurately complete financing paperwork on behalf of customers; the adoption and general demand for solar energy; the impact of a drop in the price of conventional energy on demand for solar energy systems; existing and new regulations impacting solar installations including electric codes;
delays or cancellations for system installations where revenue is recognized on a percentage-of-completion basis; seasonality of customer demand and adverse weather conditions inhibiting our ability to install solar energy systems; changing and updating technologies and the issues presented by these new technologies related to customer demand and our product offering; geographic concentration of revenue from the sale of solar energy systems in Hawaii, California and east coast states, loss of key personnel and ability to attract necessary personnel;states; non-compliance with or loss or suspension of licenses required for installation of solar energy systems; loss of key personnel and ability to attract necessary personnel; our failure to accurately predict future warranty claims; adverse outcomes arising from litigation and legal disputes to which we may be subject from time to time; our failure to accurately predict future warranty claims; the outcome of a dispute with a customer of our former Commercial segment related to remedial work; the possibility that our insurance carrier seeks reimbursement of legal expenses up to $1.5 million in connection with a now closed U.S. Securities and Exchange Commission investigation related to our July 2014 private placement; our ability to continue to obtain services and components from suppliers, installers and other vendors; disruption of our supply chain from equipment manufacturers and potential shortages of components for solar energy systems; factors impacting the timely installation of solar energy systems; competition; costs associated with safety and construction risks; continued access to competitive third party financiers to finance customer solar installations; increases in interest rates and tightening credit markets; our ability to successfully and timely commercialize POWERHOUSE™ 3.0; the ability to obtain requisite certification of POWERHOUSE™ 3.0; demand for POWERHOUSE™ 3.0; the adequacy of, and access to, capital necessary to commercialize POWERHOUSE™ 3.0; our ability to satisfy the conditions and our obligations under the POWERHOUSE™ 3.0 license agreement; our ability to manage supply chain in order to have production levels and pricing of the POWERHOUSE™ 3.0 shingles to be competitive; our ability to successfully expand our operations and employees and realize profitable revenue growth from the sale and installation of POWERHOUSE™ 3.0, and to the extent anticipated; the potential impact of the announcement of our expansion into the POWERHOUSE™ 3.0 business with employees, suppliers, customers and competitors; our ability to successfully and timely expand our POWERHOUSE™ 3.0 business outside of the United States; foreign exchange risks associated with the POWERHOUSE™ 3.0 business; intellectual property infringement claims related to the POWERHOUSE™ 3.0 business; competition in the in-roof solar shingles business; our ability to realize revenue from written reservations for initial POWERHOUSE™ deliveries; our ability to obtain future written reservations for POWERHOUSE™ deliveries; future cancellations and backlog; our ability to meet customer expectations; risks and liabilities associated with placing employees and technicians in our customers’ homes and businesses; product liability claims; future data security breaches, or our inability to protect personally identifiable information or other information about our customers; failure to comply with the director independence standards of the U.S. Securities and Exchange Commission (“SEC”) and the Nasdaq Capital Market; our inability to maintain effective disclosure controls and procedures and internal control over financial reporting; the volatile market price of our Class A common stock; possibilitythe dilutive effect of the conversion of our outstanding convertible notes, exercise of outstanding warrants and future dilutive issuances of stock, options, warrants or other securities and its impactthe effect on the market price of our Class A common stock; our ability to obtain additional financing;financing in the future; our ability to receive cash payments under the Investor Notes (as defined below); our ability to pay the balance due at maturity of our convertible notes due April 9, 2019 if the holders thereof do not convert them or are not forced to convert; the low likelihood that we will pay any cash dividends on our Class A common stock for the foreseeable future; compliance with public reporting requirements; anti-takeover provisions in our organizational documents; the terms of some of our outstanding warrants to purchase Class A common stocksecurities and securities purchase agreementstransaction documents entered into in connection with past offerings which limitrestrict our ability to enter into certain transactions or obtain financing, and which could result in our paying premiums or penalties to the holders of some of our outstanding warrants; an increase insecurities; the disruptive effect and costs associated with threatened or commenced proxy contests; our cost of materials that could arise if the United States imposes trade remedies on imported crystalline silicon photovoltaic cells and modules;ability to meet The Nasdaq Capital Market continued listing requirements; and such other factors as discussed throughout Part I, Item 1A, Risk Factors and Part II, Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 20162017 and Part I, Item 2, Management’s Discussion and Analysis of Financial Conditions and Results of Operations and Part II, Item 1A, Risk Factors included in our Quarterly ReportReports on Form 10-Q for the period ended March 31, 2017.10-Q.
Any forward-looking statement made by us in this prospectus and the documents incorporated by reference herein is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral that may be made from time to time, whether as a result of new information, future developments or otherwise.otherwise, except as required by applicable law.
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This prospectus summary highlights certain information about usimportant features of this offering and this offering. This summary is not complete and does not contain all the information you should consider before investing in our securities. You should read this summary in conjunction with, and the summary is qualified in its entirety by, the more detailed information contained elsewhere,included or incorporated by reference in this prospectus, andprospectus. Because it is a summary, it may not contain all of the information included in any free writingthat may be important to you. You should carefully read this entire prospectus, that we have authorized for use in connection with this offering, including the additional information described under “Where You Can Find More Information” and the information undersection entitled “Risk Factors.”
Overview of our Company
As of September 29, 2017, we are the exclusive domestic and international licensee of the POWERHOUSE™ in-roof solar shingle, an innovative and visually stunning solar shingle system using technology developed by The Dow Chemical Company. The POWERHOUSE™ 1.0 and 2.0 versions used CIGS (copper indium gallium selenide solar cells) technology which had a high manufacturing cost, resulting in the product not being consumer price friendly. Conversely, the POWERHOUSE™ 3.0 is being developed with traditional silicon solar cells to increase solar production and to provide a competitive consumer price point. Under terms of a Technology License Agreement with Dow, we are pursuing final stages of development of POWERHOUSE™ 3.0 to receive UL certification, after which we will begin to commercialize the product in North America. Upon achieving UL certification, we will engage third-party manufacturers for production and perform distribution logistics and services to the home building and roofing industries. Further, we plan on engaging in technological advances in panel output and expansion of potential customer base from asphalt shingle roofing to alternative roofing systems. Under the Trademark License Agreement, we will market the POWERHOUSE™ 3.0 product using the Dow name.
We are a residential and business commercial solar energy engineering, procurement and construction firm. We also perform most of our own sales and marketing activities to generate leads and secure projects. We offer turnkey services, including design, procurement, permitting, build-out, grid connection, financing referrals and warranty.warranty and customer satisfaction activities. Our solar energy systems use high-quality solar photovoltaic modules. We use proven technologies and techniques to help customers achieve meaningful savings by reducing their utility costs. In addition, we help customers lower their emissions output and reliance upon fossil fuel energy sources.
We, including our predecessors, have more than 39 years of experience in residential solar energy and trace our roots to 1978, when Real Goods Trading Corporation sold the first solar photovoltaic panels in the United States. We have designed and installed over 25,000 residential and commercial solar energy systems since our founding.
During 2014, we discontinued our entire former Commercial segment and sold the assets associated with our catalog segmentbusiness (a portion of the Other segment). As of September 30, 2017, we created a new segment for our POWERHOUSE™ business. As a result, of this major strategic shift, we now operate as threefour reportable segments: (1) Residential – the installation of solar energy systems for homeowners, including lease financing thereof, and for small businesses (small commercial)business commercial in the continental U.S.;United States; (2) Sunetric – the installation of solar energy systems for both homeowners and business owners (commercial) in Hawaii; (3) POWERHOUSE™ - the manufacturing and (3)sales of solar shingles; and (4) Other – catalog, for 2014,corporate operations. We believe this structure enables us to more effectively manage our operations and corporate operations.resources.
Our executive offices are located at 110 16th Street, 3rd Floor, Denver, CO 80202. Our telephone number is (303) 222-8300. Our website is www.rgsenergy.com. The information on our website is not intended to be a part of this prospectus, and you should not rely on any of the information provided there in making your decision to invest in our securities. Our website address referenced above is intended to be an inactive textual reference only and not an active hyperlink to our website.
Reverse Stock SplitsRecent Developments
On May 17, 2015,In conjunction with our plans to position our company for future profitable operations, we consummated a reverse stock split of all outstanding shares of our Common Stock at a ratio of one-for-20, whereby 20 shares of Common Stock were combined into one share of Common Stock (the “2015 Reverse Stock Split”). The 2015 Reverse Stock Split was previously authorized by a vote of our shareholders on May 12, 2015. We did not decrease our authorized shares of capital stock in connection with the 2015 Reverse Stock Split.have:
On June 2, 2016, we consummated a reverse stock split of all outstanding shares of our Common Stock at a ratio of one-for-20, whereby 20 shares of Common Stock were combined into one share of Common Stock (the “2016 Reverse Stock Split”). The 2016 Reverse Stock Split was previously authorized by a vote of our shareholders on May 27, 2016. We did not decrease our authorized shares of capital stock in connection with the 2016 Reverse Stock Split.
· | Issued and sold up to $10.75 million of convertible notes and Series Q warrants in April 2018 (the “April 2018 Offering”). We received gross proceeds of $5.0 million at closing and had received approximately $10.1 million of additional funds since closing as a result of exercises of Series Q warrants and prepayment of Investor Notes (as defined below), as of September 6, 2018, and may receive up to approximately $3.7 million more in the future upon prepayment of the Investor Notes and exercises of Series Q warrants, if any. It is our intent to use the proceeds from the April 2018 Offering to (i) finance UL certification for POWERHOUSE™ and the $2 million license payment to Dow upon achieving UL certification, and (ii) initiate commercialization of POWERHOUSE™. |
On January 25, 2017, we consummated a reverse stock split of all outstanding shares of our Common Stock at a ratio of one-for-30, whereby 30 shares of Common Stock were combined into one share of Common Stock (the “2017 Reverse Stock Split” and together with the 2015 Reverse Stock Split and the 2016 Reverse Stock Split, collectively, the “Reverse Stock Splits”). The 2017 Reverse Stock Split was previously authorized by a vote of our shareholders on January 23, 2017. We did not decrease our authorized shares of capital stock in connection with the 2017 Reverse Stock Split.
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Unless indicated otherwise, all exercise prices and share amounts set forth in this prospectus are presented to reflect the Reverse Stock Splits and other adjustments under the terms of the Warrants, as applicable.
· | Completed a realignment of our Residential and Sunetric segments, which is expected to reduce our fixed cost structure below the gross profit line by 30% as compared to 2017 costs, to lower the required amount of future revenue to achieve break-even, or better, operating results in the future. |
· | Raised gross proceeds of $1.8 million from an offering of Class A common stock and warrants in January 2018 (the “January 2018 Offering”). |
The Offering
An investment in our securities involves a high degree of risk. Before making an investment decision you should carefully read and consider the risks described below, together with all of the other information included or incorporated by reference in this prospectus, including, without limitation, the risk factors in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K,
The issuance of shares of Class A common stock upon conversion of our outstanding convertible notes, including the Notes, and exercise of our outstanding warrants could substantially dilute your investment and could impede our ability to obtain additional financing. Our outstanding convertible notes, including the Notes, are convertible into, and our outstanding warrants are exercisable for, shares of our Class A common stock and give the holders an opportunity to profit from a rise in the market price of our Class A common stock. Conversion or exercise thereof will result in dilution of the equity interests of our shareholders. In particular, the conversion price of the Notes is subject to adjustment and a decrease in the conversion price would result in more shares of Class A common stock becoming issuable upon conversion of the Notes and could result in downward pressure on the price of our Class A common stock. We have no control over whether the holders will exercise their right to convert their convertible notes or exercise their warrants. We cannot predict the market price of our Class A common stock at any future date, and therefore, we are unable to accurately forecast or predict with any certainty the total amount of shares that may be issued under the Notes and outstanding warrants. However, we have estimated the number of Class A common stock that may be issued under the Notes in the future to be approximately 62.8 million shares and under outstanding warrants If the holders of the Notes do not
The In the event there is a balance outstanding at maturity, we would seek to refinance the remaining balance outstanding at that time from either: (i) refinancing of the
The terms of some of our outstanding securities and certain transaction documents we have entered into with investors participating in our past offerings could impede our ability to enter into certain transactions or obtain additional financing and could result in our paying premiums or penalties to the holders of the Notes and outstanding warrants. The terms of some of our outstanding securities, including the Notes and some of our outstanding series of warrants to purchase Class A common stock, prohibit us from entering into a “fundamental transaction” (as defined in the Notes and such warrants) (including generally, a merger, sale of all or substantially all of our assets, or permitting a purchase tender or exchange offering resulting in a person or group of persons owning at least 50% of the outstanding shares of our Class A common stock) unless, among other things, the successor resulting from the fundamental transaction assumes all of our obligations under the Notes, the applicable warrants and the associated transaction documents. The terms of the transaction documents we have entered into with investors participating in our past offerings also contain restrictions on our ability to conduct future securities offerings and incur additional debt. Further, the Notes and our outstanding warrants require us to deliver the number of shares of our Class A common stock issuable upon conversion or exercise within a specified time period. If we are unable to deliver the shares of Class A common stock within the timeframe required, we may be obligated to reimburse the holder for the cost of purchasing the shares of our Class A common stock in the open market or pay them the profit they would have realized upon the conversion or exercise and sale of such shares. We may also be obligated to redeem the Notes at a premium upon the occurrence of an event of default (as defined in the Notes) or a change of control (as defined in the Notes). Some of our outstanding warrants also contain features that may require us to repurchase such warrants upon the occurrence of a change of control. In addition to the foregoing, we may be obligated to pay cash penalties under the registration rights agreement we have entered into with the investors in the April 2018 Offering (the “Registration Rights Agreement”). For example, if the registration statement required to be filed under the Registration Rights Agreement ceases to be effective and available to the selling shareholders under certain circumstances, we must pay to the selling shareholders, on the occurrence of each such event and on every 30th day thereafter until the applicable event is cured, an amount in cash equal to 1.0% of the aggregate original principal amount under the Notes on the date of issuance. On April 27, 2018, we filed a Registration Statement on Form S-3 to register for resale an aggregate of 51,038,634 of Class A common stock issuable upon conversion of the Notes and exercise of the Series Q warrants. The SEC declared the registration statement effective on May 4, 2018. The payments described above we may be obligated to make may adversely affect our results of operations. DESCRIPTION OF THE TRANSACTION
On
The
A holder may not exercise a
The
April 2018 Offering (Notes, Series Q Warrants and April 2018 Placement Agent Warrants)
On April 9, 2018, we closed the April 2018 Offering, a private placement of Notes and Series Q warrants with two unaffiliated institutional and accredited investors (the “Investors”), in which we issued and sold to the Investors (i) $10.75 million in principal amount and $10 million funding amount (reflecting an original issue discount of $750,000) of convertible notes due April 9, 2019, consisting of (A) two Series A Notes in the aggregate principal amount of $5,750,000 in consideration for aggregate cash payments of $5,000,000, (B) two Series B Notes in the aggregate principal amount of $5,000,000 for consideration consisting of two secured promissory notes, each issued and payable by an Investor, in the aggregate principal amount of $5,000,000 (each, an “Investor Note”), and (ii) Series Q warrants to purchase up to 9,126,984 shares of our Class A common stock, under the terms of the Securities Purchase Agreement, dated March 30, 2018, among us and the Investors (as amended, the “Purchase Agreement”). The Notes are convertible into, and the Series Q warrants are exercisable for, shares of our Class A common stock. The Notes and the Series Q warrants were issued in physical form separately from each other and may be transferred separately at any time. The Notes and the Series Q warrants are not listed on any national securities exchange or other trading market, and no trading market for the Notes and the Series Q warrants is expected to develop. Under the terms of the engagement letter dated January 29, 2018 we entered into with WestPark in connection with the April 2018 Offering, we issued and sold to WestPark for a sum of $100 a warrant to purchase 730,160 shares of Class A common stock at an initial exercise price of $1.12, and WestPark transferred such warrant to four of its employees (the “April 2018 Placement Agent Warrants” and, together with the January 2018 Placement Agent Warrants, collectively, the “Placement Agent Warrants”). The current holders of the April 2018 Placement Agent Warrants are listed in the selling shareholder table included in the section entitled “SELLING SHAREHOLDERS.” Description of the Notes Principal Amount; Maturity Date; Interest The aggregate original principal amount of the Series
Conversion of the Notes The Notes are convertible at any time, at the option of the holders, into shares of Class A common stock at a conversion price. The initial fixed conversion price was $1.26 per share, subject to reduction, as described below, and adjustment for stock splits, stock dividends, and similar events. On July 9, 2018, the conversion price was automatically reset to $0.3223 pursuant to the terms of the Notes. On August 29, 2018, we agreed with the Note holders to reduce the conversion price further to $0.3067. Following an event of default under the Notes, during a specified time period, a Note holder may convert a Note at an Alternate Conversion Price and at a 125% premium. “Alternate Conversion Price” means the greater of (i) a floor price of $0.194, and (ii) the lower of (A) the conversion price, and (B) 85% of the price computed as the quotient of (1) the sum of the VWAP (a volume-weighted average price of our Class A common stock, as defined in the Notes) of the Class A common stock for each of the two trading days with the lowest VWAP of the Class A common stock during the 20 consecutive trading day period ending and including the date of We have the right to require Note holders to convert all, or any part of, their Notes if at any time (i) the VWAP of the Class A common stock exceeds 200% of the conversion price for 10 consecutive trading days, and (ii) no Equity Conditions Failure (as defined in the Notes) then exists. However, our ability to force a holder to convert its Notes is limited to each Note holder’s pro rata amount of an amount equal to 20% of the aggregate dollar trading volume of the Class A common stock during the 20 consecutive trading day period before the date we provide notice of mandatory conversion to Note holders. Equity Conditions The Notes require that certain Equity Conditions (as defined in the Notes) are met to allow us to take certain actions. Generally, the Equity Conditions include, but are not limited to, requirements that (i) holders of Notes and Series Q warrants may resell shares of Class A common stock issuable upon conversion and exercise of the Notes and the Series Q warrants under an effective registration statement or under Rule 144; (ii) the Class A common stock is listed on an Eligible Market (as defined in the Notes); (iii) certain stock price and volume requirements are met; (iv) there is no event of default under the Notes; and (v) we have obtained shareholder approval of the issuance of shares of Class A common stock upon conversion of the Notes and exercise of the Series Q warrants at conversion and exercise prices below the initial conversion price of the Notes and the initial exercise price of the Series Reduction of the Conversion Price The conversion price of the Notes is subject to
The conversion price may also be reduced in connection with our failure to pay the Redemption of the At any time after the later of (i) 15 days after the Applicable Date (as defined below) and (ii) the date no Equity Conditions Failure (as defined in the If we consummate a Subsequent Placement (as defined in the Notes), subject to some exceptions, a Note holder will have the right to require that we redeem, in whole or in part, a portion of the amounts owed by us to such holder under a Note equal to such holder’s pro rata share of 37.5% of the gross proceeds from such Subsequent Placement in cash at a price calculated as described in the paragraph above. A Note holder may If we do not pay the redemption price in a timely manner, Note holders have the option to cancel such redemption and the principal amount of each Note will Events of Default The Notes contain customary events of default, including but not limited to: (i) failure to file or have declared effective by the SEC the applicable registration statement required by the Registration Rights Agreement within certain time periods or failure to keep the registration statement effective as required by the Registration Rights Agreement, (ii) failure to maintain the listing of the Class A common stock, (iii) failure to make payments when due under the Notes, (iv) breaches of covenants, and (iv) bankruptcy or insolvency. The occurrence of an event of default under the Notes will trigger default interest and will cause an Equity Condition Failure, which may mean that we will be unable to force mandatory conversion of the Notes and that Investors may not
Following an event of We must immediately redeem the Notes in cash in an amount equal to 125% multiplied by the amount to be redeemed upon the occurrence of a Bankruptcy Event of Default (as defined in the Notes). Fundamental Transactions and Change of Control The terms of the Notes prohibit us from entering into transactions constituting a Fundamental Transaction (as defined in the Notes) unless the successor entity, which must be a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market (as defined in the Notes), assumes all of our obligations under the Notes and the other transaction documents in a written agreement approved by each Note holder. The definition of Fundamental Transactions includes, but is not limited to, mergers, a sale of all or substantially all of our assets, certain tender offers and other transactions that result in a change of control. Further, in connection with a Change of Control (as defined in the Notes), upon request of a Note holder, we must redeem all or any portion of such holder’s Note(s) in cash at a 125% premium in an amount calculated pursuant to a formula set forth in the Notes. The definition of Change of Control is generally the same as the definition of Fundamental Transaction but excludes certain types of Fundamental Transactions. Beneficial Ownership Limitation
A holder may not
Purchase Rights; Distributions of Assets The Note holders Covenants We agreed to certain negative covenants in the
We also agreed to certain affirmative covenants in the Notes, pursuant to which we agreed to and will cause each of our subsidiaries to, among other things: (i) maintain and preserve ours and its existence, rights and privileges, and become or remain duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased or in which the transaction of our business makes such qualification necessary, (ii) maintain and preserve all properties which are necessary or useful in the proper conduct of our business in good working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which we are a party as lessee or under which we occupy property, so as to prevent any loss or forfeiture thereof or thereunder, (iii) maintain all intellectual property rights that are necessary or material to the conduct of our business, (iv) maintain certain insurance coverage, (v) at any time at least $1,000,000 in aggregate principal amount of Notes remains outstanding, maintain Available Cash (as defined in the Notes) as of each fiscal quarter equal to or exceeding $750,000, and (vi) make quarterly announcements of operating results. Other Terms Specific to the Series B Notes If an Investor Note is pledged, assigned or transferred to any person other than us without the prior written consent of the applicable Investor, including by contract, operation of law, court order or otherwise (each, a “Prohibited Transfer”) or if any provision of an Investor Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction or other similar authority, in each case, (i) such Investor Note will be deemed paid in full and will be null and void, and (ii) 75% of the remaining Restricted Principal of the applicable Series B Note will be automatically cancelled (with the remaining 25% of the Restricted Principal becoming unrestricted principal). The Restricted Principal of the Series B Notes are subject to offset under certain circumstances, as further described below. Upon any offset, the Restricted Principal under a Series B Note will automatically and simultaneously be reduced, on a dollar-for-dollar basis, in an amount equal to the principal amount of an Investor’s Investor Note that is cancelled and offset. Under the terms of the Series B Notes, we granted a security interest to each Investor in such Investor’s Investor Note to secure our obligations under the applicable Series B Note. Each Investor perfected its security interest by taking possession of such Investor’s Investor Note at the closing. Number of Shares Issuable Upon Conversion of the Notes As of September 6, 2018, (i) an aggregate principal amount of $5,693,700 and an aggregate Additional Amount (as defined in the Series The following table sets forth the total number of shares of Class A common stock that would be issued to the Note holders if an aggregate amount of $12,944,297 (which includes all principal and all possible original issue discount amounts and Additional Amounts that may accrue under the Notes as of September 6, 2018) is converted into shares of Class A common stock. The following table assumes that: (i) the indicated conversion price remains the same from September 6, 2018 until the Notes are fully converted, (ii) no interest, Additional Amount (as defined in the Notes), Late Charges (as defined in the Notes) or any other
Description of the Series
The initial exercise price of the Series
A holder may not exercise
The holders of the Series The Series
Further, after the occurrence of an Event of Default (as defined in the Notes), at the request of a holder of a Series Q warrant, we or the Successor Entity (as defined in the Series Q warrants), as the case may be, shall purchase such holders Series Q warrant for cash in an amount equal to the Event of Default Black Scholes Value (as defined in the Series Q warrants. Description of the April 2018 Placement Agent Warrants The April 2018 Placement Agent Warrants have substantially the same terms as the Series Q warrants other than that the April 2018 Placement Agent Warrants have a cashless exercise right regardless of whether an effective registration statement registering, or a current prospectus being available for, the resale of the shares of Class A common stock issuable upon exercise of the April 2018 Placement Agent Warrants.
Additional Terms of the Purchase Agreement Under the terms of the Purchase Agreement, we were obligated to reimburse the lead Investor for costs and expenses incurred in connection with the transaction. So long as any Notes remain outstanding, we are prohibited from effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction. A “Variable Rate Transaction” generally means a transaction in which we or any subsidiary issues or sells (i)(A) any securities with a conversion, exercise or exchange rate or price that is based upon and/or varies with the trading prices of the Class A common stock at any time after the initial issuance, or (B) a conversion, exercise or exchange price that is subject to reset in the future, other than pursuant to certain anti-dilution provisions, or (ii) enters into any agreement whereby we or any subsidiary may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights). The Purchase Agreement also provides that, until the first anniversary of the closing of the April 2018 Offering, the Investors have the right to participate in any future Subsequent Placement (other than with respect to Excluded Securities) in an amount equal to up to 35% of such Subsequent Placement. We may not affect a Subsequent Placement during this time without complying with the terms of the participation right set forth in the Purchase Agreement. Until the Applicable Date and at any time thereafter while any registration statement filed under the Registration Rights Agreement is not effective or the prospectus contained therein is not available for use, or any Current Public Information Failure (as defined in the Registration Rights Agreement) exists, we may not file any registration statement relating to securities that are not Registrable Securities (as defined in the Registration Rights Agreement), subject to some exclusions. We were required to hold a shareholders’ meeting not later than June 30, 2018 to seek approval of the issuance of shares of Class A common stock upon conversion of the Notes and exercise of the Series Q warrants at conversion and exercise prices below the initial conversion price of the Notes and the initial exercise price of the Series Q warrants, as required under Nasdaq Rule 5635(d). We obtained such shareholder approval at our annual shareholders’ meeting on June 21, 2018. We were obligated to reimburse the lead investor’s legal counsel for its reasonable fees in connection with reviewing the proxy statements relating to such shareholders’ meetings in an amount not to exceed $10,000. Registration Rights Agreement At the closing of the April 2018 Offering, we entered into the Registration Rights Agreement with the Investors under which we agreed to register for resale the shares of Class A common stock issuable upon conversion of the Notes and upon exercise of the Series Q warrants plus an additional number of shares so that the total number of shares of Class A common stock registered equals 200% of the aggregate estimate number of shares based on (i) the maximum number of shares issuable upon conversion of the Notes (using the Alternate Conversion Price (as defined in the Notes)) and (ii) the maximum number of shares issuable upon exercise of the Series Q warrants. On August 29, 2018, this percentage was lowered from 200% to 135%. The Registration Rights Agreement required us to file an initial registration statement within 30 days after the closing and to have the registration statement declared effective 60 days after the closing, or 90 days if the registration statement was subject to review by the SEC (if the registration statement is on Form S-1, the time periods are 90 and 120 days, respectively). On April 27, 2018, we filed a Registration Statement on Form S-3 to register for resale an aggregate of 51,038,634 of Class A common stock issuable under the terms of the Notes and our Series Q warrants. The SEC declared the registration statement effective on May 4, 2018. In addition, under certain circumstances, we are required to file one or more additional registration statements if the number of shares available under any prior registration statement is insufficient to cover all of the shares of Class A common stock required to be registered under the terms of the Registration Rights Agreement. We are filing the registration statement of which this prospectus is a part to satisfy our obligation under the Registration Rights Agreement.
Under the Registration Rights Agreement, we are required to pay each Investor cash liquidated damages of 1% of the sum of the aggregate original principal amount stated in such Investor’s Notes at the closing upon our failure to (i) file the registration statement in the time required, (ii) have the registration statement declared effective in the time required, (iii) maintain the effectiveness of the registration statement, or (iv) keep current public information in the marketplace. We are obligated to make such liquidated damages payments upon the occurrence of one of the described events and every 30 days thereafter until cured (or, in the case of the current public information failure, until such time that such public information is no longer required pursuant to Rule 144). We are required to keep the registration statement effective (and the prospectus contained therein available for use) pursuant to Rule 415 for resales on a delayed or continuous basis at then-prevailing market prices at all times until the earlier of (i) the date as of which the Investors may sell all of the Class A common stock issuable pursuant thereto without restriction pursuant to Rule 144, or (ii) the date on which all of the Class A common stock covered by the registration statement have been sold. The Registration Rights Agreement also provides for piggyback registration rights under certain circumstances. We are obligated to reimburse the lead investor’s legal counsel for its fees and disbursements in connection with registration, filing or qualification under the Registration Rights Agreement in an amount not to exceed $10,000 for each such registration, filing or qualification.
The current exercise price of the outstanding Series Q warrants, which are exercisable into 1,735,317 shares of Class A common stock, is $0.3223 per share. If the Series Q warrants are fully exercised for cash,
The selling shareholders will pay all underwriting discounts, selling commissions and expenses incurred by them for brokerage, accounting, tax or legal services or any other expenses incurred by the selling shareholders in connection with the sale of the shares, if any. We will bear all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation, all registration and filing fees, Nasdaq listing fees and fees and expenses of our counsel and our accountants.
For additional information regarding the issuance of the Notes and the warrants
The third column lists the shares of Class A common stock being offered by this prospectus by the selling shareholders and does not take in account any limitations on (i) conversion of the Notes set forth therein or (ii) exercise of the Series Q warrants or the Placement Agent Warrants set forth therein. In accordance with the terms of the Registration Rights Agreement, this prospectus generally covers the resale of up to 53,789,219 shares of Class A common stock issuable upon conversion and exercise of, and from time-to-time issuable under the terms of, the Notes and our Series Q warrants to purchase Class A common stock. Pursuant to agreements entered into with some of the selling shareholders, we are required to register for resale with the SEC 135% of the aggregate estimated number of shares of Class A common stock issuable upon conversion and exercise of, and from time-to-time issuable under the term of, the Notes and our Series Q warrants to purchase Class A common stock (calculated using the Alternate Conversion Price (as defined in the Notes)). We previously registered 51,038,634 shares of Class A common stock issuable under the terms of the Notes and the Series Q warrants. As of The fourth and fifth columns assume the sale of all of the shares offered by the selling shareholders pursuant to this prospectus and the prior registration statement that registered 51,038,634 shares of Class A common stock issuable under the terms of the Notes and the Series Q warrants. Under the terms of the Notes, the Series Q warrants and the Placement Agent Warrants, a selling shareholder may not convert the Notes or exercise the Series Q warrants or the Placement Agent Warrants to the extent (but only to the extent) such selling shareholder or any of its affiliates would beneficially own a number of shares of our The number of shares in the second, fourth and fifth columns reflects these limitations. The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
* Denotes less than 1%. (1) Ayrton Capital LLC, the investment manager to Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, has discretionary authority to vote and dispose of the shares held by Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B. Waqas Khatri is the managing member of Ayrton Capital LLC and in his capacity as director of Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B, may also be deemed to have investment discretion and voting power over the shares held by Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B. Mr. Khatri disclaims any beneficial ownership of these shares. The address of Ayrton Capital, LLC is 222 Broadway,19th Floor, New York, NY 10038. One or more entities affiliated with Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B have participated in prior offerings of our securities. (2) Consists of shares of our Class A common stock issuable (i) under the Notes (subject to a 4.99% beneficial ownership limitation; calculated using the current conversion price of $.03067), and (ii) upon exercise of warrants
(3) Hudson Bay Capital Management, LP, the investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management, LP. Each of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities. The address of Hudson Bay Master Fund Ltd. is c/o Hudson Bay Capital Management LP, 777 Third Avenue, 30th Floor, New York, NY 10017. Hudson Bay Master Fund Ltd. has participated in prior offerings of our securities and is currently a beneficial owner of more than 5% of our Class A common stock.
(4) Consists of shares of our Class A common stock issuable (i) under our senior secured convertible notes due on April 1, 2016 (the “2016 Notes”) (subject to a 9.99% beneficial ownership limitation; calculated using a “Conversion Price” (as defined in the 2016 Notes) of $0.2785, the lowest conversion price resulting from the defined term “Conversion Price” as of September 6, 2018), (ii) under the Notes (subject to a 9.99% beneficial ownership limitation; calculated using the current conversion price of $0.3067), and (iii) upon exercise of warrants that are currently exercisable (subject to either a 4.99% or 9.99% beneficial ownership limitation), which together represent 9.99% of our outstanding shares of Class A common stock as of September 6, 2018. Does not include an estimated 10,698,938 additional shares of Class A common stock issuable under the 2016 Notes, the Notes and upon exercise of warrants (calculated in the manner described in the preceding sentence) because the selling shareholder does not have the right to receive such shares if the selling shareholder, together with certain attribution parties, would beneficially own in excess of 9.99% (or, with respect to some warrants, 4.99%) of the outstanding shares of our Class A common stock.
(6) Richard Rappaport, in his capacity as Chief Executive Officer of WestPark has voting and investment power over the (7) Consists of (8) Mr. Blum is an employee of WestPark. His address is WestPark Capital, Inc., 1900 Avenue of the Stars, 3rd Floor, Los Angeles, CA 90067. (9) Consists of (i) 32,450 shares of our (10) Mr. Ross is an employee of WestPark. His address is WestPark Capital, Inc., 1900 Avenue of the Stars, 3rd Floor, Los Angeles, CA 90067. (11) Consists of (i) 32,450 shares of our Class A common stock issuable under the January 2018 Placement Agent Warrants, (ii) 193,919 shares of our Class A common stock issuable under the April 2018 Placement Agent Warrants and (iii) 13 shares of our Class A common stock issuable under other warrants that are currently exercisable. (12) Mr. Kaiser is an employee of WestPark. His address is WestPark Capital, Inc., 1900 Avenue of the Stars, 3rd Floor, Los Angeles, CA 90067. (13) Consists of (i) 5,000 shares of our Class A common stock issuable under the January 2018 Placement Agent Warrants, (ii) 12,500 shares of our Class A common stock issuable under the April 2018 Placement Agent Warrants and (iii) 1 share of our Class A common stock issuable under other warrants that are currently exercisable. (14) Mr. Salvatore is an employee of WestPark. His address is WestPark Capital, Inc., 1900 Avenue of the Stars, 3rd Floor, Los Angeles, CA 90067. (15) Consists of (i) 5,000 shares of our Class A common stock issuable under the January 2018 Placement Agent Warrants, (ii) 12,500 shares of our Class A common stock issuable under the April 2018 Placement Agent Warrants and (iii) 1 share of our Class A common stock issuable under other warrants that are currently exercisable.
The selling shareholders may sell all or a portion of the shares of Class A common stock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of Class A common stock are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of Class A common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:
The selling shareholders may also sell shares of Class A common stock under Rule 144, if available, rather than under this prospectus. In addition, the selling shareholders may transfer the shares of Class A common stock by other means not described in this prospectus. If the selling shareholders effect such transactions by selling shares of Class A common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the shares of Class A common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the shares of Class A common stock or otherwise, the selling shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of Class A common stock in the course of hedging in positions they assume. The selling shareholders may also sell shares of Class A common stock short and deliver shares of Class A common stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders may also loan or pledge shares of Class A common stock to broker-dealers that in turn may sell such shares.
The selling shareholders may pledge or grant a security interest in some or all of the Notes, Series Q warrants, Placement Agent Warrants or shares of Class A common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Class A common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate the shares of Class A common stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. To the extent required by the Securities Act and the rules and regulations thereunder, the selling shareholders and any broker-dealer participating in the distribution of the shares of Class A common stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Under the securities laws of some states, the shares of Class A common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of Class A common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. There can be no assurance that any selling shareholder will sell any or all of the shares of Class A common stock registered pursuant to the The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the We will pay all expenses of the registration of the shares of Class A common stock pursuant to the Registration Rights Agreement, estimated to be Once sold under the registration statement, of The validity of the Class A common stock issuable upon conversion of, or otherwise under the terms of, the Notes and exercise of the Series Q warrants and Placement Agent Warrants
The consolidated financial statements of Real Goods Solar, Inc. and its subsidiaries, as of and for the
The WHERE YOU CAN FIND MORE INFORMATION This prospectus, which constitutes a part of a registration statement on Form S-3 that we have filed with the SEC, omits certain of the
We file annual, quarterly and current reports, proxy and information statements and other information with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information about the operation of the Public Reference Room by calling the SEC at 1(800) SEC-0330. The SEC also maintains a website that contains information we file electronically with the SEC, which you can access over the Internet at http://www.sec.gov. We maintain a website at http://www.rgsenergy.com with information about our company. Information contained on our website or any other website is not incorporated into this prospectus and does not constitute a part of this prospectus. Our website address referenced above is intended to be an inactive textual reference only and not an active hyperlink to our website. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is considered part of this prospectus, and any
Our
The description of our
We also incorporate by reference all documents we subsequently file with the SEC (other than information furnished pursuant to Item 2.02 or Item 7.01 of Form 8-K or as otherwise permitted by SEC rules) pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the initial filing of the registration statement of which this prospectus is a part (including prior to the effectiveness of the registration statement) and prior to the termination of the offering.
This prospectus is part of a registration statement on Form S-3 that we have filed with the SEC relating to the securities. As permitted by SEC rules, this prospectus does not contain all of the information included in the registration statement and the accompanying exhibits and schedules we file with the SEC. We have filed certain legal documents that control the terms of the Class A common stock offered by this prospectus as exhibits to the registration statement. We may file certain other legal documents that control the terms of the Class A common stock offered by this prospectus as exhibits to reports we file with the SEC. You may refer to the registration statement and the exhibits and schedules for more information about us and our securities. The registration statement and exhibits and schedules are also available at the SEC’s Public Reference Room or through its website.
We will provide, without charge and upon oral or written request, to each person, including any beneficial owner, to whom a copy of this prospectus has been delivered, a copy of any of the documents referred to above as being incorporated by reference into this prospectus but not delivered with it. You may obtain a copy of these filings, at no cost, by writing or calling us at Real Goods Solar, Inc., 110 16th Street, 3rd Floor, Denver, Colorado 80202, (303) 222-8300. Exhibits to the filings will not be provided, however, unless those exhibits have been specifically incorporated by reference in this prospectus.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and
The following
Item 15. Indemnification of Directors and
The Colorado Business Corporation Act (the “CBCA”) generally provides that a corporation may indemnify a person made party to a proceeding because the person is or was a director against liability incurred in the proceeding if: the person’s conduct was in good faith; the person reasonably believed, in the case of conduct in an official capacity with the corporation, that such conduct was in the corporation’s best interests, and, in all other cases, that such conduct was at least not opposed to the corporation’s best interests; and, in the case of any criminal proceeding, the person had no reasonable cause to believe that the person’s conduct was unlawful. The CBCA prohibits such indemnification in a proceeding by or in the right of the corporation in which the person was adjudged liable to the corporation or in connection with any other proceeding in which the person was adjudged liable for having derived an improper personal benefit. The CBCA further provides that, unless limited by its articles of incorporation, a corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director or officer of the corporation, against reasonable expenses incurred by the person in connection with the proceeding. In addition, a director or officer, who is or was a party to a proceeding, may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. The CBCA allows a corporation to indemnify and advance expenses to an officer, employee, fiduciary or agent of the corporation to the same extent as a director.
As permitted by the CBCA, the Company’s articles of incorporation and bylaws generally provide that the Company shall indemnify its directors and officers to the fullest extent permitted by the CBCA. In addition, the Company may also indemnify and advance expenses to an officer who is not a director to a greater extent, not inconsistent with public policy, and if provided for by its bylaws, general or specific action of the Company’s board of director or shareholders.
The Company has entered into substantively identical Indemnification Agreements with certain current and former directors and officers (the “Indemnitees”), which generally provide that, to the fullest extent permitted by Colorado law, the Company shall indemnify such Indemnitee if the Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the Indemnitee is or was or has agreed to serve at the Company’s request as a director, officer, employee or agent of the Company, or while serving as a director or officer of the Company, is or was serving or has agreed to serve at the Company’s request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity or by reason of the imposition upon such officer or director of any federal and/or state income tax obligation (inclusive of any interest and penalties, if applicable), that is imposed on such officer or director with respect to income, “phantom income,” rescinded or unconsummated transactions, or any other allegedly taxable event for which no benefit was received by such officer or director. The indemnification obligation includes, without limitation, claims for monetary damages against an Indemnitee in respect of an alleged breach of fiduciary duties and generally covers expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by an Indemnitee or on an Indemnitee’s behalf in connection with such action, suit or proceeding and any appeal therefrom, but shall only be provided if the Indemnitee acted in good faith; and, in the case of conduct in an official capacity with the corporation, if such conduct was in the Company’s best interests, and, in all other cases, if such conduct was at least not opposed to the Company’s best interests; and, with respect to any criminal action, suit or proceeding, if the Indemnitee had no reasonable cause to believe the Indemnitee’s conduct was unlawful.
Section 7-108-402(1) of the CBCA permits a corporation to include in its articles of incorporation a provision eliminating or limiting the personal liability of directors to the corporation or its shareholders for monetary damages for any breach of fiduciary duty as a director (except for breach of a director’s duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, unlawful distributions, or any transaction from which the director derived improper personal benefit). Further, Section 7-108-402(2) of the CBCA provides that no director or officer shall be personally liable for any injury to persons or property arising from a tort committed by an employee, unless the director or officer was either personally involved in the situation giving rise to the litigation or committed a criminal offense in connection with such situation.
As permitted by the CBCA, the Company’s articles of incorporation provide that the personal liability of the Company’s directors to the Company or its shareholders is limited to the fullest extent permitted by the CBCA. The Indemnification Agreements described above also provide that the Company’s indemnification obligation includes, without limitation, claims for monetary damages against the Indemnitee in respect of an alleged breach of fiduciary duties to the fullest extent permitted by the CBCA.
Section 7-109-108 of the CBCA provides that a corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary or agent of the corporation, or who, while a director, officer, employee, fiduciary or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary or agent of another entity or an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from the person’s status as a director, officer, employee, fiduciary or agent, whether or not the corporation would have power to indemnify the person against the same liability under the CBCA.
As permitted by the CBCA, the Company’s bylaws authorize the Company to purchase and maintain such insurance. The Company currently maintains a directors and officers insurance policy insuring its past, present and future directors and officers, within the limits and subject to the limitations of the policy, against expenses in connection with the defense of actions, suits or proceedings, and certain liabilities that might be imposed as a result of such actions, suits or proceedings.
Item 16.
The exhibits listed in the exhibit index immediately following the signature pages are filed as part of this registration statement.
Item 17.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to
(6)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
KNOW ALL PEOPLE BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dennis Lacey and Alan Fine, and each of them severally, as his or her true and lawful attorneys-in-fact and agents, each acting alone with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including pre-effective and post-effective amendments) and exhibits to this Registration Statement on Form S-3, and to any registration statement relating to the same offering of securities that are filed pursuant to Rule 462 of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
EXHIBITS INDEX
† Filed herewith
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