We are
offering 3,695,000 shares of our common stock, $0.60 par value per
share, at a purchase price of $3.00 per share, pursuant to this
prospectus supplement and the accompanying prospectus. Our common
stock is listed on the NYSE American under the symbol
“BKTI.” The last reported sale price of our common
stock on NYSE American on June 2, 2021, was $3.97 per
share.
As of
June 2, 2021, the aggregate market value of our outstanding common
stock held by non-affiliates, or our public float, was
$38,265,120.68, based on 12,536,471 shares of common stock
outstanding on June 2, 2021, of which 7,662,534 shares are held by
non-affiliates (using information on the holdings of affiliates on
a date within the 60-day window permitted by General Instruction
I.B.6 of Form S-3), and a per share price of $5.02, based on the
closing price of our common stock on the NYSE American on April 27,2021. During the 12 calendar month period that ends on, and
includes, the date of this prospectus supplement (excluding this
offering), we have not offered and sold any shares of our common
stock pursuant to General Instruction I.B.6 of Form S-3. Pursuant
to General Instruction I.B.6 of Form S-3, in no event will we sell
securities registered on the registration statement, of which this
prospectus supplement is a part, in a public primary offering with
a value exceeding more than one-third of our public float in any
12-calendar-month period so long as our public float remains below
$75.0 million.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK
INCLUDING THAT THE TRADING PRICE OF COMMON STOCK HAS BEEN SUBJECT
TO VOLATILITY AND INVESTORS IN THIS OFFERING MAY NOT BE ABLE TO
SELL THEIR COMMON STOCK ABOVE THE ACTUAL OFFERING PRICE OR AT ALL.
BEFORE MAKING ANY INVESTMENT DECISION, YOU SHOULD CAREFULLY REVIEW
AND CONSIDER ALL THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT, THE
ACCOMPANYING PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN AND THEREIN, INCLUDING THE RISKS AND UNCERTAINTIES DESCRIBED
UNDER “RISK FACTORS” BEGINNING ON PAGE S-9 OF THIS
PROSPECTUS SUPPLEMENT AND THE RISK FACTORS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS.
Neither the U.S. Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
Per
Share
Total
Public offering
price
$3.00
$11,085,000
Underwriting
discounts and commissions(1)
$0.195
$720,525
Proceeds to us,
before expenses
$2.805
$10,364,475
(1)
The underwriters will also be reimbursed for certain expenses
incurred in this offering. In addition, we have agreed to issue to
the representative of the underwriter warrants to purchase 184,750
shares of our common stock, which equals 5% of the total number of
shares sold in this public offering (excluding the over-allotment
option), at an exercise price of $3.75 per share, which represents
125% of the public offering price per share (the
“Representative Warrants”). Neither these
Representative Warrants nor the shares issuable upon exercise of
the Representative Warrants are being registered hereby. See the
section of this prospectus supplement entitled
“Underwriting” for a description of the compensation
payable to the underwriters.
We have
granted the underwriters a 45-day option to purchase up to an
additional 554,250 shares of our common stock from us at the public
offering price per share, less underwriting discounts and
commissions discount, solely to cover over-allotments, if any. If
the underwriters exercise their option in full, the total
underwriting discounts and commissions payable by us will be
$828,603, and the total proceeds to us, before expenses, will be
$11,919,146.
The
underwriters expect to deliver the shares of common stock pursuant
to this prospectus supplement to the purchasers on or about June 9,2021.
ThinkEquity
a division of Fordham Financial Management, Inc.
The date of this prospectus supplement is June 6, 2021
On
December 11, 2020, we filed with the Securities and Exchange
Commission (the “SEC”), a registration statement on
Form S-3, as amended by Amendment No. 1 thereto, filed on December21, 2020 (File No. 333-251307), utilizing a shelf registration
process relating to the securities described in this prospectus
supplement, which registration statement became effective on
December 29, 2020. Under this shelf registration, we may, from time
to time, sell common stock and other securities, including in this
offering.
This
document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering of
common stock and also adds to and updates information contained in
the accompanying prospectus and the documents incorporated by
reference into the prospectus and this prospectus supplement. The
second part is the accompanying prospectus dated December 29, 2020,
which provides more general information, some of which does not
apply to this offering. Generally, when we refer to this
prospectus, we are referring to both parts of this document
combined.
If the
description of the offering varies between this prospectus
supplement and the accompanying prospectus, you should rely on the
information contained in this prospectus supplement. To the extent
there is any other conflict between the information contained in
this prospectus supplement, on the one hand, and the information
contained in the accompanying prospectus or in any document
incorporated by reference that was filed with the SEC before the
date of this prospectus supplement, on the other hand, you should
rely on the information in this prospectus supplement. If any
statement in one of these documents is inconsistent with a
statement in another document having a later date (for example, a
document incorporated by reference in the accompanying prospectus),
the statement in the document having the later date modifies or
supersedes the earlier statement. It is important for you to read
and consider all information contained in this prospectus
supplement and the accompanying prospectus, including the documents
we have referred you to in the section entitled “Where You
Can Find More Information” below in this prospectus
supplement.
You
should rely only on the information incorporated by reference or
provided in this prospectus supplement and the accompanying
prospectus. Neither we nor the underwriters have authorized anyone
to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on
it. This prospectus supplement and the accompanying prospectus do
not constitute an offer to sell, or a solicitation of an offer to
purchase, the securities offered by this prospectus supplement and
the accompanying prospectus in any jurisdiction where it is
unlawful to make such offer or solicitation. You should assume that
the information contained in this prospectus supplement or the
accompanying prospectus, or any document incorporated by reference
in this prospectus supplement or the accompanying prospectus, is
accurate only as of the date of those respective documents. Neither
the delivery of this prospectus supplement nor any distribution of
securities pursuant to this prospectus supplement shall, under any
circumstances, create any implication that there has been no change
in the information set forth or incorporated by reference into this
prospectus supplement or in our affairs since the date of this
prospectus supplement. Our business, financial condition, results
of operations and prospects may have changed since that
date.
We
further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in this prospectus
supplement or the accompanying prospectus were made solely for the
benefit of the parties to such agreement, including, in some cases,
for the purpose of allocating risk among the parties to such
agreements, and should not be deemed to be a representation,
warranty or covenant to you. Moreover, such representations,
warranties or covenants were accurate only as of the date when
made. Accordingly, such representations, warranties and covenants
should not be relied on as accurately representing the current
state of our affairs.
This
prospectus supplement and the accompanying prospectus do not
constitute an offer to sell or the solicitation of an offer to buy
any securities other than the shares of common stock to which it
relates, nor do this prospectus supplement and the accompanying
prospectus constitute an offer to sell or the solicitation of an
offer to buy securities in any jurisdiction to any person to whom
it is unlawful to make such offer or solicitation in such
jurisdiction.
Unless
otherwise indicated, information contained in or incorporated by
reference into this prospectus concerning our industry and the
markets in which we operate, including market position and market
opportunity, is based on information from our management’s
estimates, as well as from industry publications and research,
surveys and studies conducted by third parties. Management
estimates are derived from publicly available information, our
knowledge of our industry and assumptions based on such information
and knowledge, which we believe to be reasonable. However,
assumptions and estimates of our future performance, and the future
performance of our industry are subject to numerous known and
unknown risks and uncertainties, including those described under
the heading “Risk Factors” beginning on page S-9 of
this prospectus supplement. These and other important factors could
result in our estimates and assumptions being materially different
from future results. You should read the information contained in,
or incorporated by reference into, this prospectus completely and
with the understanding that future results may be materially
different and worse from what we expect. See the information
included under the heading “Cautionary Statement Regarding
Forward-Looking Statements.”
Unless
the context otherwise requires, “the Company,”“we,”“us,”“our” and similar
terms refer to BK Technologies Corporation, a Nevada corporation,
together with our consolidated subsidiaries. References in this
prospectus supplement to “U.S. dollars,”“U.S.
$” or “$” are to the currency of the United
States of America.
This
prospectus supplement, the accompanying prospectus, and the
information incorporated by reference herein and therein and any
free writing prospectus that we have authorized for use in
connection with this offering contain or may include
“forward-looking statements” within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”). These
forward-looking statements are intended to be covered by the safe
harbor for forward-looking statements provided by the Private
Securities Litigation Reform Act of 1995. For these purposes, any
statements contained or incorporated by reference herein regarding
our strategy, future operations, financial position, future
revenues, projected costs, prospects, plans and objectives of
management, other than statements of historical facts, are
forward-looking statements. The forward-looking statements included
herein or incorporated herein by reference include or may include,
but are not limited to, (and you should read carefully) statements
that are predictive in nature, depend upon or refer to future
events or conditions, or use or contain words, terms, phrases, or
expressions such as “achieve,”“forecast,”“plan,”“propose,”“strategy,”“envision,”“hope,”“will,”“continue,”“potential,”“expect,”“believe,”“anticipate,”“project,”“estimate,”“predict,”“intend,”“should,”“could,”“may,”“might,” or similar words, terms,
phrases, or expressions or the negative of any of these terms. Any
statements in this prospectus supplement or the accompanying
prospectus or incorporated herein or therein by reference that are
not based upon historical fact are forward-looking statements and
represent our best judgment as to what may occur in the future.
Forward-looking statements involve a number of known and unknown
risks and uncertainties, including, but not limited to, those
discussed in the “Risk Factors” sections contained in
Part I, Item 1A in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2020, and in Part II, Item 1A in our
Quarterly Report on Form 10-Q for the quarterly period ended March31, 2021, filed with the SEC on May 13, 2021, and in the documents
incorporated by reference herein and the following risks and
uncertainties: changes or advances in
technology and our ability to adapt to such changes; the success of
our land mobile radio (“LMR”) product line; successful
introduction of new products and technologies, including our
ability to successfully develop and sell our anticipated new
multiband product and other related products in the planned new BKR
Series product line; competition in the land mobile radio industry;
general economic and business conditions, including federal, state
and local government budget deficits and spending limitations, any
impact from a prolonged shutdown of the U.S. Government, and the
ongoing effects of the COVID-19 pandemic; the availability, terms
and deployment of capital; reliance on contract manufacturers and
suppliers; risks associated with fixed-price contracts; heavy
reliance on sales to agencies of the U.S. Government, which are
highly regulated and subject to termination and oversight audits by
government representatives that could result in adverse findings
and negatively impact our business, and our ability to comply with
the requirements of contracts, laws and regulations related to such
sales; allocations by government agencies among multiple approved
suppliers under existing agreements; our ability to comply with
U.S. tax laws and utilize deferred tax assets; our ability to
attract and retain executive officers, skilled workers and key
personnel; our ability to manage our growth; our ability to
identify potential candidates for, and consummate, acquisition,
disposition or investment transactions, and risks incumbent to
being a noncontrolling interest stockholder in a corporation;
having a large stockholder that might have interests that differ
from the interests of our other stockholders; risks associated with
our general investment strategy; the impact of the COVID-19
pandemic on the companies in which we hold investments; impact of
our capital allocation strategy; risks related to maintaining our
brand and reputation, including reputational risks in the event we
are unable to obtain conflict-free components; impact of government
regulation; rising health care costs; our business with
manufacturers located in other countries, including changes in the
U.S. Government and foreign governments’ trade and tariff
policies, as well as any further impact resulting from the COVID-19
pandemic; our inventory and debt levels; protection of our
intellectual property rights; fluctuation in our operating results
and stock price; acts of war or terrorism, natural disasters and
other catastrophic events; any infringement claims; data security
breaches, cyber-attacks and other factors impacting our or our
distributors’, manufacturers’, suppliers’ and
other partners’ technology systems; availability of adequate
insurance coverage; maintenance of our NYSE American listing; risks
related to being a holding company; and the effect on our stock
price and ability to raise equity capital of future sales of shares
of our Common Stock (as defined below). Given the risks and
uncertainties, readers should not place undue reliance on any
forward-looking statement and should recognize that the statements
are predictions of future results which may not occur as
anticipated. Many of the risks listed above have been, and may
further be, exacerbated by the COVID-19 pandemic, its impact on
the land mobile radio
industry, and the worsening economic environment.
Although
we believe the expectations reflected in our forward-looking
statements are reasonable, in reading this prospectus supplement or
the accompanying prospectus and the documents incorporated into
this prospectus supplement or the accompanying prospectus by
reference, you should consider the factors discussed above and
under the heading “Risk Factors” contained in this
prospectus in evaluating any forward-looking statements, and you
are cautioned not to place undue reliance on any forward-looking
statements. Each forward-looking statement is made and applies only
as of the date of the particular statement, and except as required
by U.S. federal securities laws or other applicable law, we do not
intend to update, withdraw, or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. You should consider these risks when reading any
forward-looking statements. All forward-looking statements
attributed or attributable to us or to persons acting on our behalf
are expressly qualified in their entirety by this section entitled
“Cautionary Statement Regarding Forward-Looking
Statements.”
S-2
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information contained in other parts of
this prospectus supplement, the accompanying prospectus or
information incorporated by reference herein or therein from our
filings with the SEC, listed in this section of the
prospectus supplement and the section of
the accompanying prospectus both entitled “Incorporation by
Reference.” Because it is only a summary, it does not contain
all of the information that you should consider before purchasing
our securities in this offering and it is qualified in its entirety
by, and should be read in conjunction with, the more detailed
information appearing elsewhere or incorporated by reference into
this prospectus supplement and the accompanying prospectus. You
should read the entire prospectus, the registration statement of
which this prospectus supplement and the accompanying prospectus
are a part, and the information incorporated by reference herein or
therein in their entirety, including the “Risk Factors”
and our financial statements and the related notes incorporated by
reference into this prospectus supplement and the accompanying
prospectus, before purchasing our securities in this
offering.
Company Overview
We are
a holding company that, through BK Technologies, Inc., our
operating subsidiary, provides two-way radio communications
equipment of high quality and reliability. In business for over 70
years, we design, manufacture and market wireless communications
products consisting of two-way LMRs, repeaters, base stations and
related components and subsystems. Two-way LMRs can be units that
are hand-held (portable) or installed in vehicles (mobile).
Repeaters expand the range of two-way LMRs, enabling them to
operate over a wider area. Base station components and subsystems
are installed at radio transmitter sites to improve performance by
enhancing the signal and reducing or eliminating signal
interference and enabling the use of one antenna for both
transmission and reception. We employ both analog and digital
technologies in our products.
Our
digital technology is compliant with the Project 25 standard
(“P-25”) for digital LMR equipment. The P-25 has been
adopted by representatives from the Association of Public-Safety
Communications Officials-International, the National Association of
State Technology Directors, the United States Federal Government
and other public safety user organizations. Our P-25 digital
products and our analog products function in the very high
frequency (136MHz – 174MHz), ultra-high frequency (380MHz
– 470MHz, 450MHz – 520MHz), and 700-800 MHz bands. Our
P-25 KNG and KNG2 Series mobile and portable digital radios have
been validated under the P-25 Compliance Assessment Program
(“CAP”) as being P-25 compliant and interoperable with
the communications network infrastructure of six of our
competitors. Since we do not provide our own communications network
infrastructure, we believe CAP validation provides confidence for
federal, state and local emergency response agencies that our
products are a viable and attractive alternative for use on the
infrastructure of our competitors.
We
offer products under the brand names BK Radio and RELM, and we have
federal registrations for the marks “BK Technologies,”“BK Radio,”“Radios for Heroes” and
“BKR,” and have applied for registration of the mark
“Technology for Heroes.” Generally, BK Technologies-
and BK Radio-branded products serve the government and public
safety market, while RELM-branded products serve the business and
industrial market. We believe that we provide superior value to a
wide array of customers with demanding requirements, including, for
example, emergency response, public safety, homeland security and
military customers of federal and state government agencies, as
well as various commercial enterprises. Our two-way radio products
excel in applications with harsh and hazardous conditions. They
provide high-specification performance, durability and reliability
at a lower cost relative to comparable offerings.
We were
incorporated under the laws of the State of Nevada on October 24,1997. We are the resulting corporation from the reincorporation
merger of our predecessor, Adage, Inc., a Pennsylvania corporation,
which reincorporated from Pennsylvania to Nevada effective as of
January 30, 1998. Effective on June 4, 2018, we changed our
corporate name from “RELM Wireless Corporation” to
“BK Technologies, Inc.” On March 28, 2019, we
implemented a holding company reorganization. The reorganization
created a new holding company, BK Technologies Corporation, which
became the new parent company of BK Technologies, Inc. BK
Technologies Corporation’s only significant assets are the
outstanding equity interests in BK Technologies, Inc. and any other
future subsidiaries of BK Technologies Corporation. The holding
company reorganization was intended to create a more efficient
corporate structure and increase operational
flexibility.
Our
principal executive offices are located at 7100 Technology Drive,
West Melbourne, Florida32904 and our telephone number is (321)
984-1414. Our website is www.bktechnologies.com. Information
contained on, or that may be accessible through, our website is not
a part of, and is not incorporated into, this prospectus supplement
or the accompanying prospectus or the registration statement to
which it forms a part.
S-3
THE OFFERING
The following is a brief summary of some of the terms of the
offering and is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this prospectus
supplement and the accompanying prospectus. For a more complete
description of the terms of our common stock, see description of
our common stock in the accompanying prospectus in the section,
“Description of Capital Stock.”
Common stock
outstanding prior to offering
12,536,471
shares
Common stock
offered by us pursuant
to this prospectus
supplement
3,695,000
shares
Public Offering
Price
$3.00 per
share
Common stock to be
outstanding
immediately after
this offering.
16,231,471 shares
(or 16,785,721 shares if the underwriters exercise their
over-allotment option in full to purchase additional shares of our
common stock)
Underwriters’
option to purchase
additional shares
of common stock
We have granted the
underwriters an option, exercisable for 45 days from the date of
this prospectus supplement, to purchase up to an additional 554,250
shares of our common stock from us, solely to cover
over-allotments, if any.
Use of
proceeds
We estimate the net
proceeds from this offering will be approximately $10.0 million,
after deducting underwriting discounts and commissions and
estimated offering expenses payable by us. We intend to use the net
proceeds for general corporate purposes, which may include working
capital, capital expenditures, product development costs,
operational purposes, strategic investments and potential
acquisitions in complementary businesses. See “Use of
Proceeds” on page S-13 of this prospectus
supplement.
Lock-Up
agreements
Subject to certain customary exceptions, each of
our directors and officers have agreed, for a period of three
months after the date of this prospectus supplement, without the
prior written consent of the representative of the underwriters,
not to offer, issue, sell, contract to sell, encumber, grant any
option for the sale of or otherwise dispose of any of our
securities. We, on behalf of ourselves and any successor entity,
have also agreed that, for a period of three months after the date
of this prospectus supplement, we will not: offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend or otherwise transfer or
dispose of any shares of common stock or other capital stock or any
securities convertible into or exercisable or exchangeable for our
common stock or other capital stock; file or cause the filing of
any registration statement under the Securities Act with respect to
any shares of common stock or other capital stock or any
securities convertible into or
exercisable or exchangeable for our common stock or other capital
stock; complete any offering of debt securities of the Company,
other than entering into a line of credit, term loan arrangement or
other debt instrument with a traditional bank; or enter into any
swap or other agreement or arrangement that transfers to another,
in whole or in part, directly or indirectly, any of the economic
consequences of ownership of our common stock or other capital
stock or any securities convertible into or exercisable or
exchangeable for our common stock or other capital stock, whether
any transaction described in any of the foregoing bullet points is
to be settled by delivery of our common stock or other capital
stock, other securities, in cash or otherwise, or publicly announce
an intention to do any of the foregoing.
Risk
factors
Investing in our
common stock involves a high degree of risk. Before making any
investment decision, you should carefully review and consider all
the information in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference herein and
therein, including the risks and uncertainties described under
“Risk Factors” beginning on page S-9 of this prospectus
supplement and the risk factors incorporated by reference into this
prospectus supplement and the accompanying
prospectus.
NYSE American
symbol
“BKTI”
S-4
Except
as otherwise indicated, the number of shares of common stock to be
outstanding after this offering is based on an aggregate of
12,536,471 shares
outstanding as of June 2, 2021, and excludes, as of that date, the
following:
●
489,000 shares of
common stock issuable upon the exercise of outstanding options
having a weighted average exercise price of $3.96 per
share;
●
122,533 shares of
common stock issuable upon the vesting of outstanding restricted
stock units (“RSUs”); and
●
388,467 shares of
common stock reserved for future grants under the Company’s
2017 Incentive Compensation
Plan, effective as of March 27, 2017, as amended (the
“2017 Plan”).
Except
as otherwise indicated, all information in this prospectus
supplement assumes: (i) no exercise or vesting of the securities
listed above; (ii) no exercise by the representative of the
underwriters of the option to purchase up to an additional 554,250
shares of our common stock; and (iii) no exercise of the
Representative Warrants.
S-5
RISK FACTORS
Investing
in our securities involves a high degree of risk. You should
consider carefully the risks and uncertainties described below, in
Part I, Item 1A in our Annual Report on Form 10-K for the year
ended December 31, 2020, as filed with the SEC on March 3, 2021,
and Item 1A in our Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2021, filed with the SEC on May13, 2021, together with the other information included in this
prospectus supplement, the accompanying prospectus, and other
information included in our securities filings, including our
Annual Report on Form 10-K for the year ended December 31, 2020, as
filed with the SEC on March 3, 2021, as amended by Amendment No. 1
on Form 10-K/A, as filed with the SEC on April 26, 2021, our
Quarterly Report on Form 10-Q for the quarterly period ended March31, 2021, filed with the SEC on May 13, 2021, and any subsequent
updates described in our Quarterly Reports on Form 10-Q, our
Current Reports on Form 8-K (other than, in each case, information
“furnished” rather than “filed” under
Section 18 of the Exchange Act), and other information in our
consolidated financial statements incorporated by reference herein,
before deciding to purchase our common stock. The risks and
uncertainties discussed below, in Part I, Item 1A in our Annual
Report on Form 10-K for the year ended December 31, 2020, as filed
with the SEC on March 3, 2021, and Item 1A in our Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2021,
filed with the SEC on May 13, 2021, are not the only risks and
uncertainties we face. Additional risks and uncertainties not
currently known to us, or that we currently view as immaterial, may
also impair our business. If any of the risks or uncertainties
described in our SEC filings or any additional risks and
uncertainties actually occur, our business, financial condition,
results of operations and cash flow could be materially and
adversely affected. In that case, the trading price of our common
stock could decline, and you might lose all or part of your
investment. Certain statements below are forward-looking
statements. See the information included under the heading
“Cautionary Statement Regarding Forward-Looking
Statements.”
Risks Related to the Offering or an Investment in our Common
Stock
Purchasers of common stock in this offering will experience
immediate and substantial dilution in the book value of their
investment. You may experience further dilution upon exercise of
our outstanding options and warrants.
If you purchase shares of our common stock in this offering, you
will experience immediate and substantial dilution, as the public
offering price of our common stock will be substantially greater
than the net tangible book value per share of our common stock
before giving effect to this offering. Accordingly, if you purchase
our common stock in this offering, you will incur immediate
substantial dilution of $1.06 per share, or $1.02 per share if the
underwriters exercise their over-allotment
option to purchase additional shares of our common stock,
representing the difference between the public offering price per
share of common stock and our pro forma as adjusted net tangible
book value as of March 31, 2021. In addition, as of March 31, 2021,
we had 611,533 shares of common stock issuable upon the exercise of
outstanding options or the vesting of outstanding RSUs and 388,467
shares of common stock reserved for future grants under the 2017
Plan. For a further description of the dilution that you will
experience immediately after this offering, including as a result
of our outstanding options, RSUs and the 2017 Plan, see the section
in this prospectus supplement entitled
“Dilution.”
Future sales of our common stock, or the perception that such
future sales may occur, may cause our stock price to
decline.
Sales of a substantial number of shares of our common stock in the
public market, or the perception that these sales could occur,
following this offering could cause the market price of our common
stock to decline. As of June 2, 2021, there were 489,000
shares of our common stock issuable
upon the exercise of outstanding options having a weighted average
exercise price of $3.96 per
share, 122,533 shares of our
common stock issuable upon the vesting of outstanding RSUs and
388,467 shares of our common
stock available for future grant under the 2017 Plan. Upon the
closing of this offering, we have agreed to issue the
representative of the underwriters the Representative Warrants to
purchase a number of shares of common stock equal to 5% of the
total number of shares sold in this public offering. The majority
of the shares under the 2017 Plan are, and the shares of common
stock sold in this offering upon issuance will be, freely tradable
without restriction or further registration under the Securities
Act of 1933, as amended (the “Securities Act”). With
respect to certain shares under the 2017 Plan and the
Representative Warrants, there may be certain restrictions on the
holders to sell the underlying shares to the extent they are
restricted securities, held by “affiliates” or subject
to ownership thresholds.
S-6
We have broad discretion in the use of the net proceeds from this
offering and we may not use them effectively.
Our management will have broad discretion in the application of the
net proceeds from this offering, including for any of the purposes
described in the section titled “Use of Proceeds,” and
you will be relying on the judgment of our management regarding the
application of these proceeds. You will not have the opportunity,
as part of your investment decision, to assess whether the proceeds
are being used appropriately. Our management might not apply the
net proceeds or our existing cash in ways that ultimately increase
the value of your investment. If we do not invest or apply the net
proceeds from this offering or our existing cash in ways that
enhance stockholder value, we may fail to achieve expected
financial results, which could cause our stock price to decline. We
intend to use the net proceeds from the offering for general
corporate purposes, which may include working capital,
capital expenditures, product development costs, operational
purposes, strategic investments and potential acquisitions in
complementary businesses. Such use of
the net proceeds from the offering may not yield a favorable return
to our stockholders. See “Use of
Proceeds.”
Raising additional capital, including as a result of this offering,
may cause dilution to our stockholders, or restrict our
operations.
To the extent that we raise additional capital through the sale of
equity securities, including from this offering, or convertible
debt securities, your ownership interest will be diluted, and the
terms of these securities may include liquidation or other
preferences that adversely affect your rights as a common
stockholder. Additionally, pursuant to the rules of Registration
Statement on Form S-3 (“Form S-3”), in no event
will we sell securities registered on a Form S-3 in a public
primary offering with a value exceeding more than one-third of our
public float in any 12-month period so long as our public float
remains below $75.0 million. During the 12 calendar month period
that ends on, and includes, the date of this prospectus supplement
(excluding this offering), we have not offered and sold any shares
of our common stock. To raise additional capital in the public
markets, including taking into account limitations on use of our
Form S-3, we may be required to seek other methods, such as a
Registration Statement on Form S-1, the preparation of which tends
to be more time-consuming and costly. We may also conduct
fundraising transactions in the form of private placements,
potentially with registration rights or priced at a discount to the
market value of our shares, which could require stockholder
approval under the rules of the NYSE American, or other equity
raise transactions. In addition to entailing increased capital
costs, any such transactions could result in substantial dilution
of our stockholders’ interests, transfer control to a new
investor and diminish the value of an investment in our
shares.
Debt financing and preferred equity financing, if available, may
involve agreements that include covenants limiting or restricting
our ability to take specific actions, such as incurring additional
debt, making capital expenditures or declaring dividends. In
addition, if we issue secured debt securities, the holders of the
debt would have a claim to our assets that would be senior to the
rights of stockholders until the debt is paid. Interest on these
debt securities would increase costs and negatively impact
operating results. If the issuance of new securities results in
diminished rights to holders of our common stock, the market price
of our common stock could be negatively impacted.
While we have historically paid dividends on our common stock, the
payment of future dividends is not guaranteed and is subject to the
discretion of our Board of Directors who may decide to cease future
dividends based on various factors, including the Company’s
operating results, financial condition, anticipated capital
requirements, the failure to receive dividends from the
Company’s operating subsidiary and other factors deemed
relevant by the Board.
We have paid quarterly cash dividends during the prior twenty
consecutive quarters. The declaration and payment of cash
dividends, if any, is subject to the discretion of the Board of
Directors. The Board’s final determination as to whether to
declare and pay dividends is based upon its consideration of our
operating results, financial condition and anticipated capital
requirements, as well as such other factors it may deem
relevant.
We receive dividends from our wholly-owned subsidiary, BK
Technologies, Inc., to fund the quarterly cash dividends to our
stockholders. Pursuant to the Credit Agreement between BK
Technologies, Inc. and JPMorgan Chase Bank dated as of January 30,2020, as amended (the “Credit Agreement”), BK
Technologies, Inc. is permitted to pay dividends to us if there is
no default, and if the payment of the dividend would not result in
a default, under the Credit Agreement. If BK Technologies, Inc.
defaults, or if the payment of a dividend would result in a
default, under the Credit Agreement, or if any other limitations or
restrictive covenants are triggered under the Credit Agreement,
BK Technologies, Inc., may not
be able to take certain actions, including paying dividends to the
Company. If the Company does not receive dividends from BK
Technologies, Inc., it may not be able to pay dividends to its
stockholders.
S-7
A large number of shares issued in this offering may be sold in the
market following this offering, which may depress the market price
of our common stock.
A large number of shares issued in this offering may be sold
in the market following this offering, which may depress the market
price of our common stock. Sales of a substantial number of shares
of our common stock in the public market following this offering
could cause the market price of our common stock to decline. If
there are more shares of common stock offered for sale than buyers
are willing to purchase, then the market price of our common stock
may decline to a market price at which buyers are willing to
purchase the offered shares of common stock and sellers remain
willing to sell the shares. All of the shares of common stock
issued in the offering will be freely tradable without restriction
or further registration under the Securities Act.
We are subject to the continued listing requirements of the NYSE
American. If we are unable to comply with such requirements, our
common stock would be delisted from the NYSE American, which would
limit investors’ ability to effect transactions in our common
stock and subject us to additional trading
restrictions.
Our common stock is currently listed on the NYSE American. In order
to maintain our listing, we must maintain certain share prices,
financial and share distribution targets, including maintaining a
minimum amount of shareholders’ equity and a minimum number
of public shareholders. In addition to these objective standards,
the NYSE American may delist the securities of any issuer if, in
its opinion, the issuer’s financial condition and/or
operating results appear unsatisfactory; if it appears that the
extent of public distribution or the aggregate market value of the
security has become so reduced as to make continued listing on the
NYSE American inadvisable; if the issuer sells or disposes of
principal operating assets or ceases to be an operating company; if
an issuer fails to comply with the NYSE American’s listing
requirements; if an issuer’s common stock sells at what the
NYSE American considers a “low selling price”
(generally trading below $0.20 per share for an extended period of
time); or if any other event occurs or any condition exists which
makes continued listing on the NYSE American, in its opinion,
inadvisable.
While we currently do not believe we are at risk of delisting,
there can be no assurance that we will continue to satisfy the
continued listing rules of the NYSE American. If the NYSE American
delists our common stock from trading on its exchange and we are
not able to list our securities on another national securities
exchange, we expect our common stock would qualify to be quoted on
an over-the-counter market. If this were to occur, we could face
significant material adverse consequences, including: limited
availability of market quotations for our securities; reduced
liquidity for our securities; a determination that our common stock
is a “penny stock,” which will require brokers trading
in our common stock to adhere to more stringent rules and possibly
result in a reduction of trading activity in the secondary trading
market for our securities; a limited degree of news and analyst
coverage; decreased ability to issue additional securities or
obtain additional financing in the future; and potential breaches
under or terminations of our agreements with current or prospective
large shareholders, strategic investors and banks.
The market price of our common stock has been, and may continue to
be, highly volatile, and such volatility could cause the market
price of our common stock to decrease and could cause you to lose
some or all of your investment in our common stock.
S-8
So far, during fiscal year 2021, the market price of our common
stock has fluctuated from a high of $5.50 per share to a low of
$2.86 per share, and our stock price continues to fluctuate. The
market price of our common stock may continue to fluctuate
significantly in response to numerous factors, some of which are
beyond our control, such as:
●
announcements
of technological innovations or new products by us or
others;
●
announcements
by us of significant acquisitions, strategic partnerships,
in-licensing, out-licensing, joint ventures or capital
commitments;
●
the
developments of the businesses and projects of our
subsidiaries;
●
protections
available in respect of our intellectual property
rights;
●
public
concern as to the safety of the equipment we sell;
●
the
volatility of market prices for shares of public communication or
land radio companies generally;
●
the
impact of government shutdowns, budget limitations and compliance
with regulations;
●
developments
concerning intellectual property rights or regulatory
approvals;
●
variations
in our and our competitors’ results of
operations;
●
changes
in revenues, gross profits and earnings announced by
us;
●
changes in estimates or recommendations by
securities analysts, if our
securities are covered by
analysts;
●
changes
in government regulations;
●
general
market conditions and other factors, including factors unrelated to
our operating performance; and
●
other factors
discussed in the “Risk Factors” sections contained in
Part I, Item 1A in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2020, and Item 1A in our Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2021,
filed with the SEC on May 13, 2021, and in the documents
incorporated by reference herein.
Although we have not previously been involved in securities class
action litigation as a result of market volatility, if we were to
become involved in securities litigation, it could subject us to
substantial costs, divert resources and the attention of management
from our business and harm our business, results of operations,
financial condition and reputation. These factors may materially
and adversely affect the market price of our common
stock.
S-9
USE OF PROCEEDS
We
estimate the net proceeds to us in this offering will be
approximately $10.0 million (or $11.6 million if the underwriters
exercise their option to purchase additional shares of our common
stock in full), after deducting the underwriting discounts and
commissions and estimated offering expenses payable by
us.
We
intend to use the net proceeds for general corporate purposes,
which may include working capital, capital expenditures, product
development costs, operational purposes, strategic investments and
potential acquisitions in complementary businesses. We do not
currently have any agreement or understanding with respect to an
acquisition in which we plan to invest the proceeds of the
offering.
Due to
the uncertainties inherent in the Company’s business, we
cannot estimate with certainty the exact amounts of the net
proceeds from this offering that may be used for any purpose. As a
result, our management will have broad discretion in applying the
net proceeds from this offering.
S-10
DIVIDEND POLICY
We have paid quarterly cash dividends during the prior twenty
consecutive quarters. The declaration and payment of cash
dividends, if any, is subject to the discretion of the Board of
Directors. The Board’s final determination as to whether to
declare and pay dividends is based upon its consideration of our
operating results, financial condition and anticipated capital
requirements, as well as such other factors it may deem
relevant.
We receive dividends from our wholly-owned subsidiary, BK
Technologies, Inc., to fund the quarterly cash dividends to our
stockholders. The Credit Agreement permits BK Technologies, Inc. to
pay dividends to us if there is no default, and if the payment of
the dividend would not result in a default, under the Credit
Agreement. If BK Technologies, Inc. defaults, or if the payment of
a dividend would result in a default, under the Credit Agreement,
or if any other limitations or restrictive covenants are triggered
under the Credit Agreement, BK Technologies, Inc., may not be able
to take certain actions, including paying dividends to the Company.
If the Company does not receive dividends from BK Technologies,
Inc., it may not be able to pay dividends to its
stockholders.
Accordingly, while we have previously paid quarterly cash
dividends, such continued payment rests within the discretion of
our Board of Directors and there are various factors which could
result in a decision to cease paying such dividends.
S-11
DILUTION
If you invest in our common stock in this offering, you will
experience dilution to the extent of the difference between the
public offering price per share and the net tangible book value per
share of our common stock immediately after this
offering.
Our net tangible book value on March 31, 2021, was
approximately $21.6 million, or
$1.72 per share of our common stock. “Net tangible book
value” is total assets minus the sum of liabilities and
intangible assets. “Net tangible book value per share”
is net tangible book value divided by the total number of shares
outstanding. Dilution in net tangible book value per share
represents the difference between the amount per share paid by
purchasers of shares of common stock in this offering and the net
tangible book value per share of our common stock immediately after
this offering.
After giving effect to the sale of 3,695,000 shares of our common
stock in this offering at the public offering price of $3.00
per share and after deducting the
underwriting discounts and commissions and estimated offering
expenses payable by us, our net tangible book value as of March 31,2021, would have been approximately $31.6 million, or $1.94 per
share. This represents an immediate increase in net tangible book
value of $0.22 per share to existing stockholders and immediate
dilution in net tangible book value of $1.06 per share to new
investors purchasing our common stock in this offering at the
public offering price. The following table illustrates this
dilution on a per share basis:
Increase
in net tangible book value per share attributable to new
investors
$0.22
As
adjusted net tangible book value per share as of March 31, 2021,
after giving effect to this offering
$1.94
Dilution
in net tangible book value per share to investors in this
offering
$1.06
The information above assumes that the underwriters do not exercise
their option to purchase additional shares of our common stock. If
the underwriters exercise their option in full to purchase
additional shares of our common stock in this offering at the
public offering price of $3.00 per share, the net tangible book
value per share after this offering would be $1.98 per share,
the immediate increase in the net tangible book value per share to
existing stockholders would be $0.26 per share and the immediate
dilution to investors participating in this offering would be $1.02
per share.
The above discussion and table are based on 12,536,471 shares
outstanding as of March 31, 2021, and excludes, as of that date,
the following:
●
489,000 shares of
common stock issuable upon the exercise of outstanding options
having a weighted average exercise price of $3.96 per
share;
●
122,533 shares of
common stock issuable upon the vesting of outstanding RSUs;
and
●
388,467 shares of
common stock reserved for future grants under the 2017
Plan.
The above illustration of dilution per share to the investors
participating in this offering assumes no vesting of RSUs or
exercise of outstanding options to purchase our common stock or
warrants to purchase shares of our common stock that will be
outstanding after this offering, including the Representative
Warrants. The exercise, if any, of outstanding options and warrants
that will be outstanding after this offering having an exercise
price less than the offering price will increase dilution to the
new investors. In addition, we may choose to raise
additional capital depending on market conditions, our capital
requirements and strategic considerations, even if we believe we
have sufficient funds for our current or future operating plans. To
the extent that additional capital is raised through our sale of
equity or convertible debt securities, the issuance of these
securities could result in further dilution to our
stockholders.
S-12
UNDERWRITING
ThinkEquity, a division of Fordham Financial Management, Inc., is
acting as the representative of the underwriters of the offering.
We have entered into an underwriting agreement dated June 6, 2021,
with the representative. Subject to the terms and conditions of the
underwriting agreement, we have agreed to sell to each underwriter
named below, and each underwriter named below has severally agreed
to purchase, at the public offering price less the underwriting
discounts set forth on the cover page of this prospectus
supplement, the number of shares of common stock at the public
offering price, less the underwriting discounts and commissions, as
set forth on the cover page of this prospectus supplement, the
number of shares of common stock listed next to its name in the
following table:
Underwriter
Number of
Shares
ThinkEquity,
a division of Fordham Financial Management, Inc.
3,695,000
Total
3,695,000
The underwriters are committed to purchase all the shares of common
stock offered by the Company. The obligations of the underwriters
may be terminated upon the occurrence of certain events specified
in the underwriting agreement. Furthermore, the underwriting
agreement provides that the obligations of the underwriters to pay
for and accept delivery of the shares offered by us in this
prospectus supplement are subject to various representations and
warranties and other customary conditions specified in the
underwriting agreement, such as receipt by the underwriters of
officers’ certificates and legal opinions.
We have agreed to indemnify the underwriters against specified
liabilities, including liabilities under the Securities Act, and to
contribute to payments the underwriters may be required to make in
respect thereof.
The underwriters are offering the shares of common stock subject to
prior sale, when, as and if issued to and accepted by them, subject
to approval of legal matters by their counsel and other conditions
specified in the underwriting agreement. The underwriters reserve
the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.
We have granted the underwriters an option to purchase additional
shares of our common stock. This option, which is exercisable for
up to 45 days after the date of this prospectus, permits the
underwriters to purchase up to an aggregate of 554,250 additional
shares of common stock (equal to 15% of the total number of shares
sold in this offering) at the public offering price per share, less
underwriting discounts and commissions, solely to cover
over-allotments, if any. If the underwriters exercise this option
in whole or in part, then the underwriters will be severally
committed, subject to the conditions described in the underwriting
agreement, to purchase the additional shares of common stock in
proportion to their respective commitments set forth in the prior
table.
Discounts, Commissions and Reimbursement
The representative has advised us that the underwriters propose to
offer the shares of common stock to the public at the public
offering price per share set forth on the cover page of this
prospectus. The underwriters may offer shares to securities dealers
at that price less a concession of not more than $0.195
per share. After the initial offering
to the public, the public offering price and other selling terms
may be changed by the representative.
The following table summarizes the underwriting discounts and
commissions and proceeds, before expenses, to us assuming both
no exercise and full exercise by the underwriters of their
over-allotment option:
S-13
Total
Per Share
Without Over-Allotment Option
With Over-Allotment Option
Public
offering price
$3.00
$11,085,000
$12,747,750
Underwriting
discounts and commissions (6.5%)
$0.195
$720,525
$828,603
Proceeds,
before expenses, to us
$2.805
$10,364,475
$11,919,146
We have paid an expense deposit of $35,000 to the representative,
which will be applied against the actual out-of-pocket accountable
expenses that will be paid by us to the underwriters in connection
with this offering, and will be reimbursed to us to the extent not
incurred.
In addition, we have also agreed to pay up to an aggregate of
$159,500 of the underwriters’ reasonable out-of-pocket
expenses in connection with the offering, including the following
expenses: (a) all fees, expenses and disbursements relating to
background checks of our officers, directors and entities in an
amount not to exceed $7,000 in the aggregate; (b) all filing fees
and communication expenses relating to the registration of the
shares to be sold in the offering (including the over-allotment
shares) with the SEC; (c) all filing fees and communication
expenses associated with the review of this offering by FINRA and
relating to the listing of the offered shares on NYSE American; (d)
all fees, expenses and disbursements relating to the registration,
qualification or exemption of securities offered under the
securities laws of foreign jurisdictions reasonably designated by
the underwriters, including the reasonable fees and expenses of the
underwriters’ blue sky counsel, if applicable; (e) the costs
of all mailing and printing of the underwriting documents,
registration statements, prospectuses and all amendments,
supplements and exhibits thereto and as many preliminary and final
prospectuses as the underwriters may deem necessary; (f) the costs
and expenses of any public relations firm engaged to assist in
public offerings of securities and corresponding relations with the
Company’s security holders; (g) the costs of preparing,
printing and delivering certificates representing the offered
shares; (h) fees and expenses of the transfer agent for the common
stock; (i) stock transfer and/or stamp taxes, if any, payable upon
the transfer of the securities from the Company to the
underwriters; (j) the costs associated with post-closing
advertising of the offering in the national editions of the Wall
Street Journal and the New York Times; (k) the fees and expenses of
the Company’s legal counsel and other agents and
representatives; (l) the fees and expenses of the Company’s
accountants; (m) $29,500 for the underwriters’ use of
Ipreo’s book-building, prospectus tracking and compliance
software for this offering; (n) the costs associated with bound
volumes of the public offering materials as well as commemorative
mementos and lucite tombstones, in an amount not to exceed $3,000
in aggregate; (o) the fees and expenses of the underwriters’
legal counsel incurred in connection with this offering in an
amount up to $100,000; (p) up to $10,000 for data services and
communications expenses; and (q) up to $10,000 of the
underwriters’ actual accountable “road show”
expenses for the offering.
We estimate the expenses of this offering payable by us, not
including underwriting discounts and commissions, will be
approximately $330,000.
Representative Warrants
Upon the closing of this offering, we have agreed to issue to the
representative the Representative Warrants, to purchase
184,750 shares of common stock, which
equals 5% of the total number of shares sold in this public
offering (excluding the over-allotment option). The Representative
Warrants will be exercisable at a per share exercise price of
$3.75, which represents 125% of the public offering price per share
of common stock sold in this offering. The Representative Warrants
are exercisable at any time and from time to time, in whole or in
part, during the four and one-half year period commencing six
months from the date of this prospectus supplement. The
Representative Warrants also provide for unlimited
“piggyback” registration rights with respect to the
registration of the shares of common stock underlying the
Representative Warrants and customary antidilution provisions. The
piggyback registration right provided will not be greater than four
and one-half years from the date of this prospectus supplement in
compliance with FINRA Rule 5110(g)(8)(C).
S-14
The Representative Warrants and the shares of common stock
underlying the Representative Warrants have been deemed
compensation by the Financial Industry Regulatory Authority
(“FINRA”), and are therefore subject to a 180-day
lock-up pursuant to Rule 5110(e)(1) of FINRA. Except as permitted
by Rule 5110(e)(2), the representative, or permitted assignees
under such rule, may not sell, transfer, assign, pledge, or
hypothecate the Representative Warrants or the securities
underlying the Representative Warrants, nor will the representative
engage in any hedging, short sale, derivative, put, or call
transaction that would result in the effective economic disposition
of the Representative Warrants or the underlying shares for a
period of 180 days from the date of this prospectus supplement,
except in the case of certain limited transfers to any underwriter
and selected dealer participating in the offering and their bona
fide officers or partners. The Representative Warrants will provide
for adjustment in the number and price of the Representative
Warrants and the shares of common stock underlying such
Representative Warrants in the event of a rights offering, non-cash
distribution, recapitalization, merger, stock split or other
structural transaction.
Right of First Refusal
Until June 6, 2022 (twelve (12) months from the date of this
prospectus supplement) the representative shall have an irrevocable
right of first refusal to act as sole investment banker, sole
book-runner and/or sole placement agent, at the
representative’s sole discretion, for each and every future
public and private equity and debt offering, including all equity
linked financings, for the Company, or any successor to or any
subsidiary of the Company, using an investment banker, placement
agent or broker on terms customary to the representative. The
representative shall have the sole right to determine whether or
not any other broker-dealer shall have the right to participate in
any such offering and the economic terms of any such participation.
The representative will not have more than one opportunity to waive
or terminate the right of first refusal in consideration of any
payment or fee.
Lock-Up Agreements
Subject to certain customary exceptions, each of our directors and
officers have agreed for a period of three months after the date of
this prospectus supplement, without the prior written consent of
the representative, not to offer, issue, sell, contract to sell,
encumber, grant any option for the sale of or otherwise dispose of
any of our securities. We, on behalf of ourselves and any successor
entity, have also agreed that, for a period of three months after
the date of this prospectus supplement, we will not:
●
offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend or otherwise transfer or
dispose of any shares of common stock or other capital stock or any
securities convertible into or exercisable or exchangeable for our
common stock or other capital stock;
●
file
or cause the filing of any registration statement under the
Securities Act with respect to any shares of common stock or other
capital stock or any securities convertible into or exercisable or
exchangeable for our common stock or other capital
stock;
●
complete
any offering of debt securities of the Company, other than entering
into a line of credit, term loan arrangement or other debt
instrument with a traditional bank; or
●
enter
into any swap or other agreement or arrangement that transfers to
another, in whole or in part, directly or indirectly, any of the
economic consequences of ownership of our common stock or other
capital stock or any securities convertible into or exercisable or
exchangeable for our common stock or other capital stock, whether
any transaction described in any of the foregoing bullet points is
to be settled by delivery of our common stock or other capital
stock, other securities, in cash or otherwise, or publicly announce
an intention to do any of the foregoing.
Electronic Offer, Sale and Distribution of Securities
A prospectus in electronic format may be made available on the
websites maintained by one or more of the underwriters or selling
group members. The representative may agree to allocate a number of
securities to underwriters and selling group members for sale to
its online brokerage account holders. Internet distributions will
be allocated by the underwriters and selling group members that
will make internet distributions on the same basis as other
allocations. Other than the
prospectus in electronic format, the information on these websites
is not part of, nor incorporated by reference into, this
prospectus supplement or the accompanying prospectus
or the registration statement of which
it forms a part, has not been approved or endorsed by us, and
should not be relied upon by investors.
S-15
Stabilization
In connection with this offering, the underwriters may engage in
stabilizing transactions, over-allotment transactions,
syndicate-covering transactions, penalty bids and purchases to
cover positions created by short sales.
Stabilizing transactions permit bids to purchase shares so long as
the stabilizing bids do not exceed a specified maximum, and are
engaged in for the purpose of preventing or retarding a decline in
the market price of the shares while the offering is in
progress.
Over-allotment transactions involve sales by the underwriters of
shares in excess of the number of shares the underwriters are
obligated to purchase. This creates a syndicate short position
which may be either a covered short position or a naked short
position. In a covered short position, the number of shares
over-allotted by the underwriters is not greater than the number of
shares that they may purchase in the over-allotment option. In a
naked short position, the number of shares involved is greater than
the number of shares in the over-allotment option. The underwriters
may close out any short position by exercising their over-allotment
option and/or purchasing shares in the open market.
Syndicate covering transactions involve purchases of shares in the
open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of
shares to close out the short position, the underwriters will
consider, among other things, the price of shares available for
purchase in the open market as compared with the price at which
they may purchase shares through exercise of the over-allotment
option. If the underwriters sell more shares than could be covered
by exercise of the over-allotment option and, therefore, have a
naked short position, the position can be closed out only by buying
shares in the open market. A naked short position is more likely to
be created if the underwriters are concerned that after pricing
there could be downward pressure on the price of the shares in the
open market that could adversely affect investors who purchase in
the offering.
Penalty bids permit the representative to reclaim a selling
concession from a syndicate member when the shares originally sold
by that syndicate member are purchased in stabilizing or syndicate
covering transactions to cover syndicate short
positions.
These stabilizing transactions, syndicate covering transactions and
penalty bids may have the effect of raising or maintaining the
market price of our shares of common stock or preventing or
retarding a decline in the market price of our shares of common
stock. As a result, the price of our common stock in the open
market may be higher than it would otherwise be in the absence of
these transactions. Neither we nor the underwriters make any
representation or prediction as to the effect that the transactions
described above may have on the price of our common stock. These
transactions may be effected in the over-the-counter market or
otherwise and, if commenced, may be discontinued at any
time.
Other Relationships
Certain of the underwriters and their affiliates may in the future
provide various investment banking, commercial banking and other
financial services for us and our affiliates for which they may in
the future receive customary fees.
Offer Restrictions Outside the United States
Other than in the United States, no action has been taken by
us or the underwriters that would permit a public offering of the
securities offered by this prospectus supplement
in any jurisdiction where action for
that purpose is required. The securities offered by this
prospectus supplement may not
be offered or sold, directly or indirectly, nor may this
prospectus supplement or any
other offering material or advertisements in connection with the
offer and sale of any such securities be distributed or published
in any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that
jurisdiction. Persons into whose possession this prospectus
supplement comes are advised to inform
themselves about and to observe any restrictions relating to the
offering and the distribution of this prospectus supplement
or the accompanying prospectus. This
prospectus supplement does
not constitute an offer to sell
or a solicitation of an offer to buy any securities offered by this
prospectus supplement in any
jurisdiction in which such an offer or a solicitation is
unlawful.
S-16
Australia
This prospectus supplement is
not a disclosure document under Chapter 6D of the Australian
Corporations Act, has not been lodged with the Australian
Securities and Investments Commission and does not purport to
include the information required of a disclosure document under
Chapter 6D of the Australian Corporations Act. Accordingly, (i) the
offer of the securities under this prospectus supplement
is only made to persons to whom it is
lawful to offer the securities without disclosure under Chapter 6D
of the Australian Corporations Act under one or more exemptions set
out in section 708 of the Australian Corporations Act, (ii) this
prospectus supplement is made
available in Australia only to those persons as set forth in clause
(i) above, and (iii) the offeree must be sent a notice stating in
substance that by accepting this offer, the offeree represents that
the offeree is such a person as set forth in clause (i) above, and,
unless permitted under the Australian Corporations Act, agrees not
to sell or offer for sale within Australia any of the securities
sold to the offeree within 12 months after its transfer to the
offeree under this prospectus supplement.
China
The information in this document does not constitute a public offer
of the securities, whether by way of sale or subscription, in the
People’s Republic of China (excluding, for purposes of this
paragraph, Hong Kong Special Administrative Region, Macau Special
Administrative Region and Taiwan). The securities may not be
offered or sold directly or indirectly in the PRC to legal or
natural persons other than directly to “qualified domestic
institutional investors.”
European Economic Area—Belgium, Germany, Luxembourg and
Netherlands
The information in this document has been prepared on the basis
that all offers of securities will be made pursuant to an exemption
under the Directive 2003/71/EC (“Prospectus
Directive”), as implemented in Member States of the European
Economic Area (each, a “Relevant Member State”), from
the requirement to produce a prospectus for offers of
securities.
An offer to the public of securities has not been made, and may not
be made, in a Relevant Member State except pursuant to one of the
following exemptions under the Prospectus Directive as implemented
in that Relevant Member State:
●
to
legal entities that are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities;
●
to
any legal entity that has two or more of (i) an average of at least
250 employees during its last fiscal year; (ii) a total balance
sheet of more than €43,000,000 (as shown on its last annual
unconsolidated or consolidated financial statements) and (iii) an
annual net turnover of more than €50,000,000 (as shown on its
last annual unconsolidated or consolidated financial
statements);
●
to
fewer than 100 natural or legal persons (other than qualified
investors within the meaning of Article 2(1)(e) of the Prospectus
Directive) subject to obtaining the prior consent of the Company or
any underwriter for any such offer; or
●
in
any other circumstances falling within Article 3(2) of the
Prospectus Directive, provided that no such offer of
securities shall result in a requirement for the publication by the
Company of a prospectus pursuant to Article 3 of the Prospectus
Directive.
France
This document is not being distributed in the context of a public
offering of financial securities (offre au public de titres
financiers) in France within the meaning of Article L.411-1 of the
French Monetary and Financial Code (Code Monétaire et
Financier) and Articles 211-1 et seq. of the General Regulation of
the French Autorité des marchés financiers (“AMF”). The securities
have not been offered or sold and will not be offered or sold,
directly or indirectly, to the public in
France.
S-17
This document and any other offering material relating to the
securities have not been, and will not be, submitted to the AMF for
approval in France and, accordingly, may not be distributed or
caused to distributed, directly or indirectly, to the public in
France.
Such offers, sales and distributions have been and shall only be
made in France to (i) qualified investors (investisseurs
qualifiés) acting for their own account, as defined in and in
accordance with Articles L.411-2-II-2° and D.411-1 to D.411-3,
D.744-1, D.754-1, and D.764-1 of the French Monetary and Financial
Code and any implementing regulation and/or (ii) a restricted
number of non-qualified investors (cercle restreint
d’investisseurs) acting for their own account, as defined in
and in accordance with Articles L.411-2-II-2° and D.411-4,
D.744-1, D.754-1, and D.764-1 of the French Monetary and Financial
Code and any implementing regulation.
Pursuant to Article 211-3 of the General Regulation of the AMF,
investors in France are informed that the securities cannot be
distributed (directly or indirectly) to the public by the investors
otherwise than in accordance with Articles L.411-1, L.411-2,
L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and
Financial Code.
Ireland
The information in this document does not constitute a prospectus
under any Irish laws or regulations and this document has not been
filed with or approved by any Irish regulatory authority as the
information has not been prepared in the context of a public
offering of securities in Ireland within the meaning of the Irish
Prospectus (Directive 2003/71/EC) Regulations 2005 (the
“Prospectus Regulations”). The securities have not been
offered or sold, and will not be offered, sold or delivered
directly or indirectly in Ireland by way of a public offering,
except to (i) qualified investors as defined in Regulation 2(l) of
the Prospectus Regulations and (ii) fewer than 100 natural or legal
persons who are not qualified investors.
Israel
The securities offered by this prospectus supplement
have not been approved or disapproved
by the Israeli Securities Authority (the “ISA”) nor
have such securities been registered for sale in Israel. The shares
may not be offered or sold, directly or indirectly, to the public
in Israel, absent the publication of a prospectus. The ISA has not
issued permits, approvals or licenses in connection with the
offering or publishing of the prospectus
supplement; nor has it authenticated
the details included herein, confirmed their reliability or
completeness, or rendered an opinion as to the quality of the
securities being offered. Any resale in Israel, directly or
indirectly, to the public of the securities offered by this
prospectus supplement is
subject to restrictions on transferability and must be effected
only in compliance with the Israeli securities laws and
regulations.
Italy
The offering of the securities in the Republic of Italy has not
been authorized by the Italian Securities and Exchange Commission
(Commissione Nazionale per le Societ—$$—Aga e la Borsa,
“CONSOB”) pursuant to the Italian securities
legislation and, accordingly, no offering material relating to
the securities may be distributed in Italy and such securities may
not be offered or sold in Italy in a public offer within the
meaning of Article 1.1(t) of Legislative Decree No. 58 of 24
February 1998 (“Decree No. 58”), other
than:
●
to
Italian qualified investors, as defined in Article 100 of Decree
no.58 by reference to Article 34-ter of CONSOB Regulation no. 11971
of 14 May 1999 (“Regulation no. 11971”) as amended
(“Qualified Investors”); and
●
in
other circumstances that are exempt from the rules on public offer
pursuant to Article 100 of Decree No. 58 and Article 34-ter of
Regulation No. 11971 as amended.
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Any offer, sale or delivery of the securities or distribution of
any offer document relating to the securities in Italy (excluding
placements where a Qualified Investor solicits an offer from the
issuer) under the paragraphs above must be:
●
made
by investment firms, banks or financial intermediaries permitted to
conduct such activities in Italy in accordance with Legislative
Decree No. 385 of 1 September 1993 (as amended), Decree No. 58,
CONSOB Regulation No. 16190 of 29 October 2007 and any other
applicable laws; and
●
in
compliance with all relevant Italian securities, tax and exchange
controls and any other applicable laws.
Any subsequent distribution of the securities in Italy must be made
in compliance with the public offer and prospectus requirement
rules provided under Decree No. 58 and the Regulation No. 11971 as
amended, unless an exception from those rules applies. Failure to
comply with such rules may result in the sale of such securities
being declared null and void and in the liability of the entity
transferring the securities for any damages suffered by the
investors.
Japan
The securities have not been and will not be registered under
Article 4, paragraph 1 of the Financial Instruments and Exchange
Law of Japan (Law No. 25 of 1948), as amended (the
“FIEL”) pursuant to an exemption from the registration
requirements applicable to a private placement of securities to
Qualified Institutional Investors (as defined in and in accordance
with Article 2, paragraph 3 of the FIEL and the regulations
promulgated thereunder). Accordingly, the securities may not be
offered or sold, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan other than Qualified
Institutional Investors. Any Qualified Institutional Investor who
acquires securities may not resell them to any person in Japan that
is not a Qualified Institutional Investor, and acquisition by any
such person of securities is conditional upon the execution of an
agreement to that effect.
Portugal
This document is not being distributed in the context of a public
offer of financial securities (oferta pública de valores
mobiliários) in Portugal, within the meaning of Article 109 of
the Portuguese Securities Code (Código dos Valores
Mobiliários). The securities have not been offered or sold and
will not be offered or sold, directly or indirectly, to the public
in Portugal. This document and any other offering material relating
to the securities have not been, and will not be, submitted to the
Portuguese Securities Market Commission (Comissăo do Mercado
de Valores Mobiliários) for approval in Portugal and,
accordingly, may not be distributed or caused to distributed,
directly or indirectly, to the public in Portugal, other than under
circumstances that are deemed not to qualify as a public offer
under the Portuguese Securities Code. Such offers, sales and
distributions of securities in Portugal are limited to persons who
are “qualified investors” (as defined in the Portuguese
Securities Code). Only such investors may receive this document and
they may not distribute it or the information contained in it to
any other person.
Sweden
This document has not been, and will not be, registered with or
approved by Finansinspektionen (the Swedish Financial Supervisory
Authority). Accordingly, this document may not be made available,
nor may the securities be offered for sale in Sweden, other than
under circumstances that are deemed not to require a prospectus
under the Swedish Financial Instruments Trading Act (1991:980) (Sw.
lag (1991:980) om handel med finansiella instrument). Any offering
of securities in Sweden is limited to persons who are
“qualified investors” (as defined in the Financial
Instruments Trading Act). Only such investors may receive this
document and they may not distribute it or the information
contained in it to any other person.
Switzerland
The securities may not be publicly offered in Switzerland and will
not be listed on the SIX Swiss Exchange (“SIX”) or on
any other stock exchange or regulated trading facility in
Switzerland. This document has been prepared without regard to the
disclosure standards for issuance prospectuses under art. 652a or
art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under art. 27 ff. of the SIX
Listing Rules or the listing rules of any other stock exchange or
regulated trading facility in Switzerland. Neither this document
nor any other offering material
relating to the securities may be publicly distributed or otherwise
made publicly available in Switzerland.
S-19
Neither this document nor any other offering material relating to
the securities have been or will be filed with or approved by any
Swiss regulatory authority. In particular, this document will not
be filed with, and the offer of securities will not be supervised
by, the Swiss Financial Market Supervisory Authority
(FINMA).
This document is personal to the recipient only and not for general
circulation in Switzerland.
United Arab Emirates
Neither this document nor the securities have been approved,
disapproved or passed on in any way by the Central Bank of the
United Arab Emirates or any other governmental authority in the
United Arab Emirates, nor has the Company received authorization or
licensing from the Central Bank of the United Arab Emirates or any
other governmental authority in the United Arab Emirates to market
or sell the securities within the United Arab
Emirates.
This document does not constitute and may not be used for the
purpose of an offer or invitation. No services relating to the
securities, including the receipt of applications and/or the
allotment or redemption of such shares, may be rendered within the
United Arab Emirates by the Company.
No offer or invitation to subscribe for securities is valid or
permitted in the Dubai International Financial Centre.
United Kingdom
Neither the information in this document nor any other document
relating to the offer has been delivered for approval to the
Financial Services Authority in the United Kingdom and
no prospectus (within the meaning of section 85 of the
Financial Services and Markets Act 2000, as amended
(“FSMA”)) has been published or is intended to be
published in respect of the securities. This document is issued on
a confidential basis to “qualified investors” (within
the meaning of section 86(7) of FSMA) in the United Kingdom, and
the securities may not be offered or sold in the United Kingdom by
means of this document, any accompanying letter or any other
document, except in circumstances which do not require the
publication of a prospectus pursuant to section 86(1) FSMA. This
document should not be distributed, published or reproduced, in
whole or in part, nor may its contents be disclosed by recipients
to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity
(within the meaning of section 21 of FSMA) received in connection
with the issue or sale of the securities has only been communicated
or caused to be communicated and will only be communicated or
caused to be communicated in the United Kingdom in circumstances in
which section 21(1) of FSMA does not apply to the
Company.
In the United Kingdom, this document is being distributed only to,
and is directed at, persons (i) who have professional experience in
matters relating to investments falling within Article 19(5)
(investment professionals) of the Financial Services and Markets
Act 2000 (Financial Promotions) Order 2005 (“FPO”),
(ii) who fall within the categories of persons referred to in
Article 49(2)(a) to (d) (high net worth companies, unincorporated
associations, etc.) of the FPO or (iii) to whom it may otherwise be
lawfully communicated (together, for purposes of this paragraph,
“relevant persons”). The investments to which this
document relates are available only to, and any invitation, offer
or agreement to purchase will be engaged in only with, relevant
persons. Any person who is not a relevant person should not act or
rely on this document or any of its contents.
Canada
The securities may be sold in Canada only to purchasers purchasing,
or deemed to be purchasing, as principal that are accredited
investors, as defined in National Instrument 45-106 Prospectus
Exemptions or subsection 73.3(1) of the Securities Act (Ontario),
and are permitted clients, as defined in National Instrument 31-103
Registration Requirements, Exemptions and Ongoing Registrant
Obligations. Any resale of the securities must be made in
accordance with an exemption from, or in a transaction not subject
to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of
Canada may provide a purchaser with remedies for rescission or damages if this
prospectus supplement (including any amendment thereto) contains a
misrepresentation, provided that the remedies for rescission or
damages are exercised by the purchaser within the time limit
prescribed by the securities legislation of the purchaser’s
province or territory. The purchaser should refer to any applicable
provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult
with a legal advisor. Pursuant to section 3A.3 of National
Instrument 33-105 Underwriting Conflicts (NI 33-105), the
underwriters are not required to comply with the disclosure
requirements of NI33-105 regarding underwriter conflicts of
interest in connection with this offering.
S-20
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S.
HOLDERS OF OUR COMMON STOCK
The following discussion is a summary of the material U.S. federal
income tax consequences to Non-U.S. Holders (as defined below) of
the purchase, ownership and disposition of our common stock issued
pursuant to this offering, but does not purport to be a complete
analysis of all potential tax consequences. The consequences of
other U.S. federal tax laws, such as estate and gift tax laws, the
provisions of any specific income tax treaty, 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 (the “Code”), Treasury Regulations promulgated
under the Code, judicial decisions, and published rulings and
administrative pronouncements of the U.S. Internal Revenue Service
(the “IRS”), in each case in effect as of the date of
this prospectus supplement. These authorities may
change or be subject to differing interpretations. Any such change
or differing interpretation may be applied retroactively in a
manner that could adversely affect a Non-U.S. Holder of our common
stock. We have not sought and will not seek any rulings from the
IRS regarding the matters discussed below. There can be
no assurance the IRS or a court will not take a contrary
position to that discussed below regarding the tax consequences of
the purchase, ownership and disposition of our common
stock.
This discussion is limited to Non-U.S. Holders that hold our common
stock as a “capital asset” within the meaning of
Section 1221 of the Code (generally, property held for investment).
This discussion does not address all U.S. federal income tax
consequences relevant to a Non-U.S. Holder’s particular
circumstances, including the impact of the Medicare contribution
tax on net investment income. In addition, it does not address
consequences relevant to Non-U.S. Holders subject to special rules,
including, without limitation:
●
U.S.
expatriates and former citizens or long-term residents of the
United States;
●
persons
subject to the alternative minimum tax;
●
persons
holding our common stock as part of a hedge, straddle, or other
risk reduction strategy or as part of a conversion transaction or
other integrated investment;
●
banks,
insurance companies, and other financial institutions;
●
brokers,
dealers, or traders in 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 for U.S.
federal income tax purposes and other pass-through entities (and
investors in such entities);
●
tax-exempt
organizations or governmental organizations;
●
persons deemed to
sell our common stock under the constructive sale provisions of the
Code;
●
persons who hold or
receive our common stock pursuant to the exercise of any employee
stock option or otherwise as compensation;
●
persons that own,
or are deemed to own, more than 5% of our common stock (except to
the extent specifically set forth below);
●
tax-qualified
retirement plans;
●
“qualified
foreign pension funds” as defined in Section 897(l)(2) of the
Code and entities all of the interests of which are held by
qualified foreign pension funds; and
●
persons subject to
special tax accounting rules as a result of any item of gross
income with respect to the common stock being taken into account in
an applicable financial statement.
If an entity treated as a partnership for U.S. federal income tax
purposes holds our common stock, the tax treatment of a partner in
the partnership will depend on the status of the partner, the
activities of the partnership, and certain determinations made at
the partner level. Accordingly, partnerships holding our common
stock and the partners in such partnerships should consult their
tax advisors regarding the U.S. federal income tax consequences to
them.
THIS
DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX
ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP, AND DISPOSITION OF OUR COMMON STOCK ARISING
UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER
THE LAWS OF
ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY
APPLICABLE INCOME TAX TREATY.
S-21
Definition of a Non-U.S. Holder
For purposes of this discussion, a “Non-U.S. Holder” is
any beneficial owner of our common stock that is neither a
“U.S. person” nor an entity treated as a partnership
for U.S. federal income tax purposes. A U.S. person is any person
that, for U.S. federal income tax purposes, is or is treated as any
of the following:
●
an individual who
is a citizen or resident of the United States;
●
a corporation (or
an entity treated as a corporation) created or organized under the
laws of the United States, any state thereof, or the District of
Columbia;
●
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 a valid
election in effect to be treated as a United States person for U.S.
federal income tax purposes.
Distributions
As described in the section entitled “Dividend Policy,”
we may make cash dividends to holders of our common stock, subject
to our Board’s discretion based on a variety of facts and
circumstances. If we do make distributions of cash or property on
our common stock, such distributions will constitute dividends for
U.S. federal income tax purposes to the extent paid from our
current or accumulated earnings and profits, as determined under
U.S. federal income tax principles. Amounts not treated as
dividends for U.S. federal income tax purposes will constitute a
return of capital and first be applied against and reduce a
Non-U.S. Holder’s adjusted tax basis in its common stock, but
not below zero. Any excess will be treated as capital gain and will
be treated as described below under “— Sale or Other
Taxable Disposition.”
Subject to the discussion below on effectively connected dividends
and under “—Information Reporting and Backup
Withholding” and “—Additional Withholding Tax on
Payments Made to Foreign Accounts”, dividends paid to a
Non-U.S. Holder will be subject to U.S. federal withholding tax at
a rate of 30% of the gross amount of the dividends (or such lower
rate specified by an applicable income tax treaty, provided the
Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or
other applicable documentation) certifying qualification for the
lower treaty rate). If a Non-U.S. Holder holds the stock through a
financial institution or other intermediary, the Non-U.S. Holder
will be required to provide appropriate documentation to the
intermediary, which then will be required to provide appropriate
documentation to the applicable withholding agent, either directly
or through other intermediaries. A Non-U.S. Holder that does not
timely furnish the required documentation, but that qualifies for a
reduced treaty rate, may obtain a refund of any excess amounts
withheld by timely filing an appropriate claim for refund with the
IRS. Non-U.S. Holders should consult their tax advisors regarding
their entitlement to benefits under any applicable income tax
treaty.
If dividends paid to a Non-U.S. Holder are effectively connected
with the Non-U.S. Holder’s conduct of a trade or business
within the United States (and, if required by an applicable income
tax treaty, the Non-U.S. Holder maintains a permanent establishment
in the United States to which such dividends are attributable), the
Non-U.S. Holder will be exempt from the U.S. federal withholding
tax described above. To claim the exemption, the Non-U.S. Holder
must furnish to the applicable withholding agent a valid IRS Form
W-8ECI, certifying that the dividends are effectively connected
with the Non-U.S. Holder’s conduct of a trade or business
within the United States.
Any such effectively connected dividends will be subject to U.S.
federal income tax on a net income basis at the regular graduated
rates. A Non-U.S. Holder that is a corporation also may be subject
to a branch profits tax at a rate of 30% (or such lower rate
specified by an applicable income tax treaty) on such effectively
connected dividends, as adjusted for certain items. Non-U.S.
Holders should consult their tax advisors regarding any applicable
tax treaties that may provide for different rules.
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Sale or Other Taxable Disposition
Subject to the discussion below under “—Information
Reporting and Backup Withholding” and
“—Additional Withholding Tax on Payments Made to
Foreign Accounts”, a Non-U.S. Holder will not be subject to
U.S. federal income tax on any gain realized upon the sale or other
taxable disposition of our common stock unless:
●
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 common stock
constitutes a U.S. real property interest (a “USRPI”),
by reason of our status as a U.S. real property holding corporation
(a “USRPHC”), for U.S. federal income tax purposes at
any applicable time within the shorter of the five year period
preceding the Non-U.S. Holder’s disposition of, or the
Non-U.S. Holder’s holding period for, our common
stock.
Gain described in the first bullet point above generally will be
subject to U.S. federal income tax in the same manner as if the
Non-U.S. Holder were a U.S. person and be taxed on the net gain
derived from the sale or other taxable disposition under regular
graduated U.S. federal income tax rates. A Non-U.S. Holder that is
a corporation also may be subject to a branch profits tax at a rate
of 30% (or such lower rate specified by an applicable income tax
treaty) on such effectively connected gain, as adjusted for certain
items.
Gain described in the second bullet point above will be subject to
U.S. federal income tax at a rate of 30% (or such lower rate
specified by an applicable income tax treaty), which may be offset
by U.S. source capital losses of the Non-U.S. Holder (even though
the individual is not considered a resident of the United States),
provided the Non-U.S. Holder has timely filed U.S. federal income
tax returns with respect to such losses.
With respect to the third bullet point above, we believe we
currently are not, and do not anticipate becoming, a USRPHC.
Because the determination of whether we are a USRPHC depends,
however, on the fair market value of our USRPIs relative to the
fair market value of our non-U.S. real property interests and our
other business assets, there can be no assurance that we
currently are not a USRPHC or will not become one in the future.
Even if we are or were to become a USRPHC, gain arising from the
sale or other taxable disposition of our common stock by a Non-U.S.
Holder will not be subject to U.S. federal income tax if our common
stock is “regularly traded,” as defined by applicable
Treasury Regulations, on an established securities market, and such
Non-U.S. Holder owned, actually or constructively, 5% or less of
our common stock throughout the shorter of the five-year period
ending on the date of the sale or other taxable disposition of our
common stock, or the Non-U.S. Holder’s holding period for our
common stock.
Non-U.S. Holders should consult their tax advisors regarding
potentially applicable income tax treaties that may provide for
different rules.
Information Reporting and Backup Withholding
Payments of dividends on our common stock will not be subject to
backup withholding, provided the applicable withholding agent does
not have actual knowledge or reason to know the holder is a United
States person and the holder either certifies its non-U.S. status,
such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI,
or other applicable documentation, or otherwise establishes an
exemption. However, information returns are required to be filed
with the IRS in connection with any dividends on our common stock
paid to the Non-U.S. Holder, regardless of whether any tax was
actually withheld. In addition, proceeds of the sale or other
taxable disposition of our common stock within the United States or
conducted through certain U.S.-related brokers generally will not
be subject to backup withholding or information reporting, if the
applicable withholding agent receives the certification described
above and does not have actual knowledge or reason to know that
such holder is a United States person, or the holder otherwise
establishes an exemption. Proceeds of a disposition of our common
stock conducted through a non-U.S. office of a non-U.S. broker
generally will not be subject to backup withholding or information
reporting.
S-23
Copies of information returns that are filed with the IRS may also
be made available under the provisions of an applicable treaty or
agreement to the tax authorities of the country in which the
Non-U.S. Holder resides or is established.
Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules may be allowed as a refund or a
credit against a Non-U.S. Holder’s U.S. federal income tax
liability, provided the required information is timely furnished to
the IRS.
Additional Withholding Tax on Payments Made to Foreign
Accounts
Withholding taxes may be imposed under Sections 1471 to 1474 of the
Code (such sections commonly referred to as the Foreign Account Tax
Compliance Act (“FATCA”)) on certain types of payments
made to non-U.S. financial institutions and certain other non-U.S.
entities. Specifically, a 30% withholding tax may be imposed on
dividends on, or (subject to the proposed Treasury Regulations
discussed below) gross proceeds from the sale or other disposition
of, our common stock paid to a “foreign financial
institution” or a “non-financial foreign entity”
(each as defined in the Code), unless (1) the foreign financial
institution undertakes certain diligence and reporting obligations,
(2) the non-financial foreign entity either certifies it does not
have any “substantial United States owners” (as defined
in the Code) or furnishes identifying information regarding each
substantial United States owner, or (3) the foreign financial
institution or non-financial foreign entity otherwise qualifies for
an exemption from these rules. If the payee is a foreign financial
institution and is subject to the diligence and reporting
requirements in clause (1) above, it must enter into an agreement
with the U.S. Department of the Treasury requiring, among other
things, that it undertake to identify accounts held by certain
“specified United States persons” or “United
States-owned foreign entities” (each as defined in the Code),
annually report certain information about such accounts, and
withhold 30% on certain payments to non-compliant foreign financial
institutions and certain other account holders. Foreign financial
institutions located in jurisdictions that have an
intergovernmental agreement with the United States governing FATCA
may be subject to different rules.
Under the applicable Treasury Regulations and administrative
guidance, withholding under FATCA generally applies to payments of
dividends on our common stock. While withholding under FATCA would
have applied also to payments of gross proceeds from the sale or
other disposition of stock on or after January 1, 2019, recently
proposed Treasury Regulations eliminate FATCA withholding on
payments of gross proceeds entirely. Taxpayers generally may rely
on these proposed Treasury Regulations until final Treasury
Regulations are issued.
Prospective investors should consult their tax advisors regarding
the potential application of withholding under FATCA to their
investment in our common stock.
S-24
LEGAL MATTERS
The
validity of the common stock being offered under this prospectus
supplement by us will be passed upon for us by Kirton McConkie PC,
Salt Lake City, Utah. Sullivan & Worcester LLP, New York, New
York, is acting as counsel for the underwriters in connection with
this offering.
S-25
EXPERTS
The
consolidated financial statements of the Company as of December 31,2020, and December 31, 2019, and for the years ended December 31,2020, and December 31, 2019, incorporated in this prospectus
supplement by reference to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2020, have been so
incorporated in reliance on the report of MSL, P.A., an independent
registered public accounting firm, incorporated herein by
reference, given on the authority of said firm as experts in
accounting and auditing.
S-26
WHERE YOU CAN FIND MORE
INFORMATION
We have filed with the SEC a registration statement on Form S-3
(File No. 333-251307) with the
SEC for the securities we are offering by this prospectus
supplement. This prospectus supplement does not include all of the
information contained in the registration statement. You should
refer to the registration statement and its exhibits for additional
information. Whenever a reference is made in this prospectus
supplement or the accompanying prospectus to a contract or other
document, the reference is only a summary and you should refer to
the exhibits that are a part of the registration statement for a
copy of the contract or other document. You may review a copy of
the registration statement through the SEC’s
website.
We are subject to the information reporting requirements of the
Exchange Act and, in accordance with these requirements, we file
annual, quarterly and current reports, proxy statements,
information statements, and other information with the SEC. Our SEC
filings are available to the public over the Internet at the
SEC’s website at www.sec.gov. In addition, we provide free
access to these materials through our website,
www.bktechnologies.com, as soon
as reasonably practicable after they are filed with or furnished to
the SEC. Information contained on, or that may be accessible
through, our website is not a part of, and is not incorporated
into, this prospectus supplement.
S-27
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference information in this
document. This means that we can disclose important information to
you by referring you to documents that we have previously filed
with the SEC or documents that we will file with the SEC in the
future. The information incorporated by reference is considered to
be an important part of this prospectus supplement and the
accompanying prospectus, except for any information that is
superseded by information that is included directly in this
document. We filed a registration statement on Form S-3 under the
Securities Act of 1933, as amended, with the SEC with respect to
the securities being offered pursuant to this prospectus supplement
and the accompanying prospectus. This prospectus supplement and the
accompanying prospectus omit certain information contained in the
registration statement, as permitted by the SEC. You should refer
to the registration statement, including the exhibits, for further
information about us and the securities being offered pursuant to
this prospectus supplement and the accompanying prospectus.
Statements in this prospectus supplement and the accompanying
prospectus regarding the provisions of certain documents filed
with, or incorporated by reference in, the registration statement
are not necessarily complete and each statement is qualified in all
respects by that reference. Copies of all or any part of the
registration statement, including the documents incorporated by
reference or the exhibits, may be obtained upon payment of the
prescribed rates at the offices of the SEC listed above in
“Where You Can Find More Information.”
We are incorporating by reference in this prospectus supplement the
following documents which we have previously filed with the SEC
(other than, in each case, any portions thereof furnished
rather than filed under Section 18 of the Exchange Act,
information in the Current Reports on
Form 8-K that were furnished pursuant to Item 2.02 or 7.01 of Form
8-K, or other applicable SEC rules):
In addition, we incorporate by reference into this prospectus
supplement and the accompanying prospectus any filings we make with
the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act from the date of this prospectus supplement until the
termination of the offering under this prospectus supplement.
Notwithstanding the foregoing, no information is incorporated by
reference into this prospectus supplement or the accompanying
prospectus where such information under applicable forms and
regulations of the SEC is not deemed to be “filed”
under Section 18 of the Exchange Act or otherwise subject to the
liabilities of that section (such as under Item 2.02 or 7.01 of
Form 8-K), unless we indicate in the report or filing containing
such information that the information is to be considered
“filed” under the Exchange Act or is to be incorporated
by reference into this prospectus supplement or the accompanying
prospectus.
Certain statements in and portions of this prospectus supplement
and the accompanying prospectus update and replace information in
the above-listed documents incorporated by reference. Likewise,
statements in or portions of a future document incorporated by
reference in this prospectus supplement and the accompanying
prospectus may update and replace statements in and portions of
this prospectus supplement and the accompanying prospectus or the
above-listed documents.
You may request, without charge, a copy of any incorporated
document (excluding exhibits, unless we have specifically
incorporated an exhibit in an incorporated document) by writing or
telephoning us at our principal executive offices at the following
address:
We may
from time to time offer up to $50,000,000 of the securities listed
above in one or more offerings in amounts, at prices and on terms
determined at the time of such offering or offerings. When we use
the term “securities” in this prospectus, we mean any
of the securities we may offer with this prospectus, unless we say
otherwise.
This
prospectus provides you with a general description of the
securities and the general manner in which such securities may be
offered. The specific terms of any securities to be offered, and
the specific manner in which they may be offered, will be described
in a supplement to this prospectus or incorporated into this
prospectus by reference. You should read this prospectus and any
supplement carefully before you invest. Each prospectus supplement
will indicate if the securities offered thereby will be listed or
quoted on a securities exchange or quotation system.
We may
offer and sell the securities described in this prospectus and any
prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a
combination of these methods. If any underwriters, dealers or
agents are involved in the sale of any of the securities, their
names and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth, or
will be calculable from the information set forth, in the
applicable prospectus supplement. See the sections of this
prospectus entitled “About this Prospectus” and
“Plan of Distribution” for more information. No
securities may be sold without delivery of this prospectus and the
applicable prospectus supplement describing the method and terms of
the offering of such securities.
INVESTING IN OUR SECURITIES INVOLVES RISKS. WE STRONGLY RECOMMEND
THAT YOU READ CAREFULLY THE RISKS WE DESCRIBE IN THIS PROSPECTUS
AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT, AS WELL AS THE RISK
FACTORS THAT ARE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS
FROM OUR FILINGS MADE WITH THE SECURITIES AND EXCHANGE COMMISSION.
SEE “RISK FACTORS” ON PAGE 4 OF THIS
PROSPECTUS.
Our
common stock is listed on the NYSE American under the symbol
“BKTI”. On December 7, 2020, the last reported sale
price of our common stock on the NYSE American was $3.05 per
share.
As of
December 7, 2020, the aggregate market value of our outstanding
common stock held by non-affiliates was $15,323,853, based on
12,511,966 shares of outstanding common stock, of which 7,487,752
shares were held by affiliates, and a per share price of $3.05,
based on the closing sale price of our common stock on December 7,2020. Pursuant to General Instruction I.B.6 of Form S-3, in no
event will we sell securities pursuant to this registration
statement in a public primary offering with a value of more than
one-third of the aggregate market value of our common stock held by
non-affiliates in any 12-month period, so long as the aggregate
market value of our common stock held by non-affiliates is less
than $75,000,000. In the event that subsequent to the effective
date of this registration statement, the aggregate market value of
our outstanding common stock held by non-affiliates equals or
exceeds $75,000,000, then the one-third limitation on sales shall
not apply to additional sales made pursuant to this registration
statement. We have not sold any securities pursuant to General
Instruction I.B.6 of Form S-3 during the 12 calendar months prior
to, and including, the date of this registration
statement.
You
should carefully read this prospectus, any applicable prospectus
supplement and the information described under the headings
“Where You Can Find More Information” and
“Incorporation by Reference” before you invest in any
of these securities. This prospectus may not be used to sell
securities in a primary offering by us unless it is accompanied by
a prospectus supplement that describes the securities being
offered.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved the securities we
may be offering or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal
offense.
This
prospectus is part of a registration statement that we filed with
the U.S. Securities and Exchange Commission, or the SEC, using a
“shelf” registration process. By using a shelf
registration statement, we may sell securities from time to time
and in one or more offerings up to a total dollar amount of
$50,000,000 as described in this prospectus. Each time that we
offer and sell securities, we will provide a prospectus supplement
to this prospectus that contains specific information about the
securities being offered and sold and the specific terms of that
offering. We may also authorize one or more free writing
prospectuses to be provided to you that may contain material
information relating to these offerings. The prospectus supplement
or free writing prospectus may also add, update or change
information contained in this prospectus with respect to that
offering. If there is any inconsistency between the information in
this prospectus and the applicable prospectus supplement or free
writing prospectus, you should rely on the prospectus supplement or
free writing prospectus, as applicable. Before purchasing any
securities, you should carefully read both this prospectus and the
applicable prospectus supplement (and any applicable free writing
prospectuses), together with the additional information described
under the headings “Where You Can Find More
Information” and “Incorporation by
Reference.”
We have
not authorized any other person to provide you with any information
or to make any representations other than those contained in this
prospectus, any applicable prospectus supplement or any free
writing prospectuses prepared by or on behalf of us or to which we
have referred you. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information that
others may give you. We will not make an offer to sell these
securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this
prospectus and the applicable prospectus supplement to this
prospectus is accurate only as of the date on its respective cover,
that the information appearing in any applicable free writing
prospectus is accurate only as of the date of that free writing
prospectus, and that any information incorporated by reference is
accurate only as of the date of the document incorporated by
reference, unless we indicate otherwise. Our business, financial
condition, results of operations and prospects may have changed
since those dates. This prospectus incorporates by reference, and
any prospectus supplement or free writing prospectus may contain
and incorporate by reference, market data and industry statistics
and forecasts that are based on independent industry publications
and other publicly available information. Although we believe these
sources are reliable, we do not guarantee the accuracy or
completeness of this information and we have not independently
verified this information. In addition, the market and industry
data and forecasts that may be included or incorporated by
reference in this prospectus, any prospectus supplement or any
applicable free writing prospectus may involve estimates,
assumptions and other risks and uncertainties and are subject to
change based on various factors, including those discussed under
the heading “Risk Factors” contained in this
prospectus, the applicable prospectus supplement and any applicable
free writing prospectus, and under similar headings in other
documents that are incorporated by reference into this prospectus.
Accordingly, investors should not place undue reliance on this
information.
Unless
we state otherwise or the context otherwise requires, references in
this prospectus to “we,”“our,”“us,” or “the Company” are to BK
Technologies Corporation, a Nevada corporation, together with our
consolidated subsidiaries.
This
prospectus and the documents incorporated by reference into it
contain forward-looking statements regarding the Company and
represent our expectations and beliefs concerning future events
that are, or may be considered to be, “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended, or
the Exchange Act. These forward-looking statements are intended to
be covered by the safe harbor for forward-looking statements
provided by the Private Securities Litigation Reform Act of 1995.
The forward-looking statements included herein or incorporated
herein by reference include or may include, but are not limited to,
statements that are predictive in nature, depend upon or refer to
future events or conditions, or use or contain words, terms,
phrases, or expressions such as “achieve,”“forecast,”“plan,”“propose,”“strategy,”“envision,”“hope,”“will,”“continue,”“potential,”“expect,”“believe,”“anticipate,”“project,”“estimate,”“predict,”“intend,”“should,”“could,”“would,”“may,”“might,”“seek,”“are
encouraged,” or other similar words, terms, phrases, or
expressions or the negative of any of these terms. Any statements
in this prospectus or incorporated herein by reference that are not
based upon historical fact are forward-looking statements and
represent our best judgment as to what may occur in the future.
Forward-looking statements involve a number of known and unknown
risks and uncertainties, including but not limited to those
discussed in the “Risk Factors” section contained in
Item 1A in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 and Item 1A in our Quarterly Report on Form 10-Q
for the quarters ended March 31, 2020, June 30, 2020 and September30, 2020 and the following risks and uncertainties: changes or advances in technology; the success of
our land mobile radio (“LMR”) product line; successful
introduction of new products and technologies, including our
ability to successfully develop and sell our anticipated new
multiband product and other related products in the planned new BKR
Series product line; competition in the land mobile radio industry;
general economic and business conditions, including federal, state
and local government budget deficits and spending limitations, any
impact from a prolonged shutdown of the U.S. Government, and the
ongoing effects of the COVID-19 pandemic; the availability, terms
and deployment of capital; reliance on contract manufacturers and
suppliers; risks associated with fixed-price contracts; heavy
reliance on sales to agencies of the U.S. Government and our
ability to comply with the requirements of contracts, laws and
regulations related to such sales; allocations by government
agencies among multiple approved suppliers under existing
agreements; our ability to comply with U.S. tax laws and utilize
deferred tax assets; our ability to attract and retain executive
officers, skilled workers and key personnel; our ability to manage
our growth; our ability to identify potential candidates for, and
consummate, acquisition, disposition or investment transactions,
and risks incumbent to being a noncontrolling interest stockholder
in a corporation; the impact of the COVID-19 pandemic on the
companies in which we hold investments; impact of our capital
allocation strategy; risks related to maintaining our brand and
reputation; impact of government regulation; rising health care
costs; our business with manufacturers located in other countries,
including changes in the U.S. Government and foreign
governments’ trade and tariff policies, as well as any
further impact resulting from the COVID-19 pandemic; our inventory
and debt levels; protection of our intellectual property rights;
fluctuation in our operating results and stock price; acts of war
or terrorism, natural disasters and other catastrophic events, such
as the COVID-19 pandemic; any infringement claims; data security
breaches, cyber-attacks and other factors impacting our technology
systems; availability of adequate insurance coverage; maintenance
of our NYSE American listing; risks related to being a holding
company; and the effect on our stock price and ability to raise
equity capital of future sales of shares of our Common Stock (as
defined below). Some of these factors and risks have been, and may
further be, exacerbated by the COVID-19 pandemic. We assume no
obligation to publicly update or revise any forward-looking
statements made in this prospectus, whether as a result of new
information, future events, changes in assumptions or otherwise,
after the date of this prospectus. Readers are cautioned not to
place undue reliance on these forward-looking
statements.
Although
we believe the expectations reflected in our forward-looking
statements are reasonable, in reading this prospectus and the
documents incorporated into this prospectus by reference, you
should consider the factors discussed under the heading “Risk
Factors” contained in this prospectus in evaluating any
forward-looking statements and you are cautioned not to place undue
reliance on any forward-looking statements. Each forward-looking
statement is made and applies only as of the date of the particular
statement, and we are not obligated to update, withdraw, or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. You should consider these
risks when reading any forward-looking statements. All
forward-looking statements attributed or attributable to us or to
persons acting on our behalf are expressly qualified in their
entirety by this section entitled “Cautionary Statement
Regarding Forward-Looking Statements.”
2
BK
TECHNOLOGIES CORPORATION
We are
a holding company that, through BK Technologies, Inc., our
operating subsidiary, provides two-way radio communications
equipment of high quality and reliability. In business for over 70
years, we design, manufacture and market wireless communications
products consisting of two-way LMRs, repeaters, base stations and
related components and subsystems. Two-way LMRs can be units that
are hand-held (portable) or installed in vehicles (mobile).
Repeaters expand the range of two-way LMRs, enabling them to
operate over a wider area. Base station components and subsystems
are installed at radio transmitter sites to improve performance by
enhancing the signal and reducing or eliminating signal
interference and enabling the use of one antenna for both
transmission and reception. We employ both analog and digital
technologies in our products.
Our
digital technology is compliant with the Project 25 standard
(“P-25”) for digital LMR equipment. The P-25 has been
adopted by representatives from the Association of Public-Safety
Communications Officials-International, the National Association of
State Technology Directors, the United States Federal Government
and other public safety user organizations. Our P-25 digital
products and our analog products function in the very high
frequency (136MHz – 174MHz), ultra-high frequency (380MHz
– 470MHz, 450MHz – 520MHz), and 700-800 MHz bands. Our
P-25 KNG and KNG2 Series mobile and portable digital radios have
been validated under the P-25 Compliance Assessment Program
(“CAP”) as being P-25 compliant and interoperable with
the communications network infrastructure of six of our
competitors. Since we do not provide our own communications network
infrastructure, we believe CAP validation provides confidence for
federal, state and local emergency response agencies that our
products are a viable and attractive alternative for use on the
infrastructure of our competitors.
We
offer products under the brand names BK Radio and RELM. Generally,
BK Technologies and BK Radio-branded products serve the government
and public safety market, while RELM-branded products serve the
business and industrial market. We believe that we provide superior
value to a wide array of customers with demanding requirements,
including, for example, emergency response, public safety, homeland
security and military customers of federal and state government
agencies, as well as various commercial enterprises. Our two-way
radio products excel in applications with harsh and hazardous
conditions. They provide high-specification performance, durability
and reliability at a lower cost relative to comparable
offerings.
We were
incorporated under the laws of the State of Nevada on October 24,1997. We are the resulting corporation from the reincorporation
merger of our predecessor, Adage, Inc., a Pennsylvania corporation,
which reincorporated from Pennsylvania to Nevada effective as of
January 30, 1998. Effective on June 4, 2018, we changed our
corporate name from “RELM Wireless Corporation” to
“BK Technologies, Inc.” On March 28, 2019, we
implemented a holding company reorganization. The reorganization
created a new holding company, BK Technologies Corporation, which
became the new parent company of BK Technologies, Inc. BK
Technologies Corporation’s only significant assets are the
outstanding equity interests in BK Technologies, Inc. and any other
future subsidiaries of BK Technologies Corporation. The holding
company reorganization was intended to create a more efficient
corporate structure and increase operational
flexibility.
Our
principal executive offices are located at 7100 Technology Drive,
West Melbourne, Florida32904 and our telephone number is (321)
984-1414. Our website is www.bktechnologies.com. Information
contained on, or that may be accessible through, our website is not
a part of, and is not incorporated into, this prospectus.
RISK FACTORS
An
investment in our securities involves various risks. Before making
an investment in our securities, you should carefully consider the
risks discussed under the heading “Risk Factors” in our
most recent Annual Report on Form 10-K, our most recent Quarterly
Report on Form 10-Q and any subsequently filed Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K (other than, in each
case, information furnished rather than filed), which are
incorporated herein by reference, as well as the information
contained in this prospectus and in any prospectus supplements
relating to particular offers of securities. Any of those risk
factors could significantly and adversely affect our business,
prospects, financial condition and results of operations, and the
trading price of our securities. Although we describe, and will
describe, what we believe to be the principal risks related to our
Company and the securities we offer, we can also be affected by
risks we do not anticipate or do not think will have a material
effect upon us.
USE OF PROCEEDS
We
will retain broad discretion over the use of the net proceeds from
the sale of our securities offered by this prospectus. Unless
otherwise indicated in a prospectus supplement relating to a
specific offering, we intend to use the net proceeds from the sale
of securities by us under this prospectus for general corporate
purposes, which may include working capital, capital expenditures,
operational purposes and potential acquisitions. We have not
allocated any portion of the net proceeds for any particular use at
this time. The net proceeds may be invested temporarily until they
are used for their stated purpose.
The
intended application of proceeds from the sale of any particular
offering of securities using this prospectus will be described in
the accompanying prospectus supplement or free writing prospectus
relating to such offering. The precise amount and timing of the
application of these proceeds will depend on our funding
requirements and the availability and costs of other
funds.
3
DESCRIPTION OF CAPITAL STOCK
The following summarizes the terms and provisions of our authorized
capital stock. The following summary does not purport to be
complete and is qualified in its entirety by reference to the
Company’s articles of incorporation (“Articles of
Incorporation”) and bylaws (“Bylaws”), which the
Company has previously filed with the SEC, and applicable Nevada
law.
Authorized Capital Stock
The Company’s authorized capital stock consists of 20,000,000
common shares, par value $0.60 per share (the “Common
Stock”), and 1,000,000 shares of preferred stock, par value
$1.00 per share (the “Preferred Stock”).
Under Nevada law, stockholders generally are not personally liable
for a corporation’s debts or liabilities.
Common Stock
Exchange and Trading Symbol
The Common Stock is listed for trading on the NYSE American under
the trading symbol “BKTI.”
Rights, Preferences and Privileges
All outstanding shares of Common Stock are duly authorized, fully
paid and nonassessable. Holders of Common Stock have no
preemptive, conversion, redemption, subscription or similar rights,
and there are no sinking fund provisions applicable to the Common
Stock. The rights, preferences and privileges of the holders of
Common Stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of Preferred Stock
that the Company may designate and issue in the
future.
Voting Rights
Holders of Common Stock are entitled to one vote for each share
held of record on all matters properly submitted to a vote of the
Company’s stockholders, including the election of directors,
and do not have any cumulative voting rights. Directors are elected
by a plurality of the votes cast by the holders of Common Stock.
Except as otherwise required by law, all other matters brought to a
vote of the holders of Common Stock are determined by a majority of
the votes cast and, except as may be provided with respect to any
other outstanding class or series of the Company’s stock, the
holders of shares of Common Stock possess the exclusive voting
power.
Dividends
Subject to preferences that may be applicable to any then
outstanding Preferred Stock, holders of Common Stock are entitled
to receive dividends, if any, as may be declared from time to time
by the Company’s Board of Directors out of legally available
funds.
Liquidation
In the event of the Company’s liquidation, dissolution or
winding up, holders of Common Stock are entitled to share ratably
in the net assets legally available for distribution to the
Company’s stockholders, if any, remaining after the payment
or provision for the payment of all debts and other liabilities of
the Company, subject to the satisfaction of any liquidation
preference granted to the holders of any then outstanding shares of
Preferred Stock.
Preferred Stock
The Company’s Articles of Incorporation authorize the
Company’s Board of Directors, subject to certain limitations
prescribed by law and without further stockholder approval, to
issue from time to time up to an aggregate of 1,000,000 shares of
Preferred Stock, par value $1.00 per share. The Preferred Stock may
be issued in one or more series. Each series of Preferred Stock may
have different designations, rights and preferences and
qualifications, limitations and restrictions that may be
established by the Board of Directors without approval from the
Company’s stockholders, including, without limitation, the number of
shares to be issued in a series, dividend rights and rates,
conversion rights, voting rights, liquidation preferences and
redemption terms.
4
Anti-Takeover Provisions
Nevada Law
Nevada Business Combination Statute. The “business combination”
provisions of Sections 78.411 to 78.444, inclusive, of the Nevada
Revised Statutes generally prohibit a Nevada corporation with at
least 200 stockholders of record from engaging in various
“business combination” transactions with any interested
stockholder for a period of two years after the date that the
person first become an interested stockholder, unless the business
combination or the transaction by which the person first became an
interested stockholder is approved by the corporation’s board
of directors before the person first became an interested
stockholder, or the business combination is approved by the board
of directors and thereafter is approved at a meeting of the
corporation’s stockholders by the affirmative vote of at
least 60% of the outstanding voting power of the corporation held
by disinterested stockholders.
Following the expiration of the two-year period, the corporation is
prohibited from engaging in a “business combination”
transaction with the interested stockholder, unless:
●
the
business combination or the transaction by which the person first
became an interested stockholder is approved by the
corporation’s board of directors before the person first
became an interested stockholder;
●
the
business combination is approved by a majority of the outstanding
voting power of the corporation held by disinterested stockholders;
or
●
the
aggregate amount of the consideration to be received in the
business combination by all of the holders of outstanding common
shares of the corporation not beneficially owned by the interested
stockholder is at least equal to the higher of: (a) the highest
price per share paid by the interested stockholder for any common
shares acquired by the interested stockholder within two years
immediately before the date of the announcement of the business
combination or within two years immediately before, or in, the
transaction in which the person became an interested stockholder,
whichever is higher, and (b) the market value per common share on
the date of the announcement of the business combination or on the
date that the person first became an interested stockholder,
whichever is higher.
In general, an “interested stockholder” is any person
who is (i) the direct or indirect beneficial owner of 10% or more
of the voting power of the outstanding voting shares of the
corporation, or (ii) an affiliate or associate of the corporation
and at any time within two years immediately before the date in
question was the direct or indirect beneficial owner of 10% or more
of the voting power of the then outstanding shares of the
corporation.
A “combination” is generally defined to include mergers
or consolidations; any sale, lease exchange, mortgage, pledge,
transfer, or other disposition, in one transaction or a series of
transactions: (a) having an aggregate market value equal to more
than five percent of the aggregate market value of the consolidated
assets of the corporation, (b) having an aggregate market value
equal to more than five percent of the aggregate market value of
all outstanding shares of the corporation, (c) representing more
than ten percent of the consolidated earning power or net income of
the corporation; and certain other transactions, with an interested
stockholder or an affiliate or associate of an interested
stockholder.
The business combination statute could prohibit or delay mergers or
other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire the Company even though such a
transaction may offer the Company’s stockholders the
opportunity to sell their stock at a price above the prevailing
market price.
Nevada Control Share Acquisition Statute. Sections 78.378 to 78.3793, inclusive, of the
Nevada Revised Statutes limit the voting rights of certain acquired
shares in a corporation. This “control share” statute
applies to any acquisition of outstanding voting securities of a
Nevada corporation that has 200 or more stockholders of record (at
least 100 of which are Nevada residents) and conducts business in
Nevada resulting in ownership of the corporation’s then
outstanding voting securities in excess of one of the following
thresholds: (i) one-fifth or more but less than one-third,
(ii) one-third or more but less than a
majority, and (iii) a majority or more. Once an acquirer crosses
one of these thresholds by acquiring a controlling interest in the
corporation, the shares which the acquirer acquired in the
transaction taking it over the threshold and within the 90 days
immediately preceding the date when the acquiring person acquired
or offered to acquire a controlling interest in the corporation
become “control shares.” The acquirer is denied voting
rights with respect to the control shares, unless stockholders
representing a majority of the voting power of the corporation
approve the granting of full voting rights to the control
shares.
5
As permitted under Nevada law, the Company has elected to
“opt out” of the control share statute pursuant to a
provision in its Bylaws.
authorize
the Board of Directors, without further action by stockholders, to
issue shares of Preferred Stock in one or more series, and with
respect to each series, to fix the number of shares constituting
that series and establish the rights and terms of that
series;
●
require
at least one-fifth of the outstanding shares of the Company’s
stock to call special meetings;
●
establish
advance notice procedures for stockholders to submit nominations of
candidates for election to the Board of Directors to be brought
before a stockholder meeting;
●
allow
the Company’s directors to establish the size of the Board of
Directors and fill vacancies on the Board created by an increase in
the number of directors; and
●
provide
that the Bylaws may be amended by the Board of Directors without
stockholder approval.
Provisions of the Articles of Incorporation and Bylaws may delay or
discourage transactions involving an actual or potential change in
control of the Company or change in the Company’s Board of
Directors or management, including transactions in which
stockholders might otherwise receive a premium for their shares or
transactions that stockholders might otherwise deem to be in their
best interests.
Authorized and Unissued Shares
The Company’s authorized and unissued shares of Common Stock
will be available for future issuance without stockholder approval.
The Company may use additional shares for a variety of purposes,
including future offerings to raise capital, to fund acquisitions
and as employee, director and consultant compensation. The
existence of authorized but unissued Common Stock could render more
difficult, or discourage, an attempt to obtain control of the
Company by means of a proxy contest, tender offer, merger or
otherwise.
The Company’s Articles of Incorporation authorize the
issuance of 1,000,000 shares of “blank check” Preferred
Stock with such designations, rights and preferences as may be
determined from time to time by the Company’s Board of
Directors. Accordingly, the Board of Directors is empowered,
without stockholder approval, to issue shares of Preferred Stock
with dividend, liquidation, conversion, voting or other rights that
could adversely affect the value, voting power or other rights of
holders of Common Stock. In addition, the Board of Directors may,
under certain circumstances, issue Preferred Stock in order to
delay, defer, prevent or make more difficult a change of control
transaction such as a merger, tender offer, business combination or
proxy contest, assumption of control by a holder of a large block
of the Company’s securities or the removal of incumbent
management of the Company, even if those events were favorable to
the interests of the Company’s stockholders. The Company
currently has no outstanding shares of Preferred
Stock.
Transfer Agent and Registrar
The
transfer agent for the shares of the Company’s Common Stock
is American Stock Transfer & Trust Company,
LLC.
6
DESCRIPTION OF DEPOSITARY SHARES
We may
issue depositary receipts representing interests, which are called
depositary shares, in shares of our Common Stock or of particular
series of Preferred Stock. If we did that, we would deposit the
Common Stock or Preferred Stock which is the subject of depositary
shares with a depositary, which would hold that Common Stock or
Preferred Stock for the benefit of the holders of the depositary
shares, in accordance with a deposit agreement between the
depositary and us. The holders of depositary shares would be
entitled to all the rights and preferences of the Common Stock or
Preferred Stock to which the depositary shares relate, including
dividend, voting, conversion, redemption and liquidation rights, to
the extent of their interests in that Common Stock or Preferred
Stock.
While
the deposit agreement relating to Common Stock or a particular
series of Preferred Stock may have provisions applicable solely to
Common Stock or that series of Preferred Stock, all deposit
agreements relating to Common Stock or Preferred Stock we issue
would include the following provisions:
Dividends and Other Distributions. Each time we pay a cash
dividend or make any other type of cash distribution with regard to
the Common Stock or to the Preferred Stock of a series, the
depositary will receive, and will distribute to the holder of
record of each depositary share relating to that Common Stock or to
that series of Preferred Stock, an amount equal to the dividend or
other distribution per depositary share. If there is a distribution
of property other than cash, the depositary either will distribute
the property to the holders of depositary shares in proportion to
the depositary shares held by each of them, or the depositary will,
if we approve, sell the property and distribute the net proceeds to
the holders of the depositary shares in proportion to the
depositary shares held by them.
Withdrawal of Common Stock or Preferred Stock. A holder of
depositary shares will be entitled to receive, upon surrender of
depositary receipts representing depositary shares, the number of
shares of the applicable Common Stock or series of Preferred Stock,
and any money or other property, to which the depositary shares
relate.
Redemption of Depositary Shares. Whenever we redeem shares
of a series of Preferred Stock held by a depositary, the depositary
will be required to redeem, on the same redemption date, depositary
shares relating, in total, to the number of shares of that series
held by the depositary which we redeem, subject to the
depositary’s receiving the redemption price of those shares.
If fewer than all the depositary shares relating to a series are to
be redeemed, the depositary shares to be redeemed will be selected
by lot or by another method we determine to be
equitable.
Voting. Any time we send a notice of meeting or other
materials relating to a meeting to the holders of Common Stock or a
series of Preferred Stock to which depositary shares relate, we
will provide the depositary with sufficient copies of those
materials so they can be sent to all holders of record of the
applicable depositary shares, and the depositary will send those
materials to the holders of record of the depositary shares on the
record date for the meeting. The depositary will solicit voting
instructions from holders of depositary shares and will vote or not
vote the Common Stock or Preferred Stock to which the depositary
shares relate in accordance with those instructions.
Liquidating Distributions. Upon our liquidation, dissolution
or winding up, the holder of each depositary share will be entitled
to what the holder of the depositary share would have received if
the holder had owned the number of shares of Common Stock or of the
series of Preferred Stock which is represented by the depositary
share.
Conversion. If shares of a series of Preferred Stock are
convertible into Common Stock or other of our securities or
property, holders of depositary shares relating to that series of
Preferred Stock will, if they surrender depositary receipts
representing depositary shares with appropriate instructions to
convert them, receive the shares of Common Stock or other
securities or property into which the number of shares of the
series of Preferred Stock to which the depositary shares relate
could at the time be converted.
7
Amendment and Termination of a Deposit Agreement. We and the
depositary may amend a deposit agreement, except that an amendment
which materially and adversely affects the rights of holders of
depositary shares, or would be materially and adversely
inconsistent with the rights granted to the holders of Common Stock
or the series of Preferred Stock to which they relate, will have to
be approved by holders of a designated percentage of the depositary
shares then outstanding. No amendment will impair the right of a
holder of depositary shares to surrender the depositary receipts
evidencing those depositary shares and receive the Common Stock or
Preferred Stock to which they relate, except as required to comply
with law. We may terminate a deposit agreement with the consent of
holders of a majority of the depositary shares to which it relates.
Upon termination of a deposit agreement, the depositary will make
the shares of Common Stock or Preferred Stock to which the
depositary shares issued under the deposit agreement relate
available to the holders of those depositary shares. A deposit
agreement will automatically terminate if:
●
all
outstanding depositary shares to which it relates have been
withdrawn, redeemed or converted, or
●
the
depositary has made a final distribution to the holders of the
depositary shares issued under the deposit agreement upon our
liquidation, dissolution or winding up.
Miscellaneous. There will be provisions (i) requiring the
depositary to forward to holders of record of depositary shares any
reports or communications from us which the depositary receives
with respect to the Common Stock or Preferred Stock to which the
depositary shares relate, (ii) regarding compensation of the
depositary, (iii) regarding resignation of the depositary, (iv)
limiting our liability and the liability of the depositary under
the deposit agreement (usually to failure to act in good faith,
gross negligence or willful misconduct) and (v) indemnifying the
depositary against certain possible liabilities.
8
DESCRIPTION OF DEBT SECURITIES
General
We will
issue the debt securities offered by this prospectus and any
accompanying prospectus supplement under an indenture to be entered
into between us and the trustee identified in the applicable
prospectus supplement. The terms of the debt securities will
include those stated in the indenture and those made part of the
indenture by reference to the Trust Indenture Act of 1939, as in
effect on the date of the indenture. We have filed a copy of the
form of indenture as an exhibit to the registration statement in
which this prospectus is included. The indenture will be subject to
and governed by the terms of the Trust Indenture Act of
1939.
We may
offer under this prospectus up to an aggregate principal amount of
$50,000,000 in debt securities, or if debt securities are issued at
a discount, or in a foreign currency, foreign currency units or
composite currency, the principal amount as may be sold for an
aggregate public offering price of up to $50,000,000. Unless
otherwise specified in the applicable prospectus supplement, the
debt securities will represent our direct, unsecured obligations
and will rank equally with all of our other unsecured
indebtedness.
The
debt securities, if and when issued, will be direct, unsecured
obligations of our Company and may be either senior debt securities
or subordinated debt securities. We may issue debt securities in
one or more issuances or series. An indenture, or a supplemental
indenture, will set forth specific terms of each issue or series of
debt securities. There will be prospectus supplements relating to
particular issues or series of debt securities. Each prospectus
supplement will describe:
●
the
title of the debt securities and whether the debt securities are
senior or subordinated debt securities;
●
the
total principal amount of the debt securities we are offering by
that prospectus supplement;
●
the
date or dates on which principal of the debt securities will be
payable and the amount of principal which will be
payable;
●
the
rate or rates (which may be fixed or variable) at which the debt
securities will bear interest, if any, or contingent interest, if
any, as well as the dates from which interest will accrue, the
dates on which interest will be payable, the persons to whom
interest will be payable, if other than the registered holders on
the record date, and the record date for the interest payable on
any payment date;
●
the
currency in which principal and interest, and any premium, will be
payable;
●
the
place or places where principal, premium, if any, and interest, if
any, on the debt securities will be payable and where debt
securities which are in registered form can be presented for
registration of transfer or exchange;
●
any
provisions regarding our right to prepay debt securities or the
right of holders to require us to prepay debt
securities;
●
the
right, if any, of holders of the debt securities to convert them
into Common Stock or other securities, including any contingent
conversion provisions;
●
any
provisions requiring or permitting us to make payments to a sinking
fund which will be used to redeem debt securities or a purchase
fund which will be used to purchase debt securities;
●
the
percentage of the principal amount of the debt securities which is
payable if maturity of the debt securities is accelerated because
of a default;
●
any
special or modified events of default or covenants with respect to
the debt securities; and
●
any
other material terms of the debt securities.
9
We may
issue discount debt securities that provide for an amount less than
the stated principal amount to be due and payable upon acceleration
of the maturity of such debt securities in accordance with the
terms of the indenture. We may also issue debt securities in bearer
form, with or without coupons. If we issue discount debt securities
or debt securities in bearer form, we will describe material U.S.
federal income tax considerations and other material special
considerations which apply to these debt securities in the
applicable prospectus supplement.
We may
issue debt securities denominated in or payable in a foreign
currency or currencies or a foreign currency unit or units. If we
do, we will describe the restrictions, elections, and general tax
considerations relating to the debt securities and the foreign
currency or currencies or foreign currency unit or units in the
applicable prospectus supplement.
Registrar and Paying Agent
The
debt securities may be presented for registration of transfer or
for exchange at the corporate trust office of the security
registrar or at any other office or agency that we maintain for
those purposes. In addition, the debt securities may be presented
for payment of principal, interest and any premium at the office of
the paying agent or at any office or agency that we maintain for
those purposes.
Conversion or Exchange Rights
Debt
securities may be convertible into or exchangeable for shares of
our Common Stock or other securities. The terms and conditions of
conversion or exchange will be stated in the applicable prospectus
supplement. The terms will include, among others, the
following:
●
the
conversion or exchange price;
●
the
conversion or exchange period;
●
provisions
regarding the convertibility or exchangeability of the debt
securities, including who may convert or exchange;
●
events
requiring adjustment to the conversion or exchange
price;
●
provisions
affecting conversion or exchange in the event of our redemption of
the debt securities; and
●
any
anti-dilution provisions, if applicable.
Registered Global Securities
If we
decide to issue debt securities in the form of one or more global
securities, then we will register the global securities in the name
of the depositary for the global securities or the nominee of the
depositary, and the global securities will be delivered by the
trustee to the depositary for credit to the accounts of the holders
of beneficial interests in the debt securities.
The
prospectus supplement will describe the specific terms of the
depositary arrangement for debt securities of a series that are
issued in global form. None of us, the trustee, any payment agent
or the security registrar will have any responsibility or liability
for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a global debt security
or for maintaining, supervising or reviewing any records relating
to these beneficial ownership interests.
No Protection in the Event of a Change of Control
The
indenture does not have any covenants or other provisions providing
for a put or increased interest or otherwise that would afford
holders of our debt securities additional protection in the event
of a recapitalization transaction, a change of control or a highly
leveraged transaction. If we offer any covenants or provisions of
this type with respect to any debt securities covered by this
prospectus, we will describe them in the applicable prospectus
supplement.
10
Covenants
Unless
otherwise indicated in this prospectus or the applicable prospectus
supplement, our debt securities will not have the benefit of any
covenants that limit or restrict our business or operations, the
pledging of our assets or the incurrence by us of indebtedness. We
will describe in the applicable prospectus supplement any material
covenants in respect of a series of debt securities.
Merger, Consolidation or Sale of Asset
The
form of indenture provides that we will not consolidate with or
merge into any other person or convey, transfer, sell, lease or
otherwise dispose of our properties and assets substantially as an
entirety to any person, unless:
●
we are
the surviving person of such merger or consolidation, or if we are
not the surviving person, the person formed by the consolidation or
into or with which we are merged or the person to which our
properties and assets are conveyed, transferred, sold or leased, is
a corporation organized and existing under the laws of the U.S.,
any state or the District of Columbia or a corporation or
comparable legal entity organized under the laws of a foreign
jurisdiction and has expressly assumed all of our obligations,
including the payment of the principal of, and premium and
interest, if any, on, the debt securities and the performance of
the other covenants under the indenture; and
●
immediately
before and immediately after giving effect to the transaction on a
pro forma basis, no event of default, and no event which, after
notice or lapse of time or both, would become an event of default,
has occurred and is continuing under the indenture.
Events of Default and Remedies
Unless
otherwise specified in the applicable prospectus supplement, the
following events will be events of default under the indenture with
respect to debt securities of any series:
●
we fail
to pay any principal or premium, if any, when it becomes
due;
●
we fail
to pay any interest within 30 days after it becomes
due;
●
we fail
to observe or perform any other covenant in the debt securities or
the indenture for 60 days after written notice specifying the
failure from the trustee or the holders of not less than 25% in
aggregate principal amount of the outstanding debt securities of
that series; and
●
certain
events involving bankruptcy, insolvency or reorganization of us or
any of our significant subsidiaries.
The
trustee may withhold notice to the holders of the debt securities
of any series of any default, except in payment of principal of, or
premium or interest, if any, on, the debt securities of a series,
if the trustee considers it to be in the best interest of the
holders of the debt securities of that series to do
so.
If an
event of default (other than an event of default resulting from
certain events of bankruptcy, insolvency or reorganization) occurs,
and is continuing, then the trustee or the holders of not less than
25% in aggregate principal amount of the outstanding debt
securities of any series may accelerate the maturity of the debt
securities. If this happens, the entire principal amount, plus the
premium, if any, of all the outstanding debt securities of the
affected series plus accrued interest to the date of acceleration
will be immediately due and payable. At any time after the
acceleration, but before a judgment or decree based on such
acceleration is obtained by the trustee, the holders of a majority
in aggregate principal amount of outstanding debt securities of
such series may rescind and annul such acceleration
if:
●
all
events of default (other than nonpayment of accelerated principal,
premium or interest) have been cured or waived;
●
all
lawful interest on overdue interest and overdue principal has been
paid; and
●
the
rescission would not conflict with any judgment or
decree.
11
In
addition, if the acceleration occurs at any time when we have
outstanding indebtedness that is senior to the debt securities, the
payment of the principal amount of outstanding debt securities may
be subordinated in right of payment to the prior payment of any
amounts due under the senior indebtedness, in which case the
holders of debt securities will be entitled to payment under the
terms prescribed in the instruments evidencing the senior
indebtedness and the indenture.
If an
event of default resulting from certain events of bankruptcy,
insolvency or reorganization occurs, the principal, premium and
interest amount with respect to all of the debt securities of any
series will be due and payable immediately without any declaration
or other act on the part of the trustee or the holders of the debt
securities of that series.
The
holders of a majority in principal amount of the outstanding debt
securities of a series will have the right to waive any existing
default or compliance with any provision of the indenture or the
debt securities of that series and to direct the time, method and
place of conducting any proceeding for any remedy available to the
trustee, subject to certain limitations specified in the
indenture.
No
holder of any debt security of a series will have any right to
institute any proceeding with respect to the indenture or for any
remedy under the indenture, unless:
●
the
holder gives to the trustee written notice of a continuing event of
default;
●
the
holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the affected series make a written
request and offer reasonable indemnity to the trustee to institute
a proceeding as trustee;
●
the
trustee fails to institute a proceeding within 60 days after such
request; and
●
the
holders of a majority in aggregate principal amount of the
outstanding debt securities of the affected series do not give the
trustee a direction inconsistent with such request during such
60-day period.
These
limitations do not, however, apply to a suit instituted for payment
on debt securities of any series on or after the due dates
expressed in the debt securities.
We will
periodically deliver certificates to the trustee regarding our
compliance with our obligations under the indenture.
From
time to time, we and the trustee may, without the consent of
holders of the debt securities of one or more series, amend the
indenture or the debt securities of one or more series, or
supplement the indenture, for certain specified purposes,
including:
●
to
provide that the surviving entity following a change of control
permitted under the indenture will assume all of our obligations
under the indenture and debt securities;
●
to
provide for certificated debt securities in addition to
uncertificated debt securities;
●
to
comply with any requirements of the SEC under the Trust Indenture
Act of 1939;
●
to
provide for the issuance of and establish the form and terms and
conditions of debt securities of any series as permitted by the
indenture;
●
to cure
any ambiguity, defect or inconsistency, or make any other change
that does not materially and adversely affect the rights of any
holder; and
●
to
appoint a successor trustee under the indenture with respect to one
or more series.
12
From
time to time we and the trustee may, with the consent of holders of
at least a majority in principal amount of an outstanding series of
debt securities, amend or supplement the indenture or the debt
securities series, or waive compliance in a particular instance by
us with any provision of the indenture or the debt securities. We
may not, however, without the consent of each holder affected by
such action, modify or supplement the indenture or the debt
securities or waive compliance with any provision of the indenture
or the debt securities in order to:
●
reduce
the amount of debt securities whose holders must consent to an
amendment, supplement, or waiver to the indenture or such debt
security;
●
reduce
the rate of or change the time for payment of interest or reduce
the amount of or postpone the date for payment of sinking fund or
analogous obligations;
●
reduce
the principal of or change the stated maturity of the debt
securities;
●
make
any debt security payable in money other than that stated in the
debt security;
●
change
the amount or time of any payment required or reduce the premium
payable upon any redemption, or change the time before which no
such redemption may be made;
●
waive a
default in the payment of the principal of, or premium or interest,
if any, on, the debt securities or a redemption
payment;
●
waive a
redemption payment with respect to any debt securities or change
any provision with respect to redemption of debt securities;
or
●
take
any other action otherwise prohibited by the indenture to be taken
without the consent of each holder affected by the
action.
Defeasance of Debt Securities and Certain Covenants in Certain
Circumstances
The
indenture permits us, at any time, to elect to discharge our
obligations with respect to one or more series of debt securities
by following certain procedures described in the indenture. These
procedures will allow us either:
●
to
defease and be discharged from any and all of our obligations with
respect to any debt securities except for the following obligations
(which discharge is referred to as “legal
defeasance”):
o to register the
transfer or exchange of such debt securities;
o to replace
temporary or mutilated, destroyed, lost or stolen debt
securities;
o to compensate and
indemnify the trustee;
o to maintain an
office or agency in respect of the debt securities and to hold
monies for payment in trust; or
●
to be
released from our obligations with respect to the debt securities
under certain covenants contained in the indenture, as well as any
additional covenants which may be contained in the applicable
supplemental indenture (which release is referred to as
“covenant defeasance”).
13
In
order to exercise either defeasance option, we must irrevocably
deposit with the trustee or other qualifying trustee, in trust for
that purpose:
●
money;
●
U.S.
Government Obligations (as described below) or Foreign Government
Obligations (as described below) that through the scheduled payment
of principal and interest in accordance with their terms will
provide money; or
●
a
combination of money and/or U.S. Government Obligations and/or
Foreign Government Obligations sufficient in the written opinion of
a nationally-recognized firm of independent accountants to provide
money;
that,
in each case specified above, provides a sufficient amount to pay
the principal of, premium, if any, and interest, if any, on the
debt securities of the series, on the scheduled due dates or on a
selected date of redemption in accordance with the terms of the
indenture.
In
addition, defeasance may be effected only if, among other
things:
●
in the
case of either legal or covenant defeasance, we deliver to the
trustee an opinion of counsel, as specified in the indenture,
stating that as a result of the defeasance neither the trust nor
the trustee will be required to register as an investment company
under the Investment Company Act of 1940;
●
in the
case of legal defeasance, we deliver to the trustee an opinion of
counsel stating that we have received from, or there has been
published by, the Internal Revenue Service a ruling to the effect
that, or there has been a change in any applicable federal income
tax law with the effect that (and the opinion shall confirm that),
the holders of outstanding debt securities will not recognize
income, gain or loss for U.S. federal income tax purposes solely as
a result of such legal defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner,
including as a result of prepayment, and at the same times as would
have been the case if legal defeasance had not
occurred;
●
in the
case of covenant defeasance, we deliver to the trustee an opinion
of counsel to the effect that the holders of the outstanding debt
securities will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if
covenant defeasance had not occurred; and
●
certain
other conditions described in the indenture are
satisfied.
If we
fail to comply with our remaining obligations under the indenture
and applicable supplemental indenture after a covenant defeasance
of the indenture and applicable supplemental indenture, and the
debt securities are declared due and payable because of the
occurrence of any undefeased event of default, the amount of money
or U.S. Government Obligations or Foreign Government Obligations on
deposit with the trustee could be insufficient to pay amounts due
under the debt securities of the affected series at the time of
acceleration. We will, however, remain liable in respect of these
payments.
The
term “U.S. Government Obligations” as used in the above
discussion means securities that are direct non-callable
obligations of, or non-callable obligations guaranteed by, the
United States of America for the payment of which obligation or
guarantee the full faith and credit of the United States of America
is pledged.
The
term “Foreign Government Obligations” as used in the
above discussion means, with respect to debt securities of any
series that are denominated in a currency other than U.S. dollars,
(1) direct obligations of the government that issued or caused to
be issued such currency for the payment of which obligations its
full faith and credit is pledged or (2) obligations of a person
controlled or supervised by or acting as an agent or
instrumentality of such government, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by
that government, which in either case under clauses (1) or (2), are
not callable or redeemable at the option of the
issuer.
14
Regarding the Trustee
We will
identify the trustee with respect to any series of debt securities
in the prospectus supplement relating to the applicable debt
securities. You should note that if the trustee becomes a creditor
of ours, the indenture and the Trust Indenture Act of 1939 limit
the rights of the trustee to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any
such claim, as security or otherwise. The trustee and its
affiliates may engage in, and will be permitted to continue to
engage in, other transactions with us and our affiliates. If,
however, the trustee acquires any “conflicting
interest” within the meaning of the Trust Indenture Act of
1939, it must eliminate such conflict or resign.
The
holders of a majority in principal amount of the then outstanding
debt securities of any series may direct the time, method and place
of conducting any proceeding for exercising any remedy available to
the trustee. If an event of default occurs and is continuing, the
trustee, in the exercise of its rights and powers, must use the
degree of care and skill of a prudent person in the conduct of his
or her own affairs. Subject to that provision, the trustee will be
under no obligation to exercise any of its rights or powers under
the indenture at the request of any of the holders of the debt
securities, unless they have offered to the trustee reasonable
indemnity or security.
No Individual Liability of Incorporators, Stockholders, Officers or
Directors
Each
indenture provides that no incorporator and no past, present or
future stockholder, officer or director of our Company or any
successor corporation in those capacities will have any individual
liability for any of our obligations, covenants or agreements under
the debt securities or such indenture.
Governing Law
The
indentures and the debt securities will be governed by, and
construed in accordance with, the laws of the State of New
York.
15
DESCRIPTION OF WARRANTS
We may
issue warrants to purchase Common Stock, Preferred Stock,
depositary shares, debt securities or units. Each issue of warrants
will be the subject of a warrant agreement which will contain the
terms of the warrants. In the event that we issue warrants, we will
distribute a prospectus supplement with regard to each issue of
warrants. The following description, and any description of the
warrants included in a prospectus supplement, may not be complete
and is subject to and qualified in its entirety by reference to the
terms and provisions of the applicable warrant agreement, which we
will file with the SEC in connection with any offering of warrants.
Each prospectus supplement will describe, as to the warrants to
which it relates:
●
the
securities which may be purchased by exercising the warrants (which
may be Common Stock, Preferred Stock, depositary shares, debt
securities or units consisting of two or more of those types of
securities);
●
the
exercise price of the warrants (which may be wholly or partly
payable in cash or wholly or partly payable with other types of
consideration);
●
the
period during which the warrants may be exercised;
●
any
provision adjusting the securities which may be purchased on
exercise of the warrants and the exercise price of the warrants in
order to prevent dilution or otherwise;
●
the
place or places where warrants can be presented for exercise or for
registration of transfer or exchange; and
●
any
other material terms of the warrants.
Exercise of Warrants
Each
warrant will entitle the holder of the warrant to purchase for cash
the amount of Common Stock, Preferred Stock, depositary shares,
debt securities or units at the exercise price stated or
determinable in the applicable prospectus supplement for the
warrants. Warrants may be exercised at any time up to the close of
business on the expiration date shown in the applicable prospectus
supplement, unless otherwise specified in such prospectus
supplement. After the close of business on the expiration date,
unexercised warrants will become void. Warrants may be exercised as
described in the applicable prospectus supplement.
Until a
holder exercises the warrants to purchase any securities underlying
the warrants, the holder will not have any rights as a holder of
the underlying securities by virtue of ownership of
warrants.
DESCRIPTION OF UNITS
We may
issue securities in units, each consisting of two or more types of
securities. For example, we might issue units consisting of a
combination of debt securities and warrants to purchase Common
Stock. If we issue units, the prospectus supplement relating to the
units will contain the information described above with regard to
each of the securities that is a component of the units. In
addition, each prospectus supplement relating to units
will:
●
state
how long, if at all, the securities that are components of the
units must be traded in units, and when they can be traded
separately;
●
state
whether we will apply to have the units traded on a securities
exchange or securities quotation system; and
●
describe
how, for U.S. federal income tax purposes, the purchase price paid
for the units is to be allocated among the component
securities.
16
PLAN OF
DISTRIBUTION
We may
sell the securities offered through this prospectus and applicable
prospectus supplements in one or more of the following ways from
time to time: (i) to or through underwriters or dealers, (ii)
directly to one or more purchasers, including our affiliates, (iii)
through agents, (iv) through a combination of any these methods, or
(v) through any other method permitted by applicable
law.
In
addition, the manner in which we may sell some or all of the
securities covered by this prospectus, includes, without
limitation, through:
●
an
“at the market” offering, within the meaning of Rule
415(a)(4) of the Securities Act, to or through a market maker or
into an existing trading market on an exchange or
otherwise;
●
a block
trade in which a broker-dealer will attempt to sell as agent, but
may position or resell a portion of the block, as principal, in
order to facilitate the transaction;
●
purchases
by a broker-dealer, as principal, and resale by the broker-dealer
for its account;
●
ordinary
brokerage transactions and transactions in which a broker solicits
purchasers; or
●
privately
negotiated transactions.
The
securities may be distributed at a fixed price or prices, which may
be changed, based on market prices prevailing at the time of sale,
prices related to the prevailing market prices, or negotiated
prices. The prospectus supplement relating to an offering of
securities will set forth the terms of such offering,
including:
●
the
name or names of any underwriters or agents;
●
the
name or names of any managing underwriter or
underwriters;
●
the
name or names of any broker-dealers or placement
agents;
●
the
purchase price of the securities;
●
any
over-allotment options under which underwriters may purchase
additional securities;
●
the net
proceeds from the sale of the securities;
●
any
delayed delivery arrangements;
●
any
underwriting discounts, commissions and other items constituting
underwriters’ compensation;
●
any
initial public offering price;
●
any
discounts or concessions allowed or reallowed or paid to
dealers;
●
any
commissions paid to agents; and
●
any
securities exchange or market on which the securities may be
listed.
Sale Through Underwriters or Dealers
Only
underwriters named in a prospectus supplement are underwriters of
the securities offered by such prospectus supplement.
17
If
underwriters are used in the sale, the underwriters will acquire
the securities for their own account, including through
underwriting, purchase, security lending or repurchase agreements
with us. The underwriters may resell the securities from time to
time in one or more transactions, including negotiated
transactions. Underwriters may sell the securities in order to
facilitate transactions in any of our other securities (described
in this prospectus or otherwise), including other public or private
transactions and short sales. Underwriters may offer securities to
the public either through underwriting syndicates represented by
one or more managing underwriters or directly by one or more firms
acting as underwriters without a syndicate. Unless otherwise
indicated in a prospectus supplement, the obligations of the
underwriters to purchase the securities will be subject to certain
conditions, and the underwriters will be obligated to purchase all
the offered securities if they purchase any of them. The
underwriters may change from time to time any public offering price
and any discounts or concessions allowed or reallowed or paid to
dealers.
If
dealers are used in the sale of securities offered through this
prospectus, we will sell the securities to them as principals. The
dealers may then resell those securities to the public at varying
prices determined by the dealers at the time of resale. The
prospectus supplement will include the names of the dealers and the
terms of the transaction.
In
compliance with guidelines of the Financial Industry Regulatory
Authority, or FINRA, and unless otherwise modified by FINRA,
the maximum consideration or discount to be received by any FINRA
member or independent broker-dealer may not exceed 8% of the
aggregate amount of the securities offered pursuant to this
prospectus and any applicable prospectus supplement.
Direct Sales and Sales Through Agents
We may
sell the securities offered through this prospectus directly. In
this case, no underwriters or agents would be involved. Such
securities may also be sold through agents designated from time to
time. Any applicable prospectus supplement will name any agent
involved in the offer or sale of the offered securities and will
describe any commissions payable to the agent. Unless otherwise
indicated in the prospectus supplement, any agent will agree to use
its reasonable best efforts to solicit purchases for the period of
its appointment.
We may
sell the securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any sale of those securities. The
terms of any such sales will be described in a prospectus
supplement.
If an
applicable prospectus supplement indicates, we may authorize
agents, underwriters or dealers to solicit offers from certain
types of institutions to purchase securities at the public offering
price under delayed delivery contracts. These contracts would
provide for payment and delivery on a specified date in the future.
The contracts would be subject only to those conditions described
in the prospectus supplement. The applicable prospectus supplement
will describe the commission payable for solicitation of those
contracts.
Market Making, Stabilization and Other Transactions
We may
elect to list offered securities on an exchange or in the
over-the-counter market. Any underwriters that we use in the sale
of offered securities may make a market in such securities, but may
discontinue such market making at any time without notice.
Therefore, we cannot assure you that the securities will have a
liquid trading market.
Certain
persons participating in an offering may engage in overallotment,
stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with rules and regulations under the
Exchange Act. Overallotment involves sales in excess of the
offering size, which create a short position. Stabilizing
transactions involve bids to purchase the underlying security in
the open market for the purpose of pegging, fixing or maintaining
the price of the securities. Syndicate covering transactions
involve purchases of the securities in the open market after the
distribution has been completed in order to cover syndicate short
positions.
Penalty
bids permit the underwriters to reclaim a selling concession from a
syndicate member when the securities originally sold by the
syndicate member are purchased in a syndicate covering transaction
to cover syndicate short positions. Stabilizing transactions,
syndicate covering transactions and penalty bids may cause the
price of the securities to be higher than it would be in the
absence of the transactions. The underwriters may, if they commence
these transactions, discontinue them at any time.
18
General Information
Agents,
underwriters, and dealers may be entitled, under agreements entered
into with us, to indemnification by us against certain liabilities,
including liabilities under the Securities Act. Our agents,
underwriters, and dealers, or their affiliates, may be customers
of, engage in transactions with or perform services for us in the
ordinary course of business.
LEGAL
MATTERS
Kirton McConkie PC, Salt Lake City, Utah, will pass upon the
validity of any securities that we offer from time to time pursuant
to this prospectus and any related prospectus supplement. If the
securities are being distributed in an underwritten offering,
certain legal matters will be passed upon for the underwriters by
counsel identified in the applicable prospectus
supplement.
We are
subject to the information reporting requirements of the Exchange
Act and, in accordance with these requirements, we file annual,
quarterly and current reports, proxy statements, information
statements, and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SEC’s
website at www.sec.gov. In addition, we provide free access to
these materials through our website, www.bktechnologies.com, as
soon as reasonably practicable after they are filed with or
furnished to the SEC. Information contained on, or that may be
accessible through, our website is not a part of, and is not
incorporated into, this prospectus.
We have
filed with the SEC a registration statement on Form S-3 relating to
the securities covered by this prospectus and any prospectus
supplement. This prospectus is a part of the registration statement
and does not contain all the information in the registration
statement. Whenever a reference is made in this prospectus or any
prospectus supplement to a contract or other document, the
reference is only a summary and you should refer to the exhibits
that are a part of the registration statement for a copy of the
contract or other document. You may review a copy of the
registration statement through the SEC’s
website.
19
INCORPORATION BY REFERENCE
The SEC
allows us to incorporate by reference information in this document.
This means that we can disclose important information to you by
referring you to documents that we have previously filed with the
SEC or documents that we will file with the SEC in the future. The
information incorporated by reference is considered to be an
important part of this prospectus, except for any information that
is superseded by information that is included directly in this
document.
We are
incorporating by reference in this prospectus the following
documents which we have previously filed with the SEC (other than
any portions of the Current Reports on Form 8-K that were furnished
pursuant to Item 2.02 or 7.01 of Form 8-K or other applicable SEC
rules):
Whenever
after the date of filing the registration statement of which this
prospectus is a part, and until all of the securities to which this
prospectus relates have been sold or the offering is otherwise
terminated, we file reports or documents under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, those reports and documents
will be deemed to be part of, and incorporated by reference into,
this prospectus from the time they are filed. Any statements made
in this prospectus or in a document incorporated or deemed to be
incorporated by reference in this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or in any
subsequently filed document that is also incorporated or deemed to
be incorporated by reference in this prospectus modifies or
supersedes the statement. Nothing in this prospectus will be deemed
to incorporate information furnished by us on Form 8-K that under
the rules of the SEC, is not deemed “filed” for
purposes of the Exchange Act.
You may
request, without charge, a copy of any incorporated document
(excluding exhibits, unless we have specifically incorporated an
exhibit in an incorporated document) by writing or telephoning us
at our principal executive offices at the following
address:
Through and including July 1, 2021 (the 25th
day after the date of this offering),
all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer’s obligation to
deliver a prospectus when acting as an underwriter and with respect
to an unsold allotment or subscription.
Dates Referenced Herein and Documents Incorporated by Reference