Filed
Pursuant to Rule 424(b)(1)
Registration
No. 333-231206
PROSPECTUS
Acorn
Energy, Inc.
Rights
to Purchase Shares of Common Stock
9,975,553
Shares of Common Stock
We
are distributing, at no charge, to holders of our outstanding Common Stock and to holders of certain outstanding warrants
to purchase shares of our Common Stock, non-transferable subscription rights, which we refer to as the “Rights,” to
purchase in the aggregate up to 9,975,553 shares of our Common Stock at a cash subscription price of $0.24 per whole
share. We refer to the offering of our Common Stock through the Rights as the “Rights Offering.”
In
the Rights Offering, you will receive one (1) Right for each one (1) share of our Common Stock you held as of 5:00 p.m.
Eastern Daylight Time, on June 3, 2019, the record date for the Rights Offering. If you hold warrants to purchase shares
of our Common Stock, you will also receive one (1) Right for each one (1) share of our Common Stock that you could purchase as
of 5:00 p.m. EDT on the record date by exercising your warrants. You will not need to exercise your warrants in order to receive
Rights.
Each
Right will entitle you to purchase 0.312 shares of our Common Stock at a subscription price of $0.24 per whole share.
The subscription price was determined by our Board of Directors. We will not issue fractional shares in the Rights Offering. You
will not receive any Rights in our Rights Offering unless you held, as of 5:00 p.m. EDT on the record date, shares of our
Common Stock or warrants to purchase shares of our Common Stock.
You
may exercise your Rights at any time beginning on the effective date of this prospectus and before the expiration of the Rights
Offering, on June 24, 2019, at 5:00 p.m., Eastern Daylight Time, which is 18 calendar days after the effective date of
this prospectus, unless we extend the Rights Offering period, as determined at our sole discretion, for up to eight calendar days.
We
reserve the right to cancel the Rights Offering for any reason at our sole discretion any time before the expiration date. If
we cancel the Rights Offering, any and all subscription payments that have been received by our Subscription Agent will be returned
as soon as reasonably possible, without interest or penalty.
American
Stock Transfer & Trust Company, LLC (referred to in this prospectus as the “Subscription Agent”) will serve as
the Subscription Agent for the Rights Offering. The Subscription Agent will hold in escrow the funds we receive from subscribers
until we complete or cancel the Rights Offering.
D.F.
King & Co., Inc.
(referred
to in this prospectus as the “Information Agent”) will act as our Information Agent in connection with the Rights
Offering. You may contact them directly with any questions or comments toll-free at 866-388-7535.
We
are directly offering the Rights and the shares of Common Stock issuable upon exercise of the Rights. We have not engaged the
services of any underwriters or selling agents. We will bear all costs, expenses and fees in connection with the registration
of the shares of Common Stock issuable upon exercise of the Rights.
We
have entered into a Backstop Agreement with certain Backstop Purchasers, pursuant to which the Backstop Purchasers have agreed
to exercise in full all of the Rights issued to them and their affiliates, and, upon expiration of the Rights Offering, to purchase
from the Company any and all shares of Common Stock that other securityholders do not subscribe for in the Rights Offering. The
offer and sale of the shares issuable to the Backstop Purchasers and their affiliates (including Jan H. Loeb, our President and
Chief Executive Officer and one of our Directors who is the sole manager of one of the Backstop Purchasers) is not covered by
the registration statement of which this prospectus forms a part and are being offered in a private placement exempt from the
registration requirements of the Securities Act of 1933, as amended. These privately offered shares are included in the aggregate
of the 9,975,553 shares of Common Stock offered in the Rights Offering.
Our
Common Stock is traded on the OTCQB market under the symbol ACFN. The shares of Common Stock that we issue in connection with
the Rights Offering will also trade on the OTCQB market under the same symbol. The Rights will not be listed for trading on the
OTCQB market or any other stock exchange or market. On June 3, 2019, the last reported sale price for our Common Stock
was $0.2925 per share. As of the record date for the Rights Offering, our company had 29,615,786 shares of Common
Stock issued and outstanding, and warrants to purchase 2,357,142 shares of our Common Stock held by warrantholders who will receive
Rights.
Neither
our Board of Directors nor our management has made any recommendations regarding the exercise of your Rights. You may not revoke
or revise any exercises of Rights once made, unless we cancel or make a fundamental change to the terms and conditions of the
Rights Offering. You should carefully read this entire prospectus and all information that we incorporate by reference before
you make any investment decision. See the section in this prospectus under the caption: “Incorporation of Certain Information
by Reference.”
Investing in our Common Stock involves certain risks. See “Risk Factors” beginning on page
14 to read about factors you should consider before exercising your Rights.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is June 6, 2019.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
In
considering any decision regarding an investment in the shares of our Common Stock which are the subject of this prospectus, you
should rely only upon the information contained in this prospectus and the information that we incorporate by reference into this
prospectus. We have not authorized any persons to provide you with information which is different from the information contained
in this prospectus or the information that we incorporate by reference into this prospectus. We take no responsibility for, and
can provide no assurances as to the reliability of, any other information that you may obtain from other sources. The information
contained in this prospectus is accurate only as of the date on the front cover of this prospectus. Any and all information that
we incorporate by reference is accurate only as of the date of the referenced document so incorporated.
This
prospectus is an offer to sell only the securities that are offered hereby, and only where it is lawful to do so. This prospectus
does not offer to sell, or ask for offers to buy, any shares of our Common Stock in any state or jurisdiction (within or outside
the United States) where it would not be lawful or where the person making the offer is not qualified to do so.
This
prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the “SEC”).
Please carefully read both this entire prospectus together with all information that we incorporate by reference. See the section
of this prospectus under the caption: “Incorporation of Certain Information by Reference.”
Except
as otherwise indicated herein or as the context otherwise requires, references in this prospectus to “Acorn Energy,”
“Acorn,” “the Company,” “we,” “us,” “our,” and similar references
refer to Acorn Energy, Inc. and its subsidiaries. References in this prospectus to “Subscription Agent” refer to American
Stock Transfer & Trust Company, LLC. References in this prospectus to “Information Agent” refer to D.F. King
& Co., Inc.
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents we incorporate by reference into this prospectus may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
about the us and our subsidiaries. We intend the coverage of our forward-looking statements to be within the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, and
can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,”
“will,” “could,” “should,” “projects,” “plans,” “goal,”
“targets,” “potential,” “estimates,” “pro forma,” “seeks,” “intends,”
or “anticipates” or the negative form of these terms or comparable qualifying words. The basis for our forward-looking
statements includes our current expectations and a number of known and unknown risks and uncertainties that could cause actual
outcomes to differ materially from our forward-looking statements. We caution readers not to place undue reliance on our forward-looking
statements. In light of inherent uncertainties in forward-looking statements, the reader should not interpret inclusion of these
statements as any representation by us or any other person that we will achieve or accomplish any of the matters expressed within
the scope of any of our forward-looking statements. We assume no obligation to publicly update or revise our forward-looking statements
or to advise of any changes regarding the basis of our assumptions and other factors relating to the forward-looking statements.
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in this prospectus. This summary is not complete and may not contain all of
the information that you should consider before making any decision to invest in our Common Stock. Prior to making any investment
decision, we encourage you to read the entire prospectus carefully, including the risks discussed in the “Risk Factors”
section, as well as risk factors incorporated into this prospectus by reference to other documents. We also encourage you to review
our financial statements and the other information that we provide in our periodic reports and other documents that we file with
the SEC, as described under the caption: “Where You Can Find More Information.”
Our
Company
Acorn
Energy, Inc. is a holding company focused on technology driven solutions for energy infrastructure asset management. We provide
the following services and products through our OmniMetrix
TM
, LLC subsidiary:
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Power
Generation (“PG”) monitoring.
OmniMetrix’s PG activities provide wireless remote monitoring
and control systems and services for critical assets as well as Internet of Things applications.
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Cathodic
Protection (“CP”) monitoring.
OmniMetrix’s CP activities provide for remote monitoring of
cathodic protection systems on gas pipelines for gas utilities and pipeline companies.
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Our
Common Stock is traded on the OTCQB market under the symbol ACFN. The address of our principal executive office is 1000 N West
Street, Suite 1200, Wilmington, Delaware 19801.
The
Rights Offering
Securities
Offered
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We
are distributing, at no charge, to holders of our outstanding Common Stock and to holders
of certain outstanding warrants to purchase shares of our Common Stock, non-transferable
subscription rights (which we refer to as the “Rights”) to purchase in the
aggregate up to 9,975,553 shares of our Common Stock, $0.01 par value per share.
You will receive one (1) Right for each one (1) share of our Common Stock you held
as of 5:00 p.m. EDT on the record date. If you hold warrants to purchase
shares of our Common Stock, you will also receive one (1) Right for each one (1) share
of our Common Stock that you could purchase as of 5:00 p.m. EDT on the record date by
exercising your warrants. You will not need to exercise your warrants in order
to receive Rights. Each Right will entitle you to purchase 0.312 shares of
our Common Stock.
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Subscription
Price
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The
subscription price is $0.24 per whole share, payable in cash. The subscription price was determined by our Board of Directors
based upon a discount to the closing price of our Common Stock on the record date of $0.2925. To be effective,
any payment related to the exercise of a Right must be received by the Subscription Agent before the expiration of the Rights
Offering as described below.
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After
the date of this prospectus, our Common Stock may trade at prices below the subscription price. In that event, our Board
of Directors may change the subscription price of this offering or determine to cancel or otherwise alter the terms of the
Rights Offering.
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Subscription
Right
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Each
Right will entitle you to purchase 0.312 shares of our Common Stock at a subscription price of $0.24 per whole
share. See the section in this prospectus under the caption: “The Rights Offering—The Rights.”
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Record
Date
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5:00
p.m., Eastern Daylight Time, on June 3, 2019.
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Expiration
of the Offering Period
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5:00
p.m., Eastern Daylight Time, on June 24, 2019 which is 18 calendar days after
the effective date of this prospectus. We may extend, in our sole discretion, the
expiration of the offering period for exercising your Rights for a period not to exceed
eight calendar days.
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No
Fractional Shares
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We
will not issue any fractional shares in the Rights Offering. You may only exercise your Rights to purchase shares in
whole numbers.
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Use
of Proceeds
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We
intend to use the net proceeds from the Rights Offering to finance our contemplated reacquisition of the outstanding 20% minority
interest in our OmniMetrix LLC subsidiary and to support the growth of our OmniMetrix business, with any net proceeds not
so utilized to be used for general working capital purposes. See the section in this prospectus under the caption: “Use
of Proceeds.”
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Non-transferability
of Rights
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The
Rights that we issue in the Rights Offering may not be sold, transferred or subject to any other disposition. See the
section in this prospectus under the caption: “The Rights Offering—Non-transferability of Rights.”
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No
Board Recommendation
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Our
Board of Directors is making no recommendation regarding your exercise of the Rights. You should carefully consider
all relevant facts and circumstances in determining whether or not to exercise your Rights. See the section in this
prospectus under the caption: “Risk Factors” for a discussion of some of the risks related to exercising your
Rights and investing in our Common Stock.
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No
Revocation
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Except
in the event we make a fundamental change to the terms and conditions of our Rights Offering, your exercise of Rights will
be irrevocable, even if you later change your mind about exercising your Rights. The irrevocability of your exercise
will apply even if new information comes to your attention or if the market price of our Common Stock falls below the subscription
price of $0.24 per whole share. Your exercise of the Rights will also remain irrevocable if the authorized period
for the Rights Offering is extended by our Board of Directors. You should not exercise your Rights unless you are certain
that you wish to purchase shares of our Common Stock at the subscription price of $0.24 per whole share.
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Extension
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We
reserve the right to extend the Rights Offering period for a period not to exceed eight calendar days. If we
decide to extend the Rights Offering period, we will issue a press release announcing the extension in advance of the expiration
of the Rights Offering period. We may also extend the duration of the Rights Offering period if applicable law or regulations
require us to do so. Our Board of Directors has broad discretion regarding any and all determinations whether or not
to extend the Rights Offering period. See the section in this prospectus under the caption: “The Rights Offering—Expiration
Date, Extension, and Amendments.”
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Cancellation
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Our
Board of Directors may at its sole discretion cancel the Rights Offering at any time before the expiration of the Rights Offering
period. If we cancel the Rights Offering, we will issue a press release notifying all of our securityholders of the
cancellation. If we cancel the Rights Offering, the Subscription Agent will promptly return all subscription payments,
without interest or penalty, as soon as reasonably possible after the cancellation date. See the section in this prospectus
under the caption: “The Rights Offering—Expiration Date, Extension, and Amendments.”
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Amendment
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Our
Board of Directors reserves the right to amend or modify the terms of the Rights Offering. The amendments or modifications
may be made for any reason. These changes may include, for example, changes to the subscription price or other matters
that may induce greater participation by our securityholders in the Rights Offering. See the section in this prospectus
under the caption: “The Rights Offering—Expiration Date, Extension, and Amendments.”
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Fundamental
Changes
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If
we make any fundamental change to the terms of the Rights Offering after the date of effectiveness of this prospectus, we
will file a post-effective amendment to the registration statement in which this prospectus is included and offer subscribers
the opportunity to cancel their subscriptions. In such event, if you have subscribed to purchase shares in the Rights
Offering and request a refund, we will issue the refund to you and recirculate an amended prospectus after the post-effective
amendment is declared effective with the SEC. If we extend the expiration date of the Rights Offering period in connection
with any post-effective amendment, we will allow holders of Rights a reasonable period of additional time to make new investment
decisions on the basis of the new information set forth in the amended prospectus that will form a part of the post-effective
amendment registration statement. In such event, we will issue a press release announcing the changes to the Rights
Offering and the new expiration date. See the section in this prospectus under the caption: “The Rights Offering—Expiration
Date, Extension, and Amendments.”
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Procedures
for Exercising Rights
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To
exercise your Rights, you must complete the Rights certificate and deliver the certificate to the Subscription Agent before
the expiration of the offering period. Your subscription must include full payment for the exercise of all of your Rights
that you wish to exercise. For details regarding the procedure and requirements for exercising your Rights, see the
section in this prospectus under the caption: “The Rights Offering—Method of Exercising Rights”
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You
may deliver the subscription documents and payments by mail or overnight commercial carrier. If regular mail is used
for this purpose, we recommend that you use registered mail, properly insured, with return receipt requested.
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Brokerage
Account Stockholders
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If
you are a beneficial owner of shares that are registered in the name of a broker, dealer, bank or other nominee, and you wish
to participate in the Rights Offering, you should immediately instruct your broker, dealer, bank or other nominee to exercise
your Rights on your behalf and deliver all required documents and payment before the expiration of the Rights Offering period.
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Guaranteed
Delivery Procedures
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If
you are not able to deliver your Rights certificate to the Subscription Agent before the expiration of the Rights Offering
period, you may follow the procedures that we describe in the section of this prospectus under the caption: “The Rights
Offering—Guaranteed Delivery Procedures.”
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Minimum
Subscription Requirement
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We
have not set any minimum subscription amount. You may exercise your Rights in the full amount of your allocation
or in any partial amount that you determine. You may also choose not to exercise any of your Rights.
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No
Obligation to Participate in the Rights Offering
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You
are under no obligation to exercise your Rights to subscribe for any shares in the Rights Offering. If you choose not
to participate in the Rights Offering, you do not have to take any special action to decline to participate.
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Backstop
Purchasers
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We
have entered into a Backstop Agreement with Leap Tide Capital Management LLC (“Leap Tide”), Michael Osterer (one
of our Directors), and Gary Mohr (one of our Directors and, together with Leap Tide and Mr. Osterer, the “Backstop Purchasers”),
pursuant to which the Backstop Purchasers have agreed to exercise in full all of the Rights distributed to
them for the shares of Common Stock beneficially owned by them and their affiliates, and, upon expiration of the
Rights Offering, to purchase from the Company (directly or through an affiliate), at the price per share equal to the subscription
price of $0.24 per share, any and all shares of Common Stock that other securityholders do not subscribe for in our
Rights Offering (“Unsubscribed Rights Shares”), subject to the respective terms, conditions and limitations agreed
to by each of the Backstop Purchasers pursuant to the Backstop Agreement. Jan H. Loeb, our President
and Chief Executive Officer and one of our Directors, is the sole manager of Leap Tide.
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Backstop
Agreement
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We
have entered into a Backstop Agreement with the Backstop Purchasers. The Backstop Purchasers’ obligations under
the Backstop Agreement are subject to various conditions as described in the section of this prospectus under the caption
“The Backstop Agreement.”
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Commitments
to Exercise Rights in Full
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Pursuant
to the Backstop Agreement, each of the Backstop Purchasers has agreed to exercise in
full all of the Rights distributed to them for the shares of Common Stock beneficially
owned by them and their affiliates (including Jan H. Loeb, our President and Chief
Executive Officer and one of our Directors, who is the sole manager of one of the Backstop
Purchasers).
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Backstop
Commitments
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Subject
to the terms and conditions set forth in the Backstop Agreement, the Backstop Purchasers
have agreed to purchase from us, following the completion of the Rights Offering,
any and all of the Unsubscribed Rights Shares. The Backstop Agreement provides
that, first, the three Backstop Purchasers shall each purchase one-third of the first
$300,000 of aggregate subscription price of Unsubscribed Rights Shares, and that Leap
Tide shall then purchase any and all remaining Unsubscribed Rights Shares, thus assuring
the sale of all Unsubscribed Rights Shares.
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The
Backstop Closing
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Under
the terms of the Backstop Agreement, t
he
transactions contemplated by the Backstop Agreement are to close within four business
days following the completion of the Rights Offering.
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Backstop
Consideration
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The
Backstop Purchasers will not receive any compensation or other consideration for entering into the Backstop Agreement or
consummating the transactions contemplated by the Backstop Agreement.
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Backstop
Purchasers’ Share Ownership
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As
of the record date for the Rights Offering: (1) Leap Tide beneficially owned less than 1% of our Common Stock,
and Mr. Loeb beneficially owned approximately 5.4% of our Common Stock (including all of the shares
beneficially owned by Leap Tide); (2) Michael Osterer beneficially owned approximately 6.1% of our Common
Stock; and (3) Gary Mohr owned less than 1% of our Common Stock.
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Exclusion
from Registration of Shares Offered to the Backstop Purchasers and their Affiliates
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The
offer and sale of the shares issuable to the Backstop Purchasers and their affiliates (including Jan H. Loeb, our President and
Chief Executive Officer and one of our Directors, who is the sole manager of one of the Backstop Purchasers) is not covered by
the registration statement of which this prospectus forms a part and are being offered in a private placement exempt from the
registration requirements of the Securities Act of 1933, as amended. These privately offered shares are included in the aggregate
of the 9,975,553 shares of Common Stock offered in the Rights Offering.
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Registration
Rights
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We
have entered into a Registration Rights Agreement with the Backstop Purchasers (the “Registration Rights Agreement”).
Under the terms of the Registration Rights Agreement, Backstop Purchasers holding an aggregate of at least one
million shares of our Common Stock may request that we register for resale the shares purchased by the Backstop Purchasers
pursuant to the Backstop Agreement.
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Shares
of Common Stock Outstanding as of the Record Date
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29,615,786
shares of our Common
Stock were outstanding as of the record date.
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Warrants
Outstanding as of the Record Date for which Warrantholders Will Receive Rights
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As
of the record date, we had outstanding warrants to purchase 2,357,142 shares of our Common Stock for which the warrantholders
will receive Rights.
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Shares
of Common Stock Outstanding After Completion of the Rights Offering
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Upon
completion of the Rights Offering and issuance of the shares pursuant to the Backstop Agreement, if any, we will have approximately
39,591,339 shares of Common Stock issued and outstanding.
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Delivery
of Shares
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Any
shares you elect to purchase in the Rights Offering will be delivered to you or your broker as soon as reasonably possible
following the closing of the Rights Offering.
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Market
for Common Stock
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Our
Common Stock trades on the OTCQB market under the symbol ACFN.
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U.S.
Federal Income Tax Considerations
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It
is the opinion of our outside counsel, Eilenberg & Krause LLP, that the distribution of Rights to U.S. holders of our
Common Stock or of rights to acquire shares of our Common Stock should be treated, for U.S. federal income tax purposes, as
a non-taxable distribution under Section 305(a) of the Internal Revenue Code of 1986, as amended (the “Code”),
and the Treasury Regulations promulgated thereunder. However, there is a lack of authority addressing the application
of the Code to distributions of Rights and your receipt of Rights may be treated as a taxable distribution. We urge
you to consult with your own tax advisor regarding the facts and circumstances of your own tax situation. See, “Risk
Factors—The receipt of Rights may be treated as a taxable distribution to you.” See also, “Material
U.S. Federal Income Tax Consequences.”
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Subscription
Agent
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American
Stock Transfer & Trust Company, LLC, will act as our Subscription Agent in connection with the Rights Offering. You
may contact them directly with any questions or comments toll-free at 877-248-6417.
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Information
Agent
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D.F.
King & Co., Inc.,
will act as our Information Agent in connection with the Rights Offering. You may contact them directly with any questions
or comments toll-free at 866-388-7535.
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Foreign
Holders of Registered Common Stock Certificates
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The
Subscription Agent will not mail Rights certificates to you if your address is outside
the United States or if you have an Army Post Office or a Fleet Post Office address.
Foreign
securityholders will receive written notice of the Rights Offering. The Subscription
Agent will hold the Rights to which those subscription certificates pertain for those
securityholders’ accounts until instructions are received to exercise the Rights,
subject to applicable law.
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Risk
Factors
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If
you are considering making an investment by exercising Rights in the Rights Offering, you should carefully read the risks
and other information set forth in this prospectus in the section under the caption: “Risk Factors” beginning
on page 14 of this prospectus. You should also carefully review the documents incorporated by reference into this prospectus,
and the risks that we discuss in other sections of this prospectus.
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Questions
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We
answer some of the common questions that we anticipate securityholders may ask about the Rights Offering in the section below.
See the section in this prospectus under the caption: “Questions and Answers About the Rights Offering.” You
may also contact the Information Agent if you have any questions at: 866-388-7535.
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Escrow
of Funds
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The
Subscription Agent will hold in escrow the funds we receive from subscribers until we complete or cancel the Rights Offering.
If you are the record holder of your shares, or if you hold warrants, and you wish to participate in the Rights Offering,
you must submit all of your subscription documents to the Subscription Agent in a timely manner and assure receipt of payment
by the Subscription Agent prior to the expiration of the Rights Offering.
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QUESTIONS
AND ANSWERS ABOUT THE RIGHTS OFFERING
The
following are examples of common questions that we expect to receive from securityholders and their representatives regarding
our Rights Offering. The following questions and answers are inherently limited in scope and do not contain all of the information
that may be important to you and may not address all of the questions that you may have about the Rights Offering. This prospectus
and the documents that we incorporate by reference herein contain many details regarding the terms and conditions of our Rights
Offering and provide additional information about us and our business, including potential risks related to subscribing for shares
in our Rights Offering, the shares of our Common Stock and our business.
What
is the Rights Offering?
The Rights Offering is
our distribution, at no charge, to holders of our outstanding Common Stock and to holders of certain outstanding warrants to purchase
shares of our Common Stock, of non-transferable Rights to purchase additional shares of our Common Stock. The price for exercise
of the Rights and subscription for the purchase of shares of our Common Stock is $0.24 per whole share, which was set by our Board
of Directors based on a discount to the closing market price of our Common Stock on the record date of $0.2925. There is
no charge to securityholders related to the distribution of the Rights. All references in this prospectus to the Rights Offering
subscription price of $0.24 per share refer to the price per whole share.
Why
are we conducting the Rights Offering?
We
are conducting the Rights Offering to finance our contemplated reacquisition of the outstanding 20% minority interest in our OmniMetrix
LLC subsidiary and to support the growth of our OmniMetrix business, with any net proceeds not so utilized to be used for general
working capital purposes. See the section of this prospectus under the caption: “Use of Proceeds.”
Who
may participate in our Rights Offering?
Only
securityholders of our Company as of 5:00 pm Eastern Daylight Time on the record date of June 3, 2019, may participate
in the Rights Offering.
How
many Rights will I receive?
We
will grant you one (1)
Right for each one (1) share of our Common Stock you held as of 5:00 p.m. Eastern Daylight Time, on June 3, 2019,
the record date for the Rights Offering. If you hold warrants to purchase shares of our Common Stock, you will also receive one
(1) Right for each one (1) share of our Common Stock that you could purchase as of 5:00 p.m. EDT on the record date by exercising
your warrants. You will not need to exercise your warrants in order to receive Rights. Each Right will entitle you to purchase
0.312 shares of our Common Stock at a subscription price of $0.24 per whole share. At your own choosing, you may
exercise some or all of your Rights. You may also elect not to exercise any Rights at all.
How
many warrantholders are receiving Rights?
Under
the terms of certain of our outstanding warrants, the warrantholders have the right to receive the Rights being distributed in
the Rights Offering, based on the number of shares of our Common Stock they could purchase as of the record date by exercising
their warrants. As of the record date, we had outstanding warrants to purchase 2,357,142 shares of our Common Stock for which
the warrantholders will receive Rights. Warrantholders will not need to exercise their warrants in order to receive Rights.
Will
fractional shares of Common Stock be issued upon exercise of the Rights?
No.
We will not issue fractional shares of Common Stock. If you exercise your Rights in a manner that would result in the issuance
of fractional shares, the number of shares that you may purchase will be rounded down to the nearest share.
What
if I own my stock through a brokerage account or similar nominee account?
If
you hold your shares in the name of a broker, dealer, bank or other nominee and you wish to participate in the Rights Offering
and purchase shares of our Common Stock, please contact your broker, dealer, bank or other nominee as soon as possible. You should
complete and return to your nominee the form captioned “Beneficial Owner Election Form” or other form supplied
by your nominee. You should receive the form from your broker, dealer, bank or other nominee with the other Rights Offering
materials. We assume no responsibility in respect of the timely administration of your broker, dealer, bank or other nominee to
perform its obligations on your behalf.
How
was the subscription price determined?
The subscription price
of $0.24 per share was determined by our Board of Directors on the basis of a discount to the closing price of our Common
Stock on the record date of $0.2925. In making its determination, the Board considered many factors, including the historical
and current trading prices of our Common Stock, as well as current trends and conditions in capital markets. The subscription
price was not determined on the basis of any investment bank or third-party valuation that was commissioned by our company. The
Board of Directors reserves the right, exercisable in its sole discretion, to change the subscription price of the Rights Offering
or determine to cancel or otherwise alter the terms of the Rights Offering. See the section in this prospectus under the caption:
“The Rights Offering—Expiration Date, Extension, and Amendments.”
May
I transfer my Rights?
No.
The Rights are not transferable by you. You may not sell, give away or otherwise transfer your Rights. However, Rights may be
assigned to family members or family trusts. The Rights are also subject to transfer by operation of law (such as testate or intestate
succession). The sale of any of your shares of Common Stock prior to the expiration of the Rights Offering period will not result
in the transfer of any Rights.
Are
there any limitations on the number of my Rights that I may exercise?
There
are no restrictions on the number of your Rights that you may exercise. At your own choosing, you may exercise some or all of
your Rights. You may also elect not to exercise any Rights at all.
When
can I exercise my Rights?
You
may exercise your Rights at any time commencing on the effective date of this prospectus and ending at the expiration time and
date of the Rights Offering period, at 5:00 p.m. Eastern Daylight Time on June 24, 2019, which is 18 calendar days after
the effective date of this prospectus. If you elect to exercise any Rights, the Subscription Agent must receive all documents
from you completely and properly completed, and your payment must fully clear, before the expiration of the offering period.
If
your subscription exercise documentation is received by the Subscription Agent after the expiration of the Rights Offering period,
we may, in our sole discretion, make an accommodation to accept your subscription, but we shall not be under any obligation to
do so.
See
the section in this prospectus under the caption: “The Rights Offering” for further information regarding the requirements
and procedures for exercising your Rights.
If
you hold your shares through a broker, dealer, bank, or other nominee, your broker, dealer, bank or other nominee holder may impose
separate deadlines prior to the expiration of the Rights Offering. In such case, if you wish to participate in the Rights Offering,
we urge you to contact your broker, dealer, bank, or other nominee and coordinate all procedures with them as soon as reasonably
possible.
How
do I exercise my Rights?
If
you wish to participate in the Rights Offering, you must deliver to the Subscription Agent before the expiration of the Rights
Offering, all of the following which the Subscription Agent must receive (and funds must clear) prior to 5:00 p.m., Eastern Daylight
Time, on June 24, 2019, which is 18 calendar days after the effective date of this prospectus:
|
1.
|
Your
payment for exercise of the Rights. See the section in this prospectus under the caption: “The Rights Offering—Method
of Exercising Rights” and “The Rights Offering—Form of Payment.”
|
|
|
|
|
2.
|
Your
complete and fully executed Rights certificate.
|
If
you cannot deliver your Rights certificate to the Subscription Agent before the expiration of the Rights Offering, you may use
the procedures for guaranteed delivery as described in this prospectus in the section under the caption: “The Rights Offering—Guaranteed
Delivery Procedures.”
If
you hold your shares through your broker, dealer, bank or other nominee, complete and return to such broker, dealer, bank or other
nominee the form captioned: “Beneficial Owner Election Form” or use the forms provided to you by your broker, dealer,
bank or other nominee in accordance with their stated procedures and prior to their stated deadlines.
Where
do I deliver my forms and the payment for exercise of the Rights?
If
your shares are held in the name of a broker, dealer, bank or other nominee, then you must coordinate with your broker, dealer,
bank or other nominee regarding delivery of your subscription documents, Rights certificate, notice of guaranteed delivery (if
applicable) and your subscription payment.
If
you are a stockholder of record, or hold warrants, and you wish to exercise your Rights, then you must send your subscription
documents, Rights certificate, notices of guaranteed delivery (if applicable) and subscription payment to the Subscription Agent
at the following address:
If
delivering by registered first class mail:
|
If
delivering by hand, express mail, courier, or other expedited service:
|
American
Stock Transfer & Trust Company, LLC
Operations
Center
Attn:
Reorganization Department
P.O.
Box 2042
New
York, New York 10272-2042
|
American
Stock Transfer & Trust Company, LLC
Operations
Center
Attn:
Reorganization Department
6201
15
th
Avenue
Brooklyn,
New York 11219
|
All
deliveries to the Subscription Agent should only be made by registered first class mail or by hand, express mail, courier
or other expedited service. Please allow adequate time for delivery of your subscription to the Subscription Agent by you
or by your broker, dealer, custodian bank or other nominee, as applicable.
We
do not take any responsibility for completion of your subscription documents, Rights certificate and payment to the Subscription
Agent or, if you are not a record holder to your broker, dealer, custodian bank or other nominee. If you wish to exercise your
Rights, please assure that you properly complete all documents and that you provide responses to all requested information. If
you have any questions or comments regarding completion of the materials, please contact the Information Agent.
If
the payment you remit does not cover the total purchase price for the number of shares of Common Stock for which you are subscribing,
or if the number of shares of Common Stock for which you are subscribing is not properly specified, then the funds will be applied
to the exercise of Rights only to the extent of the payment actually received by the Subscription Agent.
After
I deliver my payment and Rights certificate, may I cancel my exercise of Rights?
No.
Except in the event we make a fundamental change to the terms and conditions of the Rights Offering, all exercises of Rights are
irrevocable, even if you later change your mind. The irrevocability of your exercise will apply even if new information comes
to your attention or if the market price of our Common Stock falls below the Rights Offering subscription price of $0.24
per share. Your exercise of the Rights will also remain irrevocable if the authorized period for the Rights Offering is extended
by our Board of Directors. See the section in this prospectus under the caption: “The Rights Offering—No Revocation
or Change.”
What
if I do not exercise my Rights?
In
addition to the holders of our 29,615,786 shares of Common Stock outstanding on the record date, we are distributing Rights
to holders of outstanding warrants to purchase an additional 2,357,142 shares of our Common Stock. Warrantholders will not need
to exercise their warrants in order to receive Rights. As a result, the total number of Rights distributed will exceed the number
of shares of our Common Stock outstanding on the record date. This means that even if you exercise all of your Rights, your percentage
ownership of our Common Stock will likely decrease and your voting and other equity rights will be diluted by the issuance of
shares in the Rights Offering to subscribers and the Backstop Purchasers. The more of your Rights you exercise, the less your
voting and other equity rights will be diluted. If you do not exercise your Rights before the expiration of the Rights Offering
period your Rights will automatically terminate.
Are
there risks in exercising my Rights?
Yes.
You must carefully consider all known risks of investment prior to the exercise of your Rights. The risks of investment loss apply
to all subscribers. We cannot provide any assurance that the shares of our Common Stock sold at the Rights Offering subscription
price of $0.24 per share will in the future maintain their value or increase in value. You should carefully read this entire
prospectus and consider all of the risks described in the section of this prospectus under the caption: “Risk Factors.”
You should also carefully review documents incorporated by reference into this prospectus. See the section in this prospectus
under the caption: “Incorporation of Certain Information by Reference.”
How
are the shares of Common Stock delivered?
At
the completion of the Rights Offering, we will issue the shares of Common Stock in book-entry form to each subscriber. We will
not issue any stock certificates. If you are a holder of record of our Common Stock or hold warrants, shortly after the expiration
of the Rights Offering you will receive a statement of ownership from our transfer agent, American Stock Transfer & Trust
Company, LLC, reflecting the shares of Common Stock that you have purchased in the Rights Offering. If your shares of Common Stock
are held in the name of a broker, dealer, bank or other nominee, your shares of Common Stock will be issued to the same account.
You may request a statement of ownership from the broker or nominee following the completion of the Rights Offering.
Will
my subscription payment be refunded to me if the Rights Offering is not completed?
Yes.
If the we do not complete the Rights Offering, all subscription payments received by the Subscription Agent will be returned,
without penalty or interest, as soon as reasonably possible. If you hold your shares of Common Stock through your broker, dealer,
bank or other nominee, the Subscription Agent will return the payment to the broker, dealer, bank or other nominee holding your
shares.
If
I live outside the United States does that affect my exercise of Rights?
For
purposes of assuring that we will not breach the laws of any country outside of the United States, we will not mail this prospectus
or the Rights certificates to securityholders whose addresses are outside the United States or who have an army post office or
foreign post office address. The Subscription Agent will hold the Rights certificates on behalf of such securityholders. If you
live outside of the United States and wish to exercise your Rights, you must notify the Subscription Agent on or before 5:00 p.m.,
Eastern Daylight Time, on June 19, 2019, which is three business days prior to the expiration date of the Rights
Offering. See the section in this prospectus under the caption: “The Rights Offering—Foreign Stockholders.”
Will
any fees or charges apply to me if I exercise my Rights?
If
you wish to exercise your Rights, the only cost to you will be the payment of the subscription price for purchase of the Rights
Offering shares. We will not charge any fees or commissions in connection with the issuance of the Rights to you or the exercise
of your Rights for Rights Offering shares. If you hold your shares of Common Stock through your broker, dealer, bank or other
nominee, you may be required to pay the broker or nominee certain service or administration fees in connection with the exercise
of your Rights. Please check with your broker, dealer, bank or other nominee in such regard. We are not responsible for covering
or reimbursing any such fees.
What
are the U.S. federal income tax consequences of exercising Rights?
It
is the opinion of our outside counsel, Eilenberg & Krause LLP, that for U.S. federal income tax purposes, our U.S. securityholders
should not be subject to recognition of income or loss in connection with the receipt or exercise of Rights. However, there is
a lack of authority directly addressing the application of the Internal Revenue Code to distributions of Rights and your receipt
of Rights may be treated as a taxable distribution. We therefore recommend that you consult with your own tax advisor regarding
your own specific tax situation and to assess the potential adverse tax consequences resulting from the receipt and exercise of
Rights and the receipt, ownership and disposition of Common Stock. See, “Risk Factors—The receipt of Rights may be
treated as a taxable distribution to you.” See also, “Material U.S. Federal Income Tax Consequences.”
Will
our directors, officers, or any significant stockholders participate in the Rights Offering?
Our
directors and officers who own shares of our Common Stock as of the record date will be eligible to participate in the Rights
Offering. Pursuant to the Backstop Agreement, Michael Osterer (one of our Directors) and Gary Mohr (one of our Directors) have
agreed to exercise in full all of the Rights distributed for the shares of Common Stock that they beneficially own. In addition,
Jan H. Loeb, our President and CEO and the sole manager of Backstop Purchaser Leap Tide, has agreed to exercise all of his Rights
in full. Other than these three officers and directors, we have not received any indication from any of our directors, officers
or other stockholders as to whether they plan to subscribe for shares of our Common Stock in the Rights Offering.
How
many shares of our Common Stock will be outstanding after the Rights Offering?
As
of the record date, we had 29,615,786 shares of our Common Stock issued and outstanding. We are offering up to 9,975,553
shares of Common Stock in the Rights Offering. In reliance on the Backstop Agreement, we expect to issue all of the shares
of Common Stock in the Rights Offering. We therefore anticipate that if we complete the Rights Offering, we will have an aggregate
of 39,591,339 shares of Common Stock issued and outstanding following completion of the Rights Offering.
Can
we extend, cancel or amend the Rights Offering?
Yes.
We reserve the right to extend the Rights Offering period for a period not to exceed eight calendar days. If we decide
to extend the Rights Offering period, we will issue a press release announcing the extension in advance of the expiration of the
then-effective Rights Offering period. We may also extend the duration of the Rights Offering period if applicable law or regulations
require us to do so. Our Board of Directors has broad discretion regarding any and all determinations whether or not to extend
the Rights Offering period. The Board of Directors may also cancel the Rights Offering at any time before the expiration of the
Rights Offering for any reason. In addition, we may amend or modify the terms of the Rights Offering for any reason. See the section
in this prospectus under the caption: “The Rights Offering—Expiration Date, Extension, and Amendments.”
What
happens if the Rights Offering is not fully subscribed by our securityholders?
We have entered into a
Backstop Agreement with Leap Tide Capital Management LLC (“Leap Tide”) (whose sole manager is Jan H. Loeb,
our President and Chief Executive Officer and one of our Directors), Michael Osterer (one of our Directors) and Gary
Mohr (one of our Directors and, together with Leap Tide and Mr. Osterer, the “Backstop Purchasers”), pursuant to which
the Backstop Purchasers have agreed to exercise their (and their affiliates’) Rights in full in the Rights Offering
and, upon expiration of the Rights Offering, to purchase from the Company, at the price per share equal to the subscription price
of $0.24 per share, any and all shares of Common Stock that other securityholders do not subscribe for in our Rights Offering,
subject to the respective terms, conditions and limitations agreed to by each of the Backstop Purchasers pursuant to the Backstop
Agreement. The Backstop Purchasers’ obligations under the Backstop Agreement are subject to various conditions as described
in the section of this prospectus under the caption: “The Backstop Agreement.”
Why
are there Backstop Purchasers?
Our objective is to raise
the full amount of approximately $2.4 million in gross proceeds in the Rights Offering. In the event that all Rights are
not exercised, we would fall short of that objective. We have therefore obtained commitments from the Backstop Purchasers in order
to assure (subject to fulfillment by the Backstop Purchasers of their commitments under the Backstop Agreement) that we are able
to raise the full amount of approximately $2.4 million in gross proceeds in the Rights Offering.
Will
the Backstop Purchasers receive any compensation for entering into the Backstop Agreement?
No.
The Backstop Purchasers will not receive any compensation for entering into the Backstop Agreement.
Are
there any conditions to the Backstop Purchasers’ obligations under the Backstop Agreement?
Yes.
The obligations of the Backstop Purchasers to consummate the transactions under the Backstop Agreement are subject to the satisfaction
or waiver of specified conditions, including, but not limited to, compliance with covenants and the accuracy of various representations
and warranties set forth in the Backstop Agreement.
How
will the Rights Offering affect the ownership of our largest beneficial owners?
As
of the record date, Michael Osterer, one of our Directors and one of our Backstop Purchasers, beneficially owned approximately
6.1% of our Common Stock, and Jan H. Loeb, our President and CEO and the sole manager of one of our Backstop Purchasers,
beneficially owned approximately 5.4% of our Common Stock. No other stockholders beneficially owned more than 1% of our
Common Stock as of the record date. If no other securityholders participate in the Rights Offering, upon the closing of
the Rights Offering and consummation of the transaction contemplated by the Backstop Agreement, Mr. Osterer would beneficially
own approximately 7.0% of our Common Stock, and Mr. Loeb would beneficially own approximately 25.5% of our Common
Stock.
Whom
should I contact if I have other questions?
If
you have other questions or need assistance, please contact our Information Agent toll-free at: 866-388-7535.
RISK
FACTORS
Investing
in shares of our Common Stock involves a high degree of risk. Before making any investment decision, you should carefully consider
the risks described under “Risk Factors” in our most recent Annual Report on Form 10-K, and any updates in our Quarterly
Reports on Form 10-Q, and current Reports on Form 8-K, together with all of the other information appearing in or incorporated
into this prospectus by reference. The risks described in this prospectus and our periodic reports are not the only risks that
you should consider. Our future business, financial condition and results of operations could be materially and adversely affected
by any of the risks discussed in this prospectus and the risks in the documents incorporated herein by reference, as well as many
other unpredictable economic, business, competitive, regulatory and other factors. Past performance is no guarantee of future
results. The market price of our shares of Common Stock could lose value and you could correspondingly lose some or all of your
investment. See the section in this prospectus under the caption: “Disclosure Regarding Forward-Looking Statements.”
Risks
Relating to the Rights Offering
You
must act promptly and follow all instructions carefully if you wish to exercise your Rights to purchase shares.
If
you wish to purchase shares of Common Stock in our Rights Offering, you must promptly act to complete and properly deliver all
applicable documentation and certificates, and assure that payment for your subscription is received by the Subscription Agent
prior to the expiration of the Rights Offering at 5:00 p.m., Eastern Daylight Time on June 24, 2019, which is 18 calendar
days after the effective date of this prospectus. The time available during which you may exercise your Rights is very limited.
If you do not properly complete and sign your Rights certificate, or if you deliver late or deficient payment, or if you do not
properly follow the procedures applicable to the exercise of your Rights, we may at our discretion either reject your subscription
in its entirety or accept only the portion of your subscription corresponding to the amount of payment actually received. We are
not responsible for remediating any incomplete or incorrect documents or deficient payment that you submit. We have no obligation
to contact you or any broker, dealer, bank or other nominee that holds Rights on your behalf regarding any deficiencies. We reserve
the right to determine, at our sole discretion, whether the materials and payments that you submit are complete and if they follow
the applicable procedures pertaining to exercise of your Rights. The risk of delivery of all documents and payments is borne solely
by you or your nominee, not by the Subscription Agent or us.
We
reserve the right to cancel the Rights Offering at any time prior to the expiration of the offering period.
We
reserve the right, exercisable at our sole determination at any time prior to the expiration of the offering period, to cancel
and terminate the Rights Offering. If we cancel and terminate the Rights Offering, we will not have any obligation to you other
than to have the Subscription Agent return payments for your subscription. The return of your payments in the event of cancellation
of the Rights Offering will be made by the Subscription Agent without charge of any interest, penalties or deductions.
The
subscription price for our shares does not necessarily represent the value of our Company or the value of our Common Stock, and
our Common Stock may trade at prices below the subscription price.
Our Rights Offering subscription
price was set by our Board of Directors at $0.24 per share. The subscription price was determined by our Board of Directors based
upon a discount to the closing price of our Common Stock on the record date of $0.2925. The subscription price does not
bear any particular relationship to the book value of our assets, past operations, cash flows, losses, financial condition or
other criteria for ascertaining value. You should not consider the subscription price as an indication of the value of our company
or any inherent value of shares of our Common Stock. After the date of this prospectus, our Common Stock may trade at prices below
the Rights Offering subscription price.
We
may amend or modify the terms of the Rights Offering at any time before the expiration of the Rights Offering that could adversely
affect your investment.
Our
Board of Directors reserves the right to amend or modify the terms of the Rights Offering. The amendments or modifications may
be made for any reason. These changes may include, for example, changes to the subscription price or other matters that may induce
greater participation by our securityholders in the Rights Offering. If we make any fundamental change to the terms of the Rights
Offering after the date of effectiveness of this prospectus, we will file a post-effective amendment to the registration statement
in which this prospectus is included and offer subscribers the opportunity to cancel their subscriptions. In such event, we will
issue subscription refunds to each securityholder subscribing to purchase shares in the Rights Offering and recirculate an amended
prospectus after the post-effective amendment is declared effective with the SEC. If we extend the expiration date of the Rights
Offering period in connection with any post-effective amendment, we will allow holders of Rights reasonable period of additional
time to make new investment decisions on the basis of the new information set forth in the prospectus that will form a part of
the post-effective amendment. In such event, we will issue a press release announcing the changes to the Rights Offering and the
new expiration date. Even if an amendment does not rise to the level that is fundamental and would thus require us to offer to
return your subscription payment, the amendment may nonetheless adversely affect your Rights and any prospective return on your
investment.
The
market price of our Common Stock may be subject to significant volatility before and after the completion of our Rights Offering
which could result in an unrealized investment loss for you.
The
market price of our Common Stock could be subject to significant volatility before and after the completion of our Rights Offering
due to many factors that we cannot control. Some of these factors include, for example, competitive pressures, the unpredictably
of orders from customers, industry trends and general economic conditions. If you elect to participate in our Rights Offering,
your subscription price may be higher than the market price after the Rights Offering completion date. That could result in an
immediate unrealized investment loss for you. We can provide no assurance or guarantees that you will be able to sell your Common
Stock at a price equal to or greater than the Rights Offering subscription price.
The
Rights Offering may cause the price of our Common Stock to decrease which could result in an investment loss for you.
The
Rights Offering may cause a decrease the market price of our Common Stock. The decrease in the market price of our Common Stock
may continue after the completion of the Rights Offering. Future prices of the shares of our Common Stock may adjust negatively
depending on various factors, including future losses or speculation in the trade or business press about our operations, and
overall conditions affecting our businesses, economic trends and the securities markets. Following the exercise of your Rights,
you may not be able to sell your shares of Common Stock at a price equal to or greater than the Rights Offering subscription price
which could result in an investment loss for you.
Our
management will retain broad discretion over the use of the proceeds from the Rights Offering; utilization of the proceeds may
not increase the value of our company.
While
we currently intend to use the net proceeds from the Rights Offering to finance our contemplated reacquisition of the outstanding
20% minority interest in our OmniMetrix LLC subsidiary and to support the growth of our OmniMetrix business, with any net proceeds
not so utilized to be used for general working capital purposes, our management team will have broad discretion to allocate the
proceeds from the Rights Offering as circumstances warrant. In addition, there is no assurance that utilization of the proceeds
will increase the value of our company and/or your investment.
You
may not revoke your subscription and the shares of Common Stock that you purchase in the Rights Offering may be above the market
price at the expiration date which could result in an immediate loss.
The subscription price
for the exercise of your Rights has been set by the Board of Directors on the record date for the Rights Offering. The market
price of our Common Stock on the offering expiration date will not be known on the record date. After you exercise your Rights,
you may not revoke your subscription unless the Rights Offering is fundamentally amended or canceled by the Board of Directors.
If our Board of Directors extends the expiration date of the Rights Offering without any fundamental amendment, you will not be
able to revoke your subscription. Our Common Stock trades on the OTCQB market under the symbol ACFN, and the last reported sales
price of our Common Stock on June 3, 2019 was $0.2925 per share. If you exercise your Rights and the public trading market
price of our Common Stock thereafter decreases below the Rights Offering subscription price of $0.24 per share, you will buy shares
of our Common Stock at a price above the trading market price. In such event, you would incur an immediate loss with respect to
your investment.
You
may be required to allocate a portion of your tax basis in our Common Stock to the Rights received in the Rights Offering.
If
you determine that the value of the Rights equals or exceeds 15% of the fair market value of our Common Stock on the date we distribute
the Rights to you, you will be required to allocate a portion of your tax basis in your Common Stock to the Rights we distribute
to you in the Rights Offering. We will not undertake any appraisal regarding the fair market value of the Rights. See the section
in the prospectus under the caption: “Material U.S. Federal Income Tax Consequences” for further information on the
tax treatment of the Rights Offering.
You
will not have any rights in the shares of Common Stock that you purchase until you actually receive such shares of Common Stock.
You
will not have any rights in the shares of Common Stock that you purchase in the Rights Offering until such shares of Common Stock
are actually issued and received by you. We intend to issue the shares as soon as reasonably possible after the expiration of
the Rights Offering, however, there may be a delay between the expiration date of the Rights Offering and the date the shares
of Common Stock are actually issued and delivered to you. You may not be able to resell the shares of Common Stock that you purchase
in the Rights Offering until you, or your broker, custodian bank or other nominee, if applicable, have actually received those
shares.
The
receipt of Rights may be treated as a taxable distribution to you.
It
is the opinion of our outside counsel, Eilenberg & Krause LLP, that the distribution of Rights to a holder of shares of our
Common Stock or of rights to acquire shares of our Common Stock should be treated, for U.S. federal income tax purposes, as a
non-taxable distribution under Section 305(a) of the Code and the Treasury Regulations promulgated thereunder. However, there
is a lack of authority addressing the application of the Code to distributions of Rights. The Internal Revenue Service (the “IRS”)
could come to different conclusions than our tax counsel regarding the tax treatment for the receipt and exercise of Rights. The
opinion of our tax counsel regarding the tax-free treatment of the Rights distribution is not binding on the IRS, or the courts.
As such, there is significant uncertainty in regard to the tax treatment of the receipt and exercise of Rights. For example, if
our Rights Offering is deemed to be part of a “disproportionate distribution” under Section 305 of the Code, your
receipt of Rights may be treated as the receipt of a taxable distribution to you. A “disproportionate distribution”
is a distribution or a series of distributions, including deemed distributions, that would have the effect of the receipt of cash
or other property by some securityholders and an increase in the proportionate interest of other securityholders in the company’s
assets or earnings and profits. Due to the lack of authority on the part of the IRS and the courts in regard to interpreting Code
Section 305 with respect to distributions of Rights, it is not reasonably possible to quantify the degree of uncertainty and risk
to the recipients of the Rights regarding potential adverse tax effects. If our tax counsel’s opinion is finally determined
by the IRS or a court to be incorrect, whether on the basis that the issuance of the Rights is a “disproportionate distribution”
or otherwise, the fair market value of the Rights would be taxable to holders of our Common Stock as a dividend to the extent
of the holder’s pro rata share of our current and accumulated earnings and profits, if any, with any excess being treated
as a return of capital to the extent thereof and then as capital gain. Each holder of our shares of Common Stock considering participating
in our Rights Offering is urged to consult with his, her or its own tax advisor prior to making any investment determination in
order to assess possible adverse tax consequences. Please see the section in this prospectus under the caption: “Material
U.S. Federal Income Tax Consequences.”
The
Rights are not transferable, and there are no means for you to obtain any value associated with the Rights other than to exercise
your Rights.
The
Rights are not transferrable. You may not sell, transfer, assign or give away your Rights. There is no market or other permissible
means for you to obtain any value associated with the Rights other than to exercise your Rights. In order to realize any potential
value from your Rights, you would have to exercise the Rights. You should not exercise the Rights without careful consideration
of all risks discussed in this prospectus and in the documents contained herein by reference.
We
do not know how many securityholders will participate in the Rights Offering.
Apart
from the Backstop Purchasers, who have agreed in the Backstop Agreement to exercise in full all of the Rights distributed for
the shares of Common Stock that they beneficially own, and Jan H. Loeb, our President and CEO and the sole manager of Backstop
Purchaser Leap Tide, who has agreed to exercise all of his Rights, we have no other agreements or understandings with any persons
or entities with respect to their exercise of Rights or their participation as an underwriter, broker or dealer in the Rights
Offering. We therefore do not know how many other securityholders, if any, will participate in our Rights Offering. Assuming that
securityholders exercise all Rights we are offering, and/or the transaction contemplated by the Backstop Agreement is consummated,
we would receive the full gross proceeds from our Rights Offering of approximately $2,400,000 and net proceeds of approximately
$2,265,000. If the closing of the transaction contemplated by the Backstop Agreement does not occur due to a default by
Leap Tide, we will not have the capital necessary to fund our contemplated uses of the net proceeds of the Rights Offering and
might need to look to other sources of funding for these contemplated uses. There is no assurance that these alternative sources
will be available and at what cost.
We
cannot guarantee that the transaction contemplated by the Backstop Agreement will be consummated.
The
closing of the transaction contemplated by the Backstop Agreement is subject to satisfaction or waiver of customary terms and
conditions contained in the Backstop Agreement and the fulfillment by the Backstop Purchasers of their commitments to
purchase under the Backstop Agreement. We cannot guarantee that the transaction contemplated by the Backstop Agreement will
close as anticipated. If the closing of the transaction contemplated by the Backstop Agreement does not occur as anticipated,
we may not have sufficient capital to repurchase the outstanding minority interest in our OmniMetrix LLC subsidiary, to continue
to support the growth of OmniMetrix and/or to continue our operations.
The
Backstop Purchasers may acquire up to approximately 29.0% of our outstanding shares of Common Stock if no other securityholders
participate in the Rights Offering. The interests of the Backstop Purchasers and Mr. Loeb, who is our President and Chief Executive
Officer and the sole manager of one of the Backstop Purchasers, in the Rights Offering may be different from yours.
As
of the record date, the Backstop Purchasers, two of whom are Directors of our company, beneficially owned an aggregate of 3,609,847
shares, or approximately 12.1%, of our Common Stock. In addition, Jan H. Loeb, our President and Chief Executive Officer,
is the sole manager of Leap Tide, one of the Backstop Purchasers, with sole voting and dispositive power over the securities held
by such entity. As of the record date, Mr. Loeb beneficially owned 1,609,454 shares, or approximately 5.4%, of our
Common Stock (including all of the shares beneficially owned by Leap Tide). Each of the Backstop Purchasers and Mr. Loeb have
agreed to exercise their respective Rights in full. In the event that no other securityholders participate in the Rights Offering
and the transaction contemplated by the Backstop Agreement is consummated, the Backstop Purchasers would beneficially own an aggregate
of approximately 29.0%, and Mr. Loeb would beneficially own approximately 25.5%, of our outstanding Common Stock
at the completion of the Rights Offering. The Backstop Purchasers’ and/or Mr. Loeb’s influence over decision-making
with respect to our business direction may increase to the extent the Backstop Purchasers acquire additional shares of our Common
Stock upon consummation of the transaction contemplated by the Backstop Agreement. The interests of the Backstop Purchasers and
Mr. Loeb in the Rights Offering may be different from yours.
USE
OF PROCEEDS
We
expect to raise gross proceeds of approximately $2,400,000 and net proceeds of approximately $2,265,000 from our Rights
Offering. On the basis of the commitment received from our Backstop Purchasers (discussed in detail below), we anticipate completing
the sale of all shares of Common Stock that are available for subscription in our Rights Offering.
We
intend to use the net proceeds from the Rights Offering to finance our contemplated reacquisition of the outstanding 20% minority
interest in our OmniMetrix LLC subsidiary and to provide OmniMetrix with additional sales and marketing resources to facilitate
expansion into additional geographic markets and new product applications, as well as next-generation product development. Any
net proceeds not so utilized will be used for general working capital purposes.
THE
BACKSTOP AGREEMENT
We
have
entered into a Backstop Agreement with Leap Tide Capital
Management LLC (“Leap Tide”), Michael Osterer (one of our Directors), and Gary Mohr (one of our Directors and, together
with Leap Tide and Mr. Osterer, the “Backstop Purchasers”), pursuant to which each Backstop Purchaser has agreed to
exercise its/his Rights in full in the Rights Offering and, upon expiration of the Rights Offering, to purchase from the Company
(directly or through an affiliate), at the price per share equal to the subscription price of $0.24 per share, any and
all shares of Common Stock that other securityholders do not subscribe for in the Rights Offering (“Unsubscribed Rights
Shares”), subject to the respective terms, conditions and limitations agreed to by each of the Backstop Purchasers pursuant
to the Backstop Agreement. The Backstop Agreement provides that, first, the three Backstop Purchasers shall each purchase
one-third of the first $300,000 of aggregate subscription price of Unsubscribed Rights Shares, and that Leap Tide shall then purchase
any and all remaining Unsubscribed Rights Shares. Should Mr. Osterer and/or Mr. Mohr fail to purchase their respective contractual
portion of Unsubscribed Rights Shares in full, Leap Tide would purchase such unpurchased Unsubscribed Rights Shares as well.
As
of the record date for the Rights Offering, Mr. Osterer beneficially owned approximately 6.1% of our Common Stock, and
Mr. Mohr beneficially owned less than 1% of our Common Stock. As of the record date for the Rights Offering, Leap Tide beneficially
owned less than 1% of our Common Stock, and Jan H. Loeb, our President and Chief Executive Officer and one of our Directors
and the sole manager of Leap Tide, with sole voting and dispositive power over the securities held by such entity, beneficially
owned approximately 5.4% of our Common Stock.
The
offer and sale of the shares issuable to the Backstop Purchasers and their affiliates (including Jan H. Loeb, our President
and Chief Executive Officer and one of our Directors who is the sole manager of one of the Backstop Purchasers) is not covered
by the registration statement of which this prospectus forms a part and are being offered in a private placement exempt from the
registration requirements of the Securities Act of 1933, as amended. These privately offered shares are included in the aggregate
of the 9,975,553 shares of Common Stock offered in the Rights Offering.
Nothing herein shall be construed as any offer or solicitation for the sale or purchase of any of the shares of Common Stock that
we issue to Leap Tide and Messrs. Osterer and Mohr and their affiliates in connection with the Backstop Agreement.
Closing
Conditions
The
closing of the transactions contemplated by the Backstop Agreement is subject, in each case, to the satisfaction or waiver of
customary conditions, including (i) receipt of all applicable regulatory approvals, (ii) compliance with covenants, (iii) the
accuracy of representations and warranties set forth in the Backstop Agreement, (iv) the absence of a material adverse effect
on the Company or on the ability of the Backstop Purchasers to perform their obligations under the Backstop Agreement, (v) satisfaction
of conditions, and the effectiveness of the registration statement related to the Rights Offering and (vi) consummation of the
Rights Offering.
Termination
of the Backstop Agreement
The
Backstop Agreement may be terminated at any time prior to the closing of the transactions contemplated by the Backstop Agreement
as follows:
|
●
|
by
mutual written agreement of the Backstop Purchasers and us;
|
|
●
|
by
any party, in the event the closing of the transactions contemplated by the Backstop Agreement are not consummated within
180 days of the execution of the Backstop Agreement;
|
|
●
|
by
the Backstop Purchasers, if we materially breach any of our obligations under the Backstop Agreement, and such breach is not
cured within five business days of receipt of written notice by the Backstop Purchasers to us;
|
|
●
|
by
the Backstop Purchasers, upon the occurrence of a suspension of trading in our Common Stock by the OTCQB; or
|
|
●
|
by
us, if our Board of Directors, in its reasonable judgment, determines that it is not in the best interests of the Company
and our stockholders to proceed with the Rights Offering;
|
|
●
|
by
us, if consummation of the Rights Offering is prohibited by applicable law, rules or regulations; or
|
|
●
|
by
us, if any Backstop Purchaser materially breaches its obligations set forth in the Backstop Agreement, and such breach is
not cured within five business days of receipt of written notice by us.
|
Indemnification
The
Company has agreed to indemnify each Backstop Purchaser and their affiliates and each of their respective officers, directors,
partners, employees, agents and representatives for losses arising out of this offering and the related registration statement
and prospectus and claims, suits or proceedings challenging the authorization, execution, delivery, performance or expiration
of the Rights Offering, the Backstop Agreement and certain ancillary agreements and/or any of the transactions contemplated thereby,
other than losses arising out of or related to any breach by the Backstop Purchaser of the Backstop Agreement.
Each
Backstop Purchaser has agreed to indemnify the Company and its affiliates and each of their respective officers, directors, partners,
employees, agents and representatives for losses arising out of or relating to statements or omissions in the registration statement
or prospectus for this offering (or any amendment or supplement thereto) made in reliance on or in conformity with written information
relating to the Backstop Purchaser furnished to us by or on behalf of the Backstop Purchaser expressly for use therein.
Registration
Rights
The
purchase of shares of our Common Stock by the Backstop Purchasers under the Backstop Agreement would be effectuated in a transaction
exempt from the registration requirements of the Securities Act and would not be registered pursuant to the registration statement
of which this prospectus forms a part. As a condition of the Backstop Agreement, we have entered into a Registration Rights Agreement
with each of the Backstop Purchasers pursuant to which Backstop Purchasers holding an aggregate of at least one million shares
of our Common Stock may request that we register for resale the shares of Common Stock that the Backstop Purchasers acquire pursuant
to the Backstop Agreement, including shares of our Common Stock purchased by the Backstop Purchasers and their affiliates upon
exercise of their Rights. The Backstop Purchasers may exercise their registration rights at any time after the expiration
date of the Rights Offering. We have agreed to reimburse each Backstop Purchaser for certain fees and expenses (including attorneys’
fees and expenses) incurred by them in connection with exercise of their registration rights.
CAPITALIZATION
Set
forth below is our cash and liquid assets and capitalization as of March 31, 2019:
●
on an actual basis; and
●
on a pro forma as adjusted basis, reflecting the issuance of shares of Common Stock offered by this
prospectus, at $0.24 per share, assuming net proceeds of approximately $2,265,000 after offering expenses payable
by us.
The
information below should be read in conjunction with our unaudited condensed consolidated financial statements for the quarterly
period ended March 31, 2019 and our audited consolidated financial statements for the year ended December 31, 2018, which
are incorporated by reference in this prospectus. Our financial statements should also be read in conjunction with the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” which is included in our Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2019 and our Annual Report on Form 10-K for the year ended December
31, 2018, which are incorporated by reference in this prospectus. See the sections in this prospectus under the captions:
“Incorporation of Certain Information by Reference” and “Where You Can Find More Information.”
|
|
As
of March 31, 2019 (1)
|
|
|
|
Actual
|
|
|
Pro
Forma
As
Adjusted
|
|
Cash
and cash equivalents
|
|
$
|
779
|
|
|
|
3,044
|
|
Restricted
cash
|
|
|
299
|
|
|
|
299
|
|
|
|
|
|
|
|
|
|
|
Total
long-term liabilities
|
|
|
1,430
|
|
|
|
1,430
|
|
Shareholders’
equity
|
|
|
|
|
|
|
|
|
Common
Stock, $0.01 par value per share: Authorized - 42,000,000 shares; Issued – 30,357,706 and 40,333,259 shares
on an actual and pro forma as adjusted basis, respectively
|
|
|
304
|
|
|
|
403
|
|
Treasury
stock, at cost – 801,920 shares
|
|
|
(3,036
|
)
|
|
|
(3,036
|
)
|
Additional
paid-in capital
|
|
|
100,346
|
|
|
|
102,512
|
|
Warrants
|
|
|
1,118
|
|
|
|
1,118
|
|
Accumulated
deficit
|
|
|
(100,301
|
)
|
|
|
(100,301
|
)
|
Non-controlling
interests
|
|
|
64
|
|
|
|
64
|
|
Total
(deficit)/equity
|
|
|
(1,505
|
)
|
|
|
760
|
|
Total
capitalization
|
|
|
(75
|
)
|
|
|
2,190
|
|
(1)
In thousands, except for share and per share amounts.
THE
RIGHTS OFFERING
The
Rights
We
are distributing, at no charge, to holders of our outstanding Common Stock and to holders of certain outstanding warrants
to purchase shares of our Common Stock, non-transferable Rights to purchase in the aggregate up to 9,975,553 shares of
our Common Stock at the cash subscription price of $0.24 per share. We expect to raise approximately $2,400,000 in gross
proceeds and approximately $2,265,000 in net proceeds from the offering of Rights and subscriptions for the purchase of
shares of Common Stock thereunder.
As
of the record date, we had 29,615,786 shares of our Common Stock outstanding. Under the terms of certain of our outstanding
warrants, the warrantholders have the right to receive the Rights being distributed in the Rights Offering, based on the number
of shares of our Common Stock they could purchase as of the record date by exercising their warrants. As of the record date, we
had outstanding warrants to purchase 2,357,142 shares of our Common Stock for which the warrantholders will receive Rights.
If
you are a stockholder of record, or if you are a beneficial owner of shares held on your behalf through a broker, dealer, bank
or other nominee, you will receive one (1) Right for each one (1) share of Common Stock owned at 5:00 p.m., Eastern Daylight Time,
on June 3, 2019, which is the record date for our Rights Offering. If you hold warrants to purchase shares of our Common
Stock, you will also receive one (1) Right for each one (1) share of our Common Stock that you could purchase as of 5:00 p.m.
EDT on the record date by exercising your warrants. You will not need to exercise your warrants in order to receive Rights. Each
subscription right will entitle you to purchase 0.312 shares of our Common Stock at a subscription price of $0.24 per
whole share of Common Stock. We are not offering, and we will not accept, any subscriptions for fractional shares.
You
may exercise some, all or none of your Rights.
The
Reasons for our Rights Offering
We
are conducting the Rights Offering to finance our contemplated reacquisition of the outstanding 20% minority interest in our OmniMetrix
LLC subsidiary and to provide OmniMetrix with additional sales and marketing resources to facilitate expansion into additional
geographic markets and new product applications, as well as next-generation product development, with any net proceeds not so
utilized to be used for general working capital purposes. Our Board of Directors has carefully evaluated financing alternatives
and concluded that raising the required funding through a Rights Offering in which all our stockholders would have the opportunity
to participate was in the best interests of our stockholders.
Subscription
Price
The subscription price
of $0.24 per share was determined by our Board of Directors on the basis of a discount to the closing price of our Common
Stock on the record date of $0.2925. In making its determination, the Board considered many factors, including the historical
and current trading prices of our Common Stock, as well as current trends and conditions in capital markets. The subscription
price was not determined on the basis of any investment bank or third-party valuation that was commissioned by our company. We
cannot assure you that the market price of our Common Stock during or after the Rights Offering period will be greater than the
subscription price.
Method
of Exercising Rights
You
may exercise your Rights as follows:
1.
Subscription by Registered Stockholders of Record
. If you are the holder of record of shares of our Common Stock
and you wish to exercise your Rights, you must complete and sign your Rights certificate, together with any required signature
guarantees, and deliver them to the Subscription Agent, with a notice of guaranteed delivery (if applicable) and an IRS Form W-9,
and your payment for the number of shares of Common Stock for which you are subscribing. The address of the Subscription Agent
is set forth below in this prospectus under the caption: “Where to Submit Subscriptions.” You must deliver all materials
in a timely manner and assure that your payment clears in full prior to the expiration of the Rights Offering.
2.
Subscription by Beneficial Owners holding shares through a broker, dealer, bank or other nominee
. If you are a beneficial
owner of shares of our Common Stock that are registered in the name of a broker, dealer, bank or other nominee, and you wish to
exercise your Rights, you must instruct your broker, dealer, bank or other nominee to exercise your Rights on your behalf and
deliver all documents and payment before the expiration of the Rights Offering. Your subscription will only be valid if the Subscription
Agent receives all of the required documents and the full subscription payment prior to the Rights Offering expiration date. Your
broker, dealer, bank or other nominee may establish a deadline that is significantly in advance of the Rights Offering expiration
period at 5:00 p.m., Eastern Daylight Time, on June 24, 2019, which is 18 calendar days after the effective date of this
prospectus. If you wish to subscribe for shares of our Common Stock in the Rights Offering, you should immediately notify your
broker, dealer, bank or other nominee.
3.
Subscription by Holders of Warrants
. If you are the holder of warrants to purchase shares of our Common Stock and
you wish to exercise your Rights, you must complete and sign your Rights certificate, together with any required signature guarantees,
and deliver them to the Subscription Agent, with a notice of guaranteed delivery (if applicable) and an IRS Form W-9, and your
payment for the number of shares of Common Stock for which you are subscribing. The address of the Subscription Agent is set forth
below in this prospectus under the caption: “Where to Submit Subscriptions.” You must deliver all materials in a timely
manner and assure that your payment clears in full prior to the expiration of the Rights Offering. You do not need to exercise
your warrants in order to exercise your Rights.
Form
of Payment
Your
payment of the subscription price must be made in U.S. dollars for the full number of shares of Common Stock you wish to acquire
by one of the following methods:
|
●
|
Check
or bank draft payable to “American Stock Transfer & Trust Company, LLC, as Subscription Agent”;
or
|
|
|
|
|
●
|
Wire
transfer of immediately available funds directly to the account maintained by American
Stock Transfer & Trust Company, LLC, as Subscription Agent, for purposes of accepting
subscriptions in this Rights Offering at JPMorgan Chase Bank, 55 Water Street, New York,
New York 10005, ABA #021000021, Account # 530-354616 American Stock Transfer, FBO ACORN
ENERGY, INC.
|
All
payments will be deemed to have been received by the Subscription Agent immediately upon receipt, provided that payment by uncertified
check shall not be deemed to have been received until final clearance of such check. Payment received after the expiration of
the Rights Offering, or any uncertified check which has not cleared by the expiration of the Rights Offering, will not be honored,
and the Subscription Agent will return your payment to you, without interest or penalty, as soon as practicable.
Where
to Submit Subscriptions
You
must deliver all subscription documents, Rights certificates, notices of guaranteed delivery (if applicable) and subscription
payments other than wire transfers to the Subscription Agent at the following address:
If
delivering by registered first class mail:
|
If
delivering by hand, express mail, courier, or other expedited service:
|
American
Stock Transfer & Trust Company, LLC
Operations
Center
Attn:
Reorganization Department
P.O.
Box 2042
New
York, New York 10272-2042
|
American
Stock Transfer & Trust Company, LLC
Operations
Center
Attn:
Reorganization Department
6201
15
th
Avenue
Brooklyn,
New York 11219
|
Any
deficiency or irregularity with respect to delivery of your subscription documents, Rights certificates and/or notices of guaranteed
delivery may invalidate the exercise of your Rights.
If
you have any questions or if you need assistance in completing any of the subscription documents, Rights certificates and/or notices
of guaranteed delivery, you may contact the Information Agent at: 866-388-7535.
Missing
or Incomplete Subscription Information
If
your Rights certificate is not complete and properly signed, or if you deliver deficient payment, or if you do not properly follow
the procedures applicable to your exercise of your Rights, we may at our discretion either reject your subscription in its entirety
or accept only the portion of your subscription corresponding to the amount of payment actually received. We are not responsible
for remediating any incomplete or incorrect documents or deficient payment that you submit. We will not contact you or any broker,
dealer, bank or other nominee that holds rights on your behalf regarding any deficiencies. We reserve the right to determine,
at our sole discretion, whether the materials and payments that you submit are complete and follow the applicable procedures pertaining
to exercise of your rights.
Delivery
of Subscriptions
DO
NOT SEND YOUR SUBSCRIPTION RIGHTS CERTIFICATES OR PAYMENTS TO THE COMPANY. ALL DELIVERIES AND PAYMENTS MUST BE MADE ONLY TO THE
SUBSCRIPTION AGENT.
Please
carefully read the instruction letter accompanying the Rights certificate and follow the procedures as specified.
Your
subscription will not be deemed to be received until the Subscription Agent has received delivery of your completed and properly
signed Rights certificate and received the full subscription amount which has cleared prior to the expiration of the Rights Offering.
The only exceptions for late delivery will be in the case of delivery in accordance with the “Guaranteed Delivery Procedures”
described below. Notwithstanding the foregoing, we may, at our sole discretion, determine to accept late subscriptions on a case-by-case
basis.
The
risk of delivery of all documents and payments is borne by you or your nominee, not by the Subscription Agent or us.
All
deliveries to the Subscription Agent should only be made by registered first class mail or by hand, express mail, courier
or other expedited service. Please allow an adequate number of days for delivery of your materials to the Subscription
Agent by you or your broker, dealer, custodian bank or other nominee, as applicable. We do not take any responsibility for completion
of your subscription documents, Rights certificate and payment to the Subscription Agent or, if you are not a holder of record,
to your broker, dealer, custodian bank or other nominee. If you wish to exercise your Rights, please assure that you properly
complete all documents and that you provide comprehensive responses to all information on the forms. If you have any questions
or comments regarding completion of the materials, please contact the Information Agent.
Notice
to Nominees
If
you are a broker, dealer, bank or other nominee that holds shares of our Common Stock for the account of one or more of our stockholders
on the record date, you should contact such beneficial owners as soon as possible regarding our Rights Offering. If a beneficial
owner of our Common Stock so instructs, you should complete the Rights certificate and submit it to the Subscription Agent with
the proper subscription payment prior to the expiration date. You may exercise the number of Rights to which all beneficial owners
in the aggregate otherwise would have been entitled had they been direct holders of our Common Stock on the record date, provided
that you, as a nominee record holder, make a proper showing to the Subscription Agent by submitting the form captioned: “Nominee
Holder Election Form,” which is included with your Rights Offering materials. You may contact the Subscription Agent directly
to request the form if not provided in the materials delivered to you.
Beneficial
Owners
If
your shares of our Common Stock are held in the name of a broker, dealer, bank or other nominee, you will not receive a Rights
certificate and you will need to coordinate with your broker, dealer, bank or other nominee to act for you. To exercise your Rights,
you will need to complete and return to your broker, dealer, bank or other nominee the form captioned: “Beneficial Owner
Election Form.” You should receive the form from your broker, dealer, bank or other nominee with the other Rights Offering
materials. You should contact your broker, dealer, bank or other nominee if you do not receive the form and other Rights Offering
material. We are not responsible if you do not receive the form from your broker, dealer, bank or other nominee or if you receive
the form without sufficient time to respond by the deadline established by your nominee, which deadline may be prior to 5:00 p.m.,
Eastern Daylight Time, on June 24, 2019, which is 18 calendar days after the effective date of this prospectus.
Guaranteed
Delivery Procedures
If
you do not have adequate time to deliver the Rights certificate evidencing your Rights to the Subscription Agent prior to the
expiration of the Rights Offering, you may still participate in the Rights Offering if you follow the guaranteed delivery procedures
set forth below prior to the expiration of the Rights Offering:
|
●
|
deliver
your subscription payment to the Subscription Agent covering all Rights that you are exercising, in accordance with the procedures
set forth in the section of the prospectus under the caption: “Method of Exercising Subscription Rights;”
|
|
●
|
deliver
your “Notice of Guaranteed Delivery” to the Subscription Agent; and
|
|
●
|
within
two business days following the date you submit your Notice of Guaranteed Delivery, deliver to the Subscription Agent
the complete and properly signed Rights certificate (together with your nominee holder election form, if applicable), including
any signature guarantees if necessary.
|
All
Notices of Guaranteed Delivery must include a signature guarantee from an eligible guarantor institution.
If
you have any questions or comments regarding completion or delivery of the Notice of Guaranteed Delivery, please contact the Subscription
Agent.
Non-transferability
of Rights
The
Rights are not transferable by you. You may not sell, give away or otherwise transfer your Rights. However, Rights may be assigned
to family members or family trusts. The Rights are also subject to transfer by operation of law (such as testate or intestate
succession). The sale of any of your shares prior to the expiration of the Rights Offering period will not result in the transfer
of any Rights.
No
Fractional Shares
We
will not issue fractional shares of Common Stock in the Rights Offering. You may only exercise your Rights to purchase shares
in whole numbers. Any excess funds insufficient to purchase one whole share will be returned to you by the Subscription Agent
without penalty or interest.
Validity
of Subscriptions
We
reserve the right to resolve at our sole discretion all deficiencies, irregularities and questions regarding the validity of the
exercise of your Rights. Such determinations may include, without limitation, the time of receipt and eligibility to participate
in the Rights Offering. In resolving all such matters, we will review the relevant facts. We may, at our discretion, also consult
with our legal advisors and request input from the relevant parties. Our determination will be final and binding.
We
will not accept any alternative, conditional or contingent subscriptions or instructions of any nature or kind. We reserve the
absolute right to reject any subscriptions not submitted in accordance with the requisite time periods or procedures specified
for the Rights Offering. We may also decline to accept any subscriptions which we believe may contravene applicable laws or regulations.
We are not responsible for remediating any incomplete or incorrect documents or deficient payment that you submit. We will not
contact you or any broker, dealer, bank or other nominee that holds rights on your behalf regarding any deficiencies or irregularities
with respect to your subscription. Our interpretations, exercisable at our sole discretion, regarding your satisfaction of all
requisite terms and conditions applicable to our Rights Offering will be final and binding.
Except
in the event we make a fundamental change to the terms and conditions of the Rights Offering, once you submit your subscription
and payment, the subscription will be irrevocable, even if you later change your mind for any reason and even if the Rights Offering
is extended by the Board of Directors.
Escrow
Arrangements; Return of Funds
The
Subscription Agent will hold all Rights Offering subscription funds in a segregated account pending completion of our Rights Offering.
The Subscription Agent will hold the funds in escrow until we complete or cancel the Rights Offering. If we cancel the Rights
Offering, the Subscription Agent will return to you all of your respective subscription payments, without interest or penalty,
as soon as reasonably possible.
If
there is a fundamental change to the Rights Offering and if you decide to cancel your exercise of Rights, then the Subscription
Agent will return your payment without charge of any interest, penalties or deductions. If you hold your shares through your broker,
dealer, bank or other nominee, then the cancellation of any exercise of Rights would have to be initiated by your broker, dealer,
bank or other nominee.
If
the Subscription Agent returns payments to you through your broker, dealer, bank or other nominee, then such broker, dealer, bank
or other nominee may charge you separate service or administration fees. We are not responsible for covering or reimbursing any
such fees.
Expiration
Date, Extension, and Amendments
If
you wish to purchase shares of Common Stock in our Rights Offering, you must promptly act to complete and properly deliver all
applicable documentation and certificates, and assure that payment for your subscription is received by the Subscription Agent
prior to the expiration of the Rights Offering on June 24, 2019, at 5:00 p.m., Eastern Daylight Time, which is 18 calendar
days after the effective date of this prospectus. We are not responsible for remediating any incomplete or incorrect documents
or deficient payment that you submit. We have no obligation to contact you or any broker, dealer, bank or other nominee that holds
Rights on your behalf regarding any deficiencies or irregularities. We reserve the right to determine, at our sole discretion,
whether the materials and payments that you submit are complete and follow the applicable procedures pertaining to exercise of
your Rights. The risk of delivery of all documents and payments is borne by you or your nominee, not by the Subscription Agent
or us.
We
reserve the right to extend the Rights Offering period for a period not to exceed eight calendar days. If we extend the
Rights Offering period, we will issue a press release announcing the extension in advance of the expiration of the then-effective
Rights Offering period. We may extend the duration of the Rights Offering period if applicable laws or regulations require us
to do so. Our Board of Directors has broad discretion regarding any and all determinations whether or not to extend the Rights
Offering period. The Board of Directors may also cancel the Rights Offering at any time, for any reason, before the expiration
of the Rights Offering period.
Our
Board of Directors reserves the right to amend or modify the terms of the Rights Offering. The amendments or modifications may
be made for any reason. These changes may include, for example, changes to the subscription price or other matters that may induce
greater participation by our securityholders in the Rights Offering. If we make any fundamental change to the terms of the Rights
Offering after the date of effectiveness of this prospectus, we will file a post-effective amendment to the registration statement
in which this prospectus is included and offer subscribers the opportunity to cancel their subscriptions. In such event, we will
issue subscription refunds to each securityholder subscribing to purchase shares in the Rights Offering and recirculate an amended
prospectus after the post-effective amendment is declared effective with the SEC. If we extend the expiration date of the Rights
Offering period in connection with any post-effective amendment, we will allow holders of Rights reasonable period of additional
time to make new investment decisions on the basis of the new information set forth in the amended prospectus that will form a
part of the post-effective amendment. In such event, we will issue a press release announcing the changes to the Rights Offering
and the new Rights Offering expiration date. The terms and conditions of our Rights Offering cannot be modified or amended after
the expiration date.
Cancellation
of Some or All of the Rights Offering
We
reserve the right, exercisable at our sole discretion for any reason, to cancel some or all of the Rights Offering before the
expiration date. If we cancel and terminate some or all of the Rights Offering, we will issue a press release advising our securityholders
of the cancelation and all Rights will expire without value. The Subscription Agent will return to subscribers, without interest
or penalty, any respective subscription payments that it is holding in escrow as soon as reasonably possible following the cancelation
date.
No
Revocation or Change
Except
in the event we make a fundamental change to the terms and conditions of the Rights Offering, your exercise of Rights will be
irrevocable, even if you later change your mind about exercising your Rights. The irrevocability of your exercise will apply even
if new information comes to your attention or if the market price of our Common Stock falls below the subscription price of $0.24
per share. Your exercise of the Rights will also remain irrevocable if the authorized period for the Rights Offering is extended
by our Board of Directors. You should not exercise your Rights unless you are certain that you wish to purchase shares of our
Common Stock at the subscription price of $0.24 per share.
If
we make any fundamental change to the terms of the Rights Offering after the date of effectiveness of this prospectus, we will
file a post-effective amendment to the registration statement in which this prospectus is included and offer you the opportunity
to cancel your subscription. In such event, if you have subscribed to purchase shares in the Rights Offering and request a refund,
we will issue subscription refunds to you and recirculate an amended prospectus after the post-effective amendment is declared
effective with the SEC. If we extend the expiration date of the Rights Offering period in connection with any post-effective amendment,
we will allow holders of Rights reasonable period of additional time to make new investment decisions on the basis of the new
information set forth in the prospectus that will form a part of the post-effective amendment. In such event, we will issue a
press release announcing the changes to the Rights Offering and the new expiration date.
Dilutive
Effects of the Rights Offering
In
addition to the holders of our 29,615,786 shares of Common Stock outstanding on the record date, we are distributing Rights
to holders of outstanding warrants to purchase an additional 2,357,142 shares of our Common Stock. Warrantholders will not need
to exercise their warrants in order to receive Rights. As a result, the total number of Rights distributed will exceed the number
of shares of our Common Stock outstanding on the record date. This means that even if you exercise all of your Rights, your percentage
ownership of our Common Stock will likely decrease and your voting and other equity rights will be diluted by the issuance of
shares in the Rights Offering to subscribers and the Backstop Purchasers. Rights not exercised prior to the expiration of the
Rights Offering will automatically terminate.
Stockholder
Rights
You
will not have any rights in the shares that you purchase in the Rights Offering until the shares are actually received by you.
We intend to issue and deliver the shares as soon as reasonably possible after completion of the Rights Offering, however, there
may be a delay between the expiration date of the Rights Offering and the date and time that the shares are issued and delivered
to you or your broker, custodian bank or other nominee, if applicable.
Issuance
of Shares Acquired in the Rights Offering
At
the completion of the Rights Offering, the Company will issue the shares of Common Stock in book-entry form to each subscriber.
The Company will not issue any stock certificates. If you are the holder of record of our Common Stock, shortly after the expiration
of the Rights Offering you will receive a statement of ownership from our transfer agent, American Stock Transfer & Trust
Company, LLC, reflecting the shares of Common Stock that you have purchased in the offering. If your shares of Common Stock are
held in the name of a broker, dealer, bank or other nominee, your shares of Common Stock will be issued to the same account. You
may request a statement of ownership from the broker or nominee following the completion of the Rights Offering.
Foreign
Stockholders
For
purposes of assuring that we will not breach the laws of any country outside of the United States, we will not mail this prospectus
or the Rights certificates to securityholders whose addresses are outside the United States or who have an army post office or
foreign post office address. The Subscription Agent will hold the Rights certificates on behalf of each such stockholder.
If
you live outside of the United States and wish to exercise your Rights, you must notify the Subscription Agent on or before 5:00
p.m. EDT at least three business days prior to the expiration date of the Rights Offering. You must satisfy the Subscription
Agent that your exercise of Rights does not violate any laws applicable to you in your locality. All other deadlines with respect
to the delivery of subscription materials and payment will apply to you,
Third-Party
Consents or Approvals
We
will have no obligation to accept your subscription to the Rights Offering if we determine, at our sole discretion, that any third-party
consents or approvals would be necessary for you to own or control such shares, including, without limitation, any regulatory
authorities of any state or federal agency, and we have not received satisfactory evidence of such consent or approval prior to
the expiration of the offering period.
Fees
and Expenses
We
will pay all fees, costs and expenses due to the Subscription Agent, the Information Agent and any other expenses we that we may
incur in connection with the Rights Offering. You are solely responsible for paying your own commissions, fees, taxes or other
expenses that you may incur in connection with the exercise of your Rights, your subscription and your purchase of our shares
of Common Stock in the Rights Offering. Without limiting the foregoing, you will be solely responsible for any and all fees, costs,
expenses and disbursements charged by your broker, dealer, bank or other nominee, if applicable.
No
Board of Directors Recommendation to Rights Holders
Neither
our Board of Directors nor our management has made any recommendations regarding the exercise of your Rights. You should carefully
consider all relevant facts and circumstances in determining whether or not to exercise your Rights on the basis of your own assessment.
Except in the event we make a fundamental change to the terms and conditions of the Rights Offering, you may not revoke or revise
any exercises of Rights once made, unless we cancel and terminate the Rights Offering. See the section in this prospectus under
the caption: “Risk Factors.”
Shares
of Our Common Stock Outstanding After the Rights Offering
As
of the record date, we have 29,615,786 shares of our Common Stock issued and outstanding. We are offering up to 9,975,553
shares of Common Stock in the Rights Offering. In reliance on the Backstop Commitments, we expect to issue all of the shares
of Common Stock offered in the Rights Offering. We therefore anticipate that if we complete the Rights Offering, we will have
an aggregate of 39,591,339 shares of Common Stock issued and outstanding following completion of the Rights Offering.
No Offer
Made to California Residents;
No Unlawful
Subscriptions
The distribution of
the Rights and the offer and sale of the shares of Common Stock issuable upon exercise of the Rights is not registered or otherwise
qualified in California. Accordingly, the Rights Offering is not available to residents of California.
We
reserve the absolute right to reject any subscriptions not properly submitted or the acceptance of which would be unlawful. We
are not soliciting, selling or accepting any offers to participate in our Rights Offering in any jurisdictions where such actions
are prohibited. No offers to purchase any shares of our Common Stock are made to rights holders who are residents of such jurisdictions
and we will not sell or accept offers for the purchase of our Common Stock from such Rights holders.
PLAN
OF DISTRIBUTION
On
or about June 6, 2019, which is the date of effectiveness of this prospectus,
we plan to distribute the Rights, Rights certificates and copies of this prospectus to holders of shares of our Common Stock as
of the record date. If you have made a determination to exercise your rights, you must comply in a timely manner with the exercise
procedures set forth in the section of this prospectus under the caption: “The Rights Offering—Method of Exercising
Rights.”
You
may contact the Information Agent if you have any questions at: 866-388-7535.
Some
of our officers and directors may solicit responses from you as a holder of Rights. We will not pay our officers and directors
any commissions or compensation for such services, other than their normal employment or director compensation.
In
connection with our Rights Offering, we have agreed to pay our Subscription Agent and Information Agent their customary fees,
plus certain expenses.
No
brokers, dealers or underwriters are acting on our behalf in connection with the solicitation or exercise of Rights. We are not
paying any commissions, underwriting fees or discounts in connection with the Rights Offering or the shares that we will issue
upon exercise of the Rights held by our securityholders. We are not aware of any third-party agreements in such regard.
DESCRIPTION
OF OUR COMMON STOCK
The
following is only a summary of the terms and conditions applicable to our Common Stock and it not intended to be complete. Our
company is a Delaware corporation and our Common Stock is subject to the provisions of our Amended and Restated Certificate of
Incorporation and our By Laws.
General
We
are authorized to issue 42,000,000 shares of Common Stock, par value $0.01 per share. As of the record date, we had 29,615,786
shares of our Common Stock issued and outstanding.
The
holders of our Common Stock:
●
have equal ratable rights to dividends from funds legally available if and when declared by our
Board of Directors;
●
do not have cumulative voting rights;
●
are entitled to share ratably in all of our assets available for distribution to holders of Common
Stock upon liquidation, dissolution or winding up of our affairs; and
●
do not have preemptive, subscription or conversion rights and there are no redemption or sinking
fund provisions or rights.
All
shares of Common Stock now issued and outstanding are fully paid for and non-assessable. The full scope of the terms, rights and
liabilities applicable to holders of our securities are set forth in (i) our Amended and Restated Certificate of Incorporation
and By Laws, which are incorporated by reference as exhibits into the Registration Statement of which this prospectus is part;
and (ii) the applicable statutes of the State of Delaware.
Transfer
Agent and Registrar
The
transfer agent and registrar for our Common Stock is American Stock Transfer & Trust Company, LLC
Listing
Our
Common Stock is traded on the OTCQB market under the symbol ACFN.
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
The
following is a summary of the material U.S. federal income tax consequences of the receipt of rights in our Rights Offering and
the exercise (or expiration) of those rights as applied to U.S. holders (as defined below) of our Common Stock that hold such
stock as a capital asset for federal income tax purposes and, insofar as it relates to matters of U.S. federal income tax law
and regulations or legal conclusions with respect thereto, constitutes the opinion of our outside counsel, Eilenberg & Krause
LLP. This discussion is based upon existing U.S. federal income tax law, which is subject to differing interpretations or change
(possibly with retroactive effect). The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable
state, local or non-U.S. tax laws are not discussed. We therefore recommend that each holder of our Common Stock consult its own
tax advisor with respect to the particular tax consequences of this offering or the related share issuance to such holder.
This
discussion is based upon the U.S. Internal Revenue Code of 1986, as amended, or Code, Treasury Regulations promulgated thereunder,
judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (“IRS”),
in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such
change or differing interpretation may be applied retroactively in a manner that could adversely affect a holder of the Rights
or shares of our Common Stock acquired pursuant to exercise of the Rights.
This
summary deals only with U.S. holders that acquire Rights in our Rights Offering and assumes that the Rights or shares of Common
Stock issued upon exercise of the Rights will be held as capital assets within the meaning of Section 1221 of the Code.
This
summary does not address all aspects of federal income taxation that may be important or consequential to various holders responsive
to specific facts or circumstances or to holders who may be subject to special tax rules, including, without limitation, the following,
all of whom may be subject to tax rules that differ significantly from those summarized in this discussion:
●
U.S. expatriates and former citizens or long-term residents of the United States;
●
persons holding the Rights or shares of our Common Stock as part of a hedge, straddle or other risk reduction strategy or as part
of a conversion transaction or other integrated investment;
●
banks, insurance companies, 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 investors therein);
●
tax-exempt organizations or governmental organizations;
●
persons deemed to sell the Rights, shares of Common Stock under the constructive sale provisions of the Code;
●
persons for whom our stock constitutes “qualified small business stock” within the meaning of Section 1202 of the
Code;
●
persons who hold or receive the Rights, shares of our Common Stock pursuant to the exercise of any employee stock option or otherwise
as compensation; and
●
tax-qualified retirement plans.
We
have not sought, and we will not seek, any rulings from the IRS regarding the federal income tax consequences of this offering
or the related share issuances.
For
purposes of this summary, a “U.S. holder” is a holder that is for U.S. federal income tax purposes:
●
an individual who is a citizen or resident of the U.S.;
●
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws
of the United States, any state thereof, or the District of Columbia;
●
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
●
a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more United States persons (within
the meaning of Section 7701(a)(30) of the Code), or (2) has made a valid election under applicable Treasury Regulations to continue
to be treated as a United States person.
THE
FOLLOWING IS A DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS OF THE RECEIPT OF RIGHTS IN THIS OFFERING AND
OF THE EXERCISE, SALE OR OTHER DISPOSITION AND EXPIRATION OF THOSE RIGHTS. EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS
TO PARTICULAR TAX CONSEQUENCES TO IT OF THE RECEIPT OF RIGHTS IN THIS OFFERING AND OF THE EXERCISE, SALE OR OTHER DISPOSITION
AND EXPIRATION OF THOSE RIGHTS, INCLUDING THE APPLICABILITY AND EFFECTS OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED
CHANGES IN APPLICABLE LAWS.
Receipt
of the Rights
It
is the opinion of our outside counsel, Eilenberg & Krause LLP, that the distribution of the Rights should be treated as a
non-taxable stock dividend under Section 305(a) of the Code. However, there is a lack of authority directly addressing the application
of Section 305(a) of the Code to distributions of Rights, including ones that incorporate backstop commitments by certain securityholders,
and thus the application of Section 305(a) of the Code to the distribution of the Rights in our offering is uncertain. In addition,
our counsel’s position is not binding on the IRS, or the courts. If this position is finally determined by the IRS or a
court to be incorrect, the fair market value of the rights would be taxable to participants in the Rights Offering as a dividend
to the extent of our current and accumulated earnings and profits, with any excess being treated as a return of basis to the extent
thereof and then as capital gain. Due to the lack of authority on the part of the IRS and the courts in regard to interpreting
Code Section 305 as applied to distributions of Rights, it is not reasonably possible to quantify the degree of uncertainty and
risk to the recipients of the Rights regarding potential adverse tax effects.
See,
“Risk Factors—The receipt
of Rights may be treated as a taxable distribution to you.”
The
distribution of the rights would be taxable under Section 305(b) of the Code if the Rights Offering were to be treated as a distribution
or part of a series of distributions that have the effect of the receipt of cash or other property by some of our securityholders
and an increase in the proportionate interest of our other securityholders in our assets or earning and profits. Distributions
having that effect are referred to as “disproportionate distributions.” For purposes of the definition of “disproportionate
distributions”, the term “property” includes money, securities and any other property, except that “property”
does not include stock in the corporation making the distribution or rights to acquire such stock. The reference to a “series
of distributions” encompasses all distributions of stock made or deemed made by a corporation which have the result of receipt
of cash or property by some securityholders and an increase in the proportionate interests of other securityholders. Under the
Treasury Regulations applicable to Section 305(b), where the receipt of cash or property occurs more than 36 months following
a distribution or series of distributions of stock, or where a distribution is made more than 36 months following the receipt
of cash or property, such distribution or distributions will be presumed not to result in the receipt of cash or property by some
securityholders and an increase in the proportionate interest of other securityholders, unless the receipt of cash or property
by some securityholders and the distribution or series of distributions are made pursuant to a plan. During the last 36 months,
we have not made any distributions of cash or non-stock property with respect to our Common Stock. In addition, within the last
36 months, we have not made any payments in cash or non-stock property of interest on previously outstanding convertible notes
or of dividends on previously outstanding preferred stock. Currently, we do not intend to pay any dividends on our Common Stock
(other than the issuance of the Rights in connection with this offering). In addition, many forms of taxable distributions under
Section 305(b) of the Code involve preferred stock, such as the distribution of convertible preferred stock in certain circumstances
pursuant to Section 305(b). Currently, we do not have any convertible debt or preferred stock outstanding, nor do we currently
intend to issue any convertible debt or preferred stock.
On
the basis of the relevant facts discussed in the paragraph above, together with analysis of Section 305(b) of the Code and corresponding
Treasury Regulations, it is the opinion of our outside counsel, Eilenberg & Krause LLP, that the distribution of the Rights
in the Rights Offering should not constitute an increase in the proportionate interest of some securityholders in the assets or
earnings and profits of the Company and that the Rights Offering should therefore not constitute part of a “disproportionate
distribution,” pursuant to Section 305(b) of the Code. However, due to lack of authority, the actual application of the
Code Section 305 rules to the Rights Offering (and any interest therein or obtained thereby) is uncertain. If our tax counsel’s
opinion is determined by the IRS or a court to be incorrect, whether on the basis that the issuance of the Rights is a “disproportionate
distribution” or otherwise, the fair market value of the Rights would be taxable to you.
See,
“Risk Factors—The
receipt of Rights may be treated as a taxable distribution to you.”
The
remaining description assumes that holders of our Common Stock will not be subject to U.S. federal income tax on the receipt of
Rights.
Tax
Basis and Holding Period of the Rights
Your
tax basis of the Rights you receive with respect to your shares of commons stock for U.S. federal income tax purposes will depend
on the fair market value of the Rights you receive and the fair market value of your existing shares of Common Stock on the date
you receive the Rights.
If
the fair market value of the Rights you receive is less than 15% of the fair market value of your existing shares of Common Stock
on the date you receive your Rights, your Rights will have a zero basis, unless you choose to allocate your basis in the shares
of Common Stock you own prior to the expiration date of the Rights Offering between your existing shares of Common Stock and the
Rights in proportion to the relative fair market values of those existing shares of Common Stock and the Rights, as determined
on the date of receipt of the Rights.
However,
if the fair market value of the Rights a U.S. holder receives is 15% or more of the fair market value of their existing shares
of Common Stock on the date the U.S. holder receives the Rights, then the U.S. holder must allocate its tax basis in its existing
shares of Common Stock between those shares and the Rights the U.S. holder receives in proportion to their fair market values
determined on the date the U.S. holder receives the Rights.
The
fair market value of the Rights on the date of distribution of the Rights is inherently uncertain. We have not obtained any fair
market value appraisal, and we do not plan to commission any appraisal regarding the fair market value of the Rights. In ascertaining
fair market value of the Rights, you should consider all relevant facts and circumstances, including any difference between the
subscription price of the Rights and the trading price of our Common Stock on the date that the Rights are distributed, the length
of the period during which the Rights may be exercised and the fact that the Rights are non-transferable.
Expiration
of the Rights
If
your rights expire without exercise while you continue to hold the shares of our Common Stock with respect to which the rights
are granted to you, we do not expect that you will recognize any gain or loss, and your tax basis in the shares of Common Stock
on which your rights were granted should equal the tax basis prior to the date of your receipt of the Rights. If the rights expire
without exercise after you have disposed of any shares of our Common Stock with respect to which your rights have been granted,
you should consult your tax advisor regarding recognition of any possible gain or loss upon the expiration of your rights.
Exercise
of the Rights; Tax Basis and Holding Period of the Shares
The
exercise of the rights that you receive in this offering should not result in any gain or loss to you. The tax basis of our Common
Stock that you acquire through exercise of the rights should be equal to the sum of:
●
the subscription price per share; and
●
the basis, if any, in the rights that you exercised, determined as described in “—Tax Basis of the Rights” above.
The
holding period for the shares of our Common Stock that you acquire upon exercise of a right should begin with the date of exercise
of the rights.
If
you exercise the rights received in this offering after disposing of the shares of our Common Stock with respect to which the
rights are received, you should consult your tax advisor regarding the potential application of the “wash sale” rules
under Section 1091 of the Code.
Sale
or Other Disposition of the Rights Shares
If
you sell, transfer or dispose of the shares that you acquire in respect of the exercise of your rights, the recognition of the
gain or loss upon the sale, transfer or disposition of such shares should be a capital gain or loss, assuming the shares are held
as capital assets at the time of sale. If you hold your shares for more than one year, the treatment of the gain or loss should
be long-term.
Information
Reporting and Backup Withholding
You
may be subject to information reporting to the IRS and/or U.S. federal backup withholding with respect to dividend payments on
or the gross proceeds from the disposition of our shares of Common Stock that you acquire through the exercise of Rights. Backup
withholding should not apply if you furnish a correct taxpayer identification number (certified on the IRS Form W-9) or otherwise
establish that you are exempt from backup withholding. Backup withholding is not an additional tax. Backup withholding may apply
if you (i) fail to furnish your social security or other taxpayer identification number (“TIN”), (ii) furnish an incorrect
TIN, (iii) fail to report interest or dividends properly, or (iv) fail to provide a certified statement, signed under penalty
of perjury, that the TIN provided is correct, that you are not subject to backup withholding and that you are a U.S. person. Amounts
withheld as backup withholding may be credited against your U.S. federal income tax liability. You may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing
the applicable information.
LEGAL
MATTERS
The
validity of the Common Stock offered by this prospectus will be passed upon for us, and certain matters regarding the material
U.S. federal income tax consequences of the Rights Offering have been passed upon for us, by Eilenberg & Krause LLP.
EXPERTS
Our
consolidated financial statements incorporated in this prospectus by reference from our Annual Report on Form 10-K for the year
ended December 31, 2018, were audited by Friedman LLP, an independent registered public accounting firm, as stated in their report
which is incorporated herein by reference. Such consolidated statements have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
are an SEC reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC.
We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the Common Stock and
Rights being offered under this prospectus. This prospectus does not contain all of the information set forth in the registration
statement and the exhibits to the registration statement. For further information with respect to us and the securities being
offered under this prospectus, we refer you to the complete registration statement and the exhibits and schedules filed as a part
of the registration statement. You may read and copy the registration statement, as well as our reports, proxy statements and
other information, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC. The SEC’s Internet site can be found at
http://www.sec.gov
. You can also obtain copies of materials we file
with the SEC from our Internet website found at
http://www.acornenergy.com
under the heading “Investor Relations.”
The information contained in our website is not a part of this prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with the SEC. The documents incorporated by reference
into this prospectus contain important information that you should read about us. The following documents are incorporated by
reference into this prospectus:
|
●
|
our
Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on March 27, 2019;
|
|
●
|
our
Current Report on Form 8-K filed with the SEC on May 6, 2019;
|
|
●
|
our
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, filed with
the SEC on May 15, 2019;
|
|
●
|
our
Current Report on Form 8-K filed with the SEC on May 24, 2019; and
|
|
●
|
our Current Report on Form 8-K filed with the
SEC on June 4, 2019.
|
All
documents subsequently filed by us (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits
filed on such form that are related to such items unless such Form 8-K expressly provides to the contrary) with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, including those made after the date of
the initial filing of the registration statement of which this prospectus forms a part and prior to effectiveness of such registration
statement, until we file a post-effective amendment that indicates the termination of the offering of the Common Stock made by
this prospectus, are deemed to be incorporated by reference into this prospectus. Such future filings will become a part of this
prospectus from the respective dates that such documents are filed with the SEC.
Any
statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes hereof to the extent that such statement contained herein or in any other subsequently filed
document, which is also incorporated or deemed to be incorporated herein, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
The
documents incorporated by reference into this prospectus are also available on our corporate website at
http://www.acornenergy.com
under the heading “Investor Relations.” Information contained on, or that can be accessed through, our website
is not part of this prospectus, and you should not consider information on our website to be part of this report unless specifically
incorporated herein by reference. You may obtain copies of any or all of the documents incorporated by reference in this prospectus
from us free of charge by requesting them in writing or by telephone at the following address:
Acorn
Energy, Inc.
1000 N West Street, Suite 1200
Wilmington, Delaware 19801
(302) 656-1708
Acorn
Energy, Inc.
Rights
to Purchase Shares of Common Stock
9,975,553
Shares of Common Stock
PROSPECTUS
June 6, 2019
We
have not authorized any dealer, salesperson or other person to give you written information other than this prospectus or to make
representations as to matters not stated in this prospectus. You must not rely on unauthorized information. This prospectus is
not an offer to sell these securities or our solicitation of your offer to buy these securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any sales made hereunder after the date of this prospectus
shall create an implication that the information contained herein or the affairs of our company have not changed since the date
of this prospectus.
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