Filed
Pursuant to Rule 424(b)(4)
Registration
No. 333-233657
PROSPECTUS
AIM
ImmunoTech Inc.
(Formerly,
Hemispherx Biopharma, Inc.)
1,740,550
Shares of Common Stock
Pre-funded
Warrants to Purchase Up to 7,148,310 Shares of Common Stock
Warrants
to Purchase 8,888,860 Shares of Common Stock
This
is a “best efforts” offering of 1,740,550 shares of our common stock, $0.001 par value per share, and warrants to
purchase up to 1,740,550 shares of our common stock (and the shares of common stock that are issuable from time to time upon exercise
of the warrants). Each warrant will have an exercise price of $0.99 per share and will result in the issuance of one share of
common stock to the holder of such warrant. Each warrant will expire on the fifth anniversary of the original issuance date. The
shares of our common stock and warrants are immediately separable and will be issued separately, but will be purchased together
in this offering.
We
are also offering 7,148,310 pre-funded warrants to certain purchasers whose purchase of shares of common stock in this offering
would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than
4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of
this offering, the opportunity to purchase, if any such purchaser so chooses, pre-funded warrants, in lieu of shares of common
stock that would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser,
9.99%) of our outstanding common stock. Each pre-funded warrant is exercisable for one share of our common stock. The purchase
price of each pre-funded warrant is equal to the price at which a share of common stock is sold to the public in this offering,
minus $0.001, and the exercise price of each pre-funded warrant will be $0.001 per share. The pre-funded warrants are immediately
exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full. Each pre-funded warrant
purchased in this offering in lieu of common stock also is being sold together with a purchase warrant. Pursuant to this prospectus,
we are also offering the shares of common stock issuable upon the exercise of the purchase warrants and pre-funded warrants offered
hereby. This offering also relates to the shares of common stock issuable upon exercise of the purchase warrants and any
pre-funded warrants sold in this offering. The shares of common stock, purchase warrants and pre-funded warrants can only be purchased
together in this offering but will be issued separately and will be immediately separable upon issuance.
Our
common stock is listed on the NYSE American under the symbol “AIM”. The last reported sale price for our common stock
on the NYSE American on September 24, 2019 was $1.47 per share. There is no established public trading market for the pre-funded
warrants or the warrants, and we do not expect a market to develop. In addition, we do not intend to apply for a listing of the
pre-funded warrants or the warrants on any national securities exchange.
This
offering will terminate upon the earliest of (i) such time as all of the securities offered pursuant to this offering have been
sold or (ii) ten (10) days from the date of this prospectus. While this is a “best efforts” offering, the Underwriter
will purchase the securities from us and resell them to you, rather than you purchasing the securities from us directly. You will
fund your account at the Underwriter and the Underwriter will only withdraw those funds at the closing of the offering. We have
not made any arrangements to place your funds received from this offering in an escrow, trust or similar account with any third-party
agent because your funds will be placed directly in your account at the Underwriter. In the event that at least 80% of the aggregate
dollar amount of the securities offered pursuant to this offering have not yet been sold within the ten (10) day offering period
from the date of this prospectus, the Underwriter will promptly return to investors who have deposited funds into their accounts
such funds without interest or offset.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning on page 6 of this prospectus. You should
carefully consider these risk factors, as well as the information contained in this prospectus, before you invest.
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.
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Per Share and Warrant
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Per Pre-Funded Warrant and Warrant
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Total
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Public offering price(1)
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$
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0.90
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$
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0.899
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$
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7,992,826
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Underwriting discounts and commissions(2)
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$
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0.06307
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$
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0.063
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$
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560,120
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Proceeds to us, before expenses
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$
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0.837
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$
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0.83607
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$
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7,432,706
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(1)
The public offering price is $0.89 per share of common stock, $0.899 per pre-funded warrant and $0.001 per accompanying warrant.
(2)
We have agreed to reimburse the Underwriter for certain expenses. See “Underwriting” beginning on page 25 of this
prospectus for a description of the compensation payable to the Underwriter.
We
have granted a 45-day option to the Underwriter to purchase up to 1,333,329 additional shares of common stock and/or warrants
to purchase up to 1,333,329 shares of common stock from us solely to cover over-allotments, if any.
This
offering is being completed on a “best efforts” basis and the Underwriter has no obligation to buy any shares of common
stock, pre-funded warrant and warrant from us or to arrange for the purchase or sale of any specific number or dollar amount of
such securities.
The
Underwriter expects to deliver the securities to purchasers in the offering on or about September 27, 2019.
Sole
Book-Running Manager
A.G.P.
The
date of this Prospectus is September 25, 2019
TABLE
OF CONTENTS
You
should rely only on the information we have included or incorporated by reference into this prospectus. Neither we nor the Underwriter
has authorized any dealer, salesman or other person to give any information or to make any representation other than those contained
or incorporated by reference into this prospectus. You must not rely upon any information or representation not contained or incorporated
by reference into this prospectus. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy
any securities other than the registered securities to which they relate, nor does this prospectus constitute an offer to sell
or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer
or solicitation in such jurisdiction.
You
should not assume the information contained in this prospectus is accurate on any date subsequent to the date set forth on the
front of the document or that any information we have incorporated by reference herein is correct on any date subsequent to the
date of the document incorporated by reference, even though this prospectus is delivered, or securities are sold, on a later date.
No
action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession
or distribution of this prospectus in that jurisdiction. We have not and the Underwriter has not done anything that would permit
this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required,
other than the United States. Persons who come into possession of this prospectus in jurisdictions outside the United States are
required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus
applicable to that jurisdiction.
This
prospectus contains or incorporates by reference summaries of certain provisions contained in some of the documents described
herein, but reference is made to the actual documents for complete information. All the summaries are qualified in their entirety
by the actual documents. Copies of some of the documents referred to herein have been filed or have been incorporated by reference
as exhibits to the registration statement of which this prospectus forms a part, and you may obtain copies of those documents
as described in this prospectus under the heading “Where You Can Find More Information.”
PROSPECTUS
SUMMARY
This
summary contains basic information about us and this offering. Because it is a summary, it does not contain all of the information
that you should consider before investing. Before you decide to invest in our securities, you should read this entire prospectus
carefully, including the section entitled “Risk Factors” and any information incorporated by reference herein. Unless
the context otherwise requires, references in this prospectus to “AIM,” “the Company,” “we,”
“us” and “our” refer to AIM ImmunoTech Inc. and our subsidiaries.
Our
Business
We
are an immuno-pharma company focused on the research and development of therapeutics to treat multiple types of cancers, as well
as immune-deficiency disorders, including myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS). We have established a strong
foundation of laboratory, pre-clinical and clinical data with respect to the development of nucleic acids and natural interferon
to enhance the natural antiviral defense system of the human body and to aid the development of therapeutic products for the treatment
of certain cancers and chronic diseases.
Our
flagship products include Ampligen® (rintatolimod), a drug of large macromolecular RNA (ribonucleic acid) molecules, and Alferon
N Injection® (Interferon Alfa-N3).
Ampligen®
represents an RNA being developed for globally important cancers, viral diseases and disorders of the immune system. Ampligen®
has in the clinic demonstrated the potential for standalone efficacy in a number of solid tumors. We have also seen success in
increasing survival rates and efficacy in the treatment of animal tumors when Ampligen® is used in combination with checkpoint
blockade therapies. This success in the field of immuno-oncology has guided our focus toward the potential use of Ampligen®
as a combinational therapy for the treatment of a variety of solid tumor types. There are currently multiple Ampligen® clinical
trials — both underway and planned — at major cancer research centers around the country. Ampligen ® is also being
used as a monotherapy to treat pancreatic cancer patients in an Early Access Program (EAP) approved by the Inspectorate of Healthcare
in the Netherlands at Erasmus Medical Center.
Ampligen®
is also being evaluated for the treatment of ME/CFS. We are currently sponsoring an expanded access program (EAP) for ME/CFS patients
in the U.S. In August 2016, we received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia
Medica (ANMAT) for commercial sale of Ampligen® (trade name rintatolimod) in the Argentine Republic for the treatment of severe
CFS. With regulatory approval in Argentina, to the best of our knowledge, Ampligen® is the world’s only approved therapeutic
for ME/CFS. We continue to pursue our Ampligen New Drug Application, or NDA, for the treatment of ME/CFS with the U.S. Food and
Drug Administration, or FDA.
Alferon
N Injection® is approved for a category of sexually transmitted diseases infection and patients that are intolerant to recombinant
interferon in Argentina. Alferon is the only natural-source, multi-species alpha interferon currently approved for sale in the
U.S. for the intralesional treatment of refractory (resistant to other treatment) or recurring external Condylomata Acuminata/genital
warts (GW) in patients 18 years of age or older. Certain types of human papilloma viruses cause GW. We also have approval from
ANMAT for the treatment of refractory patients that failed or were intolerant to treatment with recombinant interferon in Argentina.
We have developed and, with proper funding, will be seeking FDA Pre-Approval Inspection of a high-volume, high-efficiency, upgraded
manufacturing process to allow for the commercial viability of Alferon®.
Recent
Developments
Currently,
six Ampligen® clinical trials are open for enrollment or expect to open for enrollment soon at university cancer
centers testing whether tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including
checkpoint inhibitors:
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Advanced
Recurrent Ovarian Cancer - Phase 1 / 2 study of intraperitoneal chemo-immunotherapy
in advanced recurrent ovarian cancer at University of Pittsburgh Medical Center. Phase
1 portion establishes intraperitoneal safety with positive survival data.
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Advanced
Recurrent Ovarian Cancer - A follow-up Phase 2 study of advanced recurrent ovarian
cancer using cisplatin, pembrolizumab, plus Ampligen at University of Pittsburgh Medical
Center. Up to 45 patients to be enrolled. Enrollment has commenced and the first patients
have just commenced treatment.
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Stage
4 Metastatic Triple Negative Breast Cancer - Phase 2 study of metastatic triple-negative
breast cancer using chemokine modulation therapy, including Ampligen and pembrolizumab
at Roswell Park Comprehensive Cancer Center. Two of the planned 6 patients enrolled and
treated.
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Stage
4 Colorectal Cancer Metastatic to the Liver - Phase 2a study of Ampligen as component
of chemokine modulatory regimen on colorectal cancer metastatic to liver at Roswell Park
Comprehensive Cancer Center. Seven of 12 planned patients enrolled and treated.
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Early-Stage
Prostate Cancer - Phase 2 study investigating the effectiveness and safety of aspirin
and Ampligen with or without interferon-alpha 2b (Intron A) compared to no drug treatments
in a randomized three-arm study of patients with prostate cancer before undergoing radical
prostatectomy (Roswell Park Comprehensive Cancer Center, Dr. G. Chatta, PI). IRB and
FDA approval to proceed received; pending internal tasks before the study can be opened,
with the goal of the end of September. Up to 60 patients to be enrolled.
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Early-Stage
Triple Negative Breast Cancer - Phase 1 study of chemokine modulation plus neoadjuvant
chemotherapy in patients with early-stage triple negative breast cancer has received
FDA authorization. The objective of this study is to evaluate the safety and tolerability
of a combination of Ampligen, celecoxib with or without Intron A, when given along with
chemotherapy. The goal of this approach is to increase survival.
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In
addition, five Ampligen clinical trials are planned for initiation in 2019 or 2020, subject to funding:
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Stage
4 Refractory Metastatic Colorectal Carcinoma - Phase 2 study of Ampligen plus pembrolizumab
in Stage 4 refractory metastatic colorectal carcinoma at Roswell Park Comprehensive Cancer
Center. Dr. P. Boland, PI. Up to 22 patients to be enrolled.
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Stage
4 Urothelial, Melanoma and Renal Cell Carcinoma - Phase 2 study of Stage 4 urothelial
(bladder), melanoma and renal cell carcinoma, resistant to checkpoint blockade, using
Ampligen plus checkpoint blockade at Roswell Park Comprehensive Cancer Center. Protocol
design currently being finalized.
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Non-Small
Cell Lung Cancer - First-line therapy for non-small cell lung cancer with SOC chemotherapy
plus Ampligen and pembrolizumab at University of Nebraska Medical Center. Dr. V. Ernani,
PI. Study design and budget being developed. However, we now anticipate an extended delay,
as other studies with funding have moved ahead of the Ampligen project.
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Advanced
Pancreatic Cancer - Phase 2 study in advanced pancreatic cancer using checkpoint
blockade plus Ampligen at University of Nebraska Medical Center. Dr. K. Klute, PI. Protocol
and budget being developed.
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Brain-Metastatic
Breast Cancer - Phase 2 study to assess the effectiveness of a three-pronged strategy
combining distinct immunotherapy approaches, including Ampligen. Roswell Park Comprehensive
Cancer Center and Moffitt Cancer Center have both received “Breakthrough Awards”
from the U.S. Department of Defense. Together, these separate but parallel proposed clinical
trials are receiving approximately $15 million in DoD funding to study Ampligen.
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There
is also an Expanded Access Program (EAP) with Ampligen as a standalone treatment in pancreatic cancer at Erasmus University, The
Netherlands, conducted by Professor Casper van Eijck. Eligibility for the EAP includes adults with metastatic or locally advanced
pancreatic carcinoma following FOLFIRINOX and adults post-Whipple procedure. Systemic Immune-Inflammation Index and restaging
scans/x-rays were performed every 6 weeks. The EAP was initially approved for extremely advanced cases, but is now approved for
all pancreatic cancer, regardless of stage.
In
addition, we received clearance to export to Argentina from the FDA our drug Ampligen. In 2016, we announced the approval of our
NDA from Argentina’s Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (ANMAT) for the commercial sale
of Ampligen for the treatment of CFS. The FDA requires certain regulations be met in order to export a drug manufactured in the
United States to a foreign country. In order to receive clearance to export to Argentina, we submitted information on the drug
approval processes and standards in Argentina and the issuance by ANMAT of its approval of Ampligen. The FDA determined that the
processes and standards applicable to drug approval in Argentina meet the requirements under section 802(b)(2) of the U.S. Federal
Food, Drug and Cosmetic Act. Those requirements include expert review of safety and effectiveness, good manufacturing practice
and quality controls, adverse experience reporting and control of drug labeling and promotion. We believe that this is the first
time in over ten years, and only the second time ever, the FDA has made this determination.
General
Corporate Information
We
are incorporated under the laws of the State of Delaware. Our principal offices are located at 2117 SW Highway 484, Ocala Florida
34473. Effective September 3, 2019, we changed our name from Hemispherx, Biopharma Inc. to AIM ImmunoTech Inc. We operate a 30,000
sq. ft. facility located at 783 Jersey Avenue, New Brunswick, New Jersey 08901 with the objective of producing Ampligen® and
Alferon®. Our website address is currently is www.aimimmuno.com. We make our periodic and current reports that are filed with
the SEC available, free of charge, on our website as soon as reasonably practicable after such material is electronically filed
with, or furnished to, the SEC. The information contained in, and that can be accessed through, our website is not incorporated
into and is not a part of this prospectus.
The
Offering
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Common Stock Offered by Us
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1,740,550
Shares.
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Pre-funded
Warrants Offered by Us
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We
are also offering 7,148,310 pre-funded warrants to each purchaser whose purchase of shares of common stock in this offering
would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more
than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation
of this offering, the opportunity to purchase, if the purchaser so chooses, pre-funded warrants, in lieu of shares of common
stock that would otherwise result in any such purchaser’s beneficial ownership exceeding 4.99% (or, at the election
of the purchaser, 9.99%) of our outstanding common stock. Each pre-funded warrant will be exercisable for one share of our
common stock. The purchase price of each pre-funded warrant will equal the price per share at which the shares of common stock
are being sold to the public in this offering, minus $0.001, and the exercise price of each pre-funded warrant will be $0.001
per share. The pre-funded warrants are exercisable immediately and may be exercised at any time until all of the pre-funded
warrants are exercised in full. No fractional shares of common stock will be issued in connection with the exercise of a pre-funded
warrant. In lieu of fractional shares, the Company shall, at its election, either pay a cash adjustment in respect of such
final fraction in an amount equal to such fraction multiplied by the exercise price or round up to the next whole share. The
pre-funded warrants also provide that in the event of a fundamental transaction we are required to cause any successor entity
to assume our obligations under the pre-funded warrants. In addition, the holder of the pre-funded warrant will be entitled
to receive upon exercise of the pre-funded warrant the kind and amount of securities, cash or property that the holder would
have received had the holder exercised the pre-funded warrant immediately prior to such fundamental transaction. Each holder
of pre-funded warrants will be prohibited from exercising its pre-funded warrant for shares of our common stock if, as a result
of such exercise, the holder, together with its affiliates, would own more than 4.99% (or, at the election of the purchaser,
9.99%) of the total number of shares of our common stock then issued and outstanding. However, any holder may increase such
percentage to any other percentage not in excess of 9.99%. This prospectus also relates to the shares of common stock issuable
upon exercise of any pre-funded warrants sold in this offering. For each pre-funded warrant we sell, the number of shares
of common stock we are offering will be decreased on a one-for-one basis.
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Warrants
Offered by Us
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Warrants
to purchase 8,888,860 shares of common stock. Each share of our common stock and each pre-funded warrant is being sold together
with a warrant to purchase an additional share of our common stock. Each warrant will have an exercise price of $0.99 per
share (subject to appropriate adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications,
reorganizations or similar events). Each warrant will expire on the fifth anniversary of the original issuance date. No fractional
shares of common stock will be issued in connection with the exercise of a warrant. In lieu of fractional shares, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the exercise price or round up to the next whole share. The warrants also provide that in the event of a fundamental
transaction we are required to cause any successor entity to assume our obligations under the warrants. In addition, the holder
of the warrant will be entitled to receive upon exercise of the warrant the kind and amount of securities, cash or property
that the holder would have received had the holder exercised the warrant immediately prior to such fundamental transaction.
Because a warrant is being sold together in this offering with each share of common stock and, in the alternative, each pre-funded
warrant to purchase one share of common stock, the number of warrants sold in this offering will not change as a result of
a change in the mix of the shares of our common stock and pre-funded warrants sold. Each holder of warrants will be prohibited
from exercising its warrant for shares of our common stock if, as a result of such exercise, the holder, together with its
affiliates, would own more than 4.99% (or, at the election of the purchaser, 9.99%) of the total number of shares of our common
stock then issued and outstanding. However, any holder may increase such percentage to any other percentage not in excess
of 9.99%. This prospectus also relates to the shares of common stock issuable upon exercise of any warrants sold in this offering.
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Common
Stock to be Outstanding after this Offering
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11,987,791
shares (or 13,320,820 shares if the Underwriter exercises in full its over-allotment option in respect of shares of common
stock only), assuming no sale of any pre-funded warrants and no exercise of any warrants issued in this offering.
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Option
to Purchase Additional Shares
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We
have granted the Underwriter a 45-day over-allotment option to purchase up to 1,333,329 additional shares of common stock
and/or warrants to purchase up to 1,333,329 shares of common stock less estimated underwriting discounts and commissions.
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Best
Efforts
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We
have agreed to issue and sell the securities offered hereby to the public through the Underwriter, and the Underwriter has
agreed to offer and sell such shares on a “best efforts” basis. The Underwriter is not required to sell any specific
number or dollar amount of the securities offered hereby, but will use its best efforts to sell such securities. See “Underwriting”
on page 25 of this prospectus.
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Use
of Proceeds
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We
estimate the net proceeds to us from this offering, after deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us, will be approximately $6,958,328 or approximately $8,074,324 if the Underwriter
exercises its option to purchase additional shares of common stock and/or warrants in full, at a public offering price
of $0.90 per share. We intend to use the net proceeds from this offering, along with our available cash and cash equivalents,
for the manufacturing of Ampligen, ongoing clinical trials and general administrative and operational expenses associated
with our ongoing activities. In addition, we may utilize the net proceeds to repays a portion of one of our outstanding
notes.
Please
see “Use of Proceeds” for more detailed information.
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Risk Factors
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An
investment in our securities involves a high degree of risk. See the section titled “Risk Factors” beginning
on page 6 of this prospectus and the similarly titled sections in the documents incorporated by reference into this prospectus.
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NYSE
American Symbol for Our Common Stock
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“AIM”.
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No
Market for the Pre-funded Warrants or Warrants
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We
do not intend to list any pre-funded warrants or warrants on any securities exchange or nationally recognized trading system.
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Outstanding
Shares
Unless
otherwise indicated herein, the number of shares of our common stock outstanding prior to and after this offering is based on
3,098,631 shares outstanding as of September 24, 2019 and excludes:
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214,713
shares of our common stock issuable upon the exercise of stock options, with a weighted-average
exercise price of $0.65 per share;
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364,190
shares of our common stock issuable upon the exercise of outstanding warrants, with a
weighted-average exercise price of $16.93 per share;
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89,318
shares issuable pursuant to conversion of outstanding Series B Convertible Preferred
Stock;
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121,653
other shares of our common stock reserved for future issuance under our 2018 Equity Incentive
Plan;
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no
exercise by the underwriter of its option to purchase additional shares of common stock
and/or warrants from us;
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no
exercise of the pre-funded warrants or warrants being offered in this prospectus; and
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no
exercise of the outstanding stock options or warrants described above.
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Unless
otherwise indicated, the information in this prospectus assumes:
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the
one-for-44 four reverse stock split of our common stock that was effected on June 10,
2019.
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RISK
FACTORS
Investing
in our securities involves a high degree of risk. Before making an investment decision with respect to our securities, we urge
you to carefully consider the risks described in the “Risk Factors” section of our Annual Report on Form 10-K for
the year ended December 31, 2018 and our subsequent Quarterly Reports on Form 10-Q, which are incorporated by reference into this
prospectus. These risk factors relate to our business, regulatory matters, and ownership of our common stock. In addition, the
following risk factors present material risks and uncertainties associated with this Offering. The risks and uncertainties incorporated
by reference into this prospectus or described below are not the only ones we face. Additional risks and uncertainties not presently
known or which we consider immaterial as of the date hereof may also have an adverse effect on our business. If any of the matters
discussed in the following risk factors were to occur, our business, financial condition, results of operations, cash flows or
prospects could be materially adversely affected, the market price of our common stock could decline and you could lose all or
part of your investment in our securities.
Risks
Relating to our Securities and this Offering
The
market price of our stock may be adversely affected by market volatility.
The
market price of our common stock has been and is likely to be volatile. This is especially true given the current significant
instability in the financial markets. In addition to general economic, political and market conditions, the price and trading
volume of our stock could fluctuate widely in response to many factors, including:
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announcements
of the results of clinical trials by us or our competitors;
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announcements
of availability or projections of our products for commercial sale;
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announcements
of legal actions against us and/or settlements or verdicts adverse to us;
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adverse
reactions to our products;
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governmental
approvals, delays in expected governmental approvals or withdrawals of any prior governmental
approvals or public or regulatory agency comments regarding the safety or effectiveness
of our products, or the adequacy of the procedures, facilities or controls employed in
the manufacture of our products;
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changes
in U.S. or foreign regulatory policy during the period of product development;
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developments
in patent or other proprietary rights, including any third party challenges of our intellectual
property rights;
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announcements
of technological innovations by us or our competitors;
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announcements
of new products or new contracts by us or our competitors;
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actual
or anticipated variations in our operating results due to the level of development expenses
and other factors;
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changes
in financial estimates by securities analysts and whether our earnings meet or exceed
the estimates;
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conditions
and trends in the pharmaceutical and other industries;
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new
accounting standards;
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overall
investment market fluctuation;
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restatement
of prior financial results;
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notice
of NYSE American non-compliance with requirements; and
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occurrence
of any of the risks described in these “Risk Factors” and those incorporated
by reference herein.
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Our
common stock is listed for quotation on the NYSE American. For the year ended December 31, 2018, the trading price of our common
stock has ranged from $7.92 to $27.28 per share. For the six months ended June 30, 2019, the trading price of our common stock
has ranged from $3.98 to $11.44. We expect the price of our common stock to remain volatile. The average daily trading volume
of our common stock varies significantly.
Our
management will have broad discretion over the use of the net proceeds from this offering, you may not agree with how we use the
proceeds and the proceeds may not be invested successfully.
Our
management will have broad discretion as to the use of the net proceeds from this offering and could use them for purposes other
than those contemplated at the time of commencement of this offering. Accordingly, you will be relying on the judgment of our
management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision,
to assess whether the proceeds are being used appropriately. It is possible that, pending their use, we may invest the net proceeds
in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively could
have a material adverse effect on our business, financial condition, operating results and cash flows.
There
is no public market for the pre-funded warrants or the warrants being offered in this offering.
There
is no established public trading market for the pre-funded warrants or the warrants being offered in this offering, and we do
not expect a market to develop. In addition, we do not intend to apply to list the pre-funded warrants or the warrants on any
securities exchange or nationally recognized trading system, including the NYSE American. Without an active market, the liquidity
of the pre-funded warrants and the warrants will be limited.
New
investors purchasing our common stock in this offering will experience immediate and substantial dilution in the net tangible
book value of their investment.
The
public offering price is substantially higher than the net tangible book value per share of our common stock immediately prior
to this offering. Therefore, if you purchase common stock in this offering, you will incur immediate dilution of approximately
$0.35 in pro forma as adjusted net tangible book value per share as of June 30, 2019 from the price you paid, based on
a public offering price of $0.90 per share. To the extent outstanding options or warrants, including the pre-funded warrants and
warrants issued in the offering, are ultimately exercised or outstanding shares of Series B Convertible Preferred Stock are converted,
there may be further dilution to investors who purchase shares in this offering. In addition, if the Underwriter exercises its
option to purchase additional shares of common stock and/or warrants or if we issue additional equity securities, investors purchasing
shares in this offering may experience additional dilution. As a result of the dilution to investors purchasing shares in this
offering, investors may receive significantly less than the purchase price paid in this offering, if anything, in the event of
our liquidation. The discussion above assumes no sale of pre-funded warrants, which if sold and not exercised, would reduce the
number of shares of common stock that we are offering on a one-for-one basis.
Future
sales and issuances of our common stock or other securities may result in significant dilution and could cause the price of our
common stock to decline.
We
may issue shares to be used to meet our capital requirements or use shares to compensate employees, consultants and/or Directors.
We completed a rights offering to our stockholders and certain option and warrant holders in March 2019, pursuant to which we
issued Preferred stock convertible into an aggregate of 89,318 shares of common stock and common stock purchase warrants. In addition,
as of September 24, 2019, we have outstanding common stock purchase warrants, inclusive of the warrants issued in the rights offering,
for the purchase of 364,190 shares of our common stock. All of the shares of common stock issuable upon conversion of the above
referenced preferred stock and exercise of the above referenced common stock warrants have been registered for public sale. We
also have registered securities for public sale pursuant to a universal shelf registration statement and we had been selling shares
under this shelf registration statement. In this regard we have an “at-the-market” offering program with Maxim Group
LLC pursuant to which we can publicly sell shares of our common stock.
We
are unable to estimate the amount, timing or nature of future sales of outstanding common stock or instruments convertible into
or exercisable for our common stock. Sales of substantial amounts of our common stock in the public market, including the registered
shares referred to above and shares and warrant shares registered in this Offering as well as sales of additional securities pursuant
to our equity distribution agreements with Maxim Group LLC or otherwise under the universal shelf registration statement, could
cause the market price for our common stock to decrease. Furthermore, a decline in the price of our common stock would likely
impede our ability to raise capital through the issuance of additional shares of common stock or other equity securities.
Our
charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market
price of our common stock.
Our
certificate of incorporation, as amended, or the Certificate of Incorporation, and our Bylaws, as amended, or the Bylaws, contain
provisions that could delay or prevent a change in control of our Company. These provisions could also make it more difficult
for stockholders to elect directors and take other corporate actions. These provisions include:
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our
Bylaws may be amended or repealed by our board of directors or our stockholders;
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our
board of directors will be authorized to issue, without stockholder approval, preferred
stock, the rights of which will be determined at the discretion of our board of directors
and that, if issued, could operate as a “poison pill” to dilute the stock
ownership of a potential hostile acquirer to prevent an acquisition that our board of
directors does not approve;
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●
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our
stockholders do not have cumulative voting rights, and therefore our stockholders holding
a majority of the shares of common stock outstanding will be able to elect all of our
directors; and
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●
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our
stockholders must comply with advance notice provisions to bring business before or nominate
directors for election at a stockholder meeting.
|
We
also have a stockholder rights plan that, if triggered, could discourage potential acquisition of control of our company.
In
addition, the provisions of Section 203 of the Delaware General Corporation Law govern us. These provisions may prohibit large
stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a
certain period of time without the consent of our board of directors.
These
and other provisions in our Certificate of Incorporation and our Bylaws and under Delaware law could discourage potential takeover
attempts, reduce the price that investors might be willing to pay in the future for shares of our Common Stock and result in the
market price of our Common Stock being lower than it would be without these provisions.
The
market price of our common stock may never exceed the exercise price of the warrants issued in connection with this offering.
The
warrants being issued in connection with this offering become exercisable upon issuance and will expire five years from the date
of issuance. The market price of our common stock may never exceed the exercise price of the warrants prior to their date of expiration.
This
offering is being conducted on a “best efforts” basis and there can be no assurance that the offering contemplated
hereby will ultimately be consummated.
While
this offering is anticipated to close only if the Underwriter receives interests for at least 80% of the aggregate dollar amount
of securities offered, the Underwriter is offering the securities on a “best efforts” basis, and the Underwriter is
under no obligation to purchase any securities for its own account. The Underwriter is not required to sell any specific number
or dollar amount of securities in this offering but will use its best efforts to sell the securities offered in this prospectus.
As a “best efforts” offering, there can be no assurance that the offering contemplated hereby will ultimately be consummated.
Risks
Related to Our Business
Investors
should carefully consider the risks and uncertainties and all other information contained or incorporated by reference in this
prospectus, including the risks and uncertainties discussed under “Risk Factors” in our most recent Annual
Report on Form 10-K, as may be amended from time to time, and in subsequent filings that are incorporated herein by reference.
All of these risk factors are incorporated by reference herein in their entirety. These risks and uncertainties are not the only
ones facing us. Our business, financial condition or results of operations could be materially adversely affected by any of these
risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
This prospectus and the incorporated documents also contain forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors,
including the risks mentioned in this prospectus.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated herein by reference contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based on our management’s current beliefs, expectations and
assumptions about future events, conditions and results and on information currently available to us. Discussions containing these
forward-looking statements may be found, among other places, in the Sections entitled “Business,” “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated by
reference from our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, as well as any amendments thereto,
filed with the SEC.
All
statements, other than statements of historical fact, included or incorporated herein regarding our strategy, future operations,
financial position, future revenues, projected costs, plans, prospects and objectives are forward-looking statements. Words such
as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,”
“estimate,” “think,” “may,” “could,” “will,” “would,”
“should,” “continue,” “potential,” “likely,” “opportunity” and similar
expressions or variations of such words are intended to identify forward-looking statements but are not the exclusive means of
identifying forward-looking statements.
Among
the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks
and uncertainties inherent in our business including, without limitation: our ability to adequately fund our projects as we will
need additional funding to proceed with our objectives, the potential therapeutic effect of our products, the possibility of obtaining
regulatory approval, our ability to find senior co-development partners with the capital and expertise needed to commercialize
our products and to enter into arrangements with them on commercially reasonable terms, our ability to manufacture and sell any
products, our ability to enter into arrangements with third party vendors, market acceptance of our products, our ability to earn
a profit from sales or licenses of any drugs, our ability to discover new drugs in the future, changing market conditions, changes
in laws and regulations affecting our industry, and issues related to our New Brunswick, New Jersey facility. In February 2013,
we received a Complete Response Letter from the Food and Drug Administration, or FDA, for our Ampligen New Drug Application, or
NDA, for the treatment of Chronic Fatigue Syndrome. The FDA communicated that we should conduct at least one additional clinical
trial, complete various nonclinical studies and perform a number of data analysis. Accordingly, the remaining steps to potentially
gain FDA approval of the Ampligen NDA, the final results of these and other ongoing activities could vary materially from our
expectations and could adversely affect the chances for approval of the Ampligen NDA. These activities and the ultimate outcomes
are subject to a variety of risks and uncertainties, including but not limited to risks that (i) the FDA may ask for additional
data, information or studies to be completed or provided; and (ii) the FDA may require additional work related to the commercial
manufacturing process to be completed or may, in the course of the inspection of manufacturing facilities, identify issues to
be resolved.
In
August 2016, we received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica, or ANMAT,
for commercial sale of rintatolimod (U.S. tradename: Ampligen®) in the Argentine Republic for the treatment of severe CFS.
The product will be marketed by GP Pharm, our commercial partner in Latin America. We believe, but cannot assure, that this approval
provides a platform for potential sales in certain countries within the European Union under regulations that support cross-border
pharmaceutical sales of licensed drugs. In Europe, approval in a country with a stringent regulatory process in place, such as
Argentina, should add further validation for the product as the Early Access Program, or EAP, as discussed below and underway
in Europe in pancreatic cancer. ANMAT approval is only an initial, but important, step in the overall successful commercialization
of our product. There are a number of actions that must occur before we could be able to commence commercial sales in Argentina.
Commercialization in Argentina will require an appropriate reimbursement level, appropriate marketing strategies, and the FDA’s
authorization to ship product from the U.S. to Argentina. Approval of rintatolimod for severe CFS in the Argentine Republic does
not in any way suggest that the Ampligen NDA in the United States or any comparable application filed in the European Union or
elsewhere will obtain commercial approval.
In
May 2016, we entered into a five-year agreement with myTomorrows, a Netherlands based company, for the commencement and management
of an EAP in Europe and Turkey related to CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor
in this territory, is performing EAP activities. In January 2017, the EAP was extended to pancreatic cancer patients beginning
in the Netherlands. In February 2018, we signed an amendment to extend the territory to cover Canada to treat pancreatic cancer
patients, pending government approval. In March 2018, we signed an amendment to which myTomorrows will be our exclusive service
provider for special access activities in Canada for the supply of Ampligen for the treatment of CFS. No assurance can be given
that we can sufficiently supply product should we experience an unexpected demand for Ampligen in our clinical studies, the commercial
launch in Argentina or pursuant to the EAPs. No assurance can be given that Ampligen will prove effective in the treatment of
pancreatic cancer.
Currently,
six Ampligen clinical trials are open for enrollment. All five of the trials are at university cancer centers testing whether
tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including checkpoint blockade.
Three are at Roswell Park Comprehensive Cancer Center and the other two are at the University of Pittsburgh Medical Center. No
assurance can be given as to the results of these underway trials. Six additional cancer trials in collaboration with University
Medical/Cancer Research Centers are in various pre-enrollment stages. These six trials are using Ampligen plus checkpoint blockade
or chemokine modulation. No assurance can be given as to whether some or all of the planned additional oncology clinical trials
will occur and they are subject to many factors including lack of regulatory approval(s), lack of study drug, or a change in priorities
at the sponsoring Universities or Cancer Centers. Even if these additional clinical trials are initiated, we cannot assure that
these clinical studies or the four studies underway will be successful or yield any useful data.
Our
overall objectives include plans to continue seeking approval for commercialization of Ampligen in the United States and abroad
as well as seeking to broaden commercial therapeutic indications for Alferon N Injection presently approved in the United States
and Argentina. We continue to pursue senior co-development partners with the capital and expertise needed to commercialize our
products and to enter into arrangements with them on commercially reasonable terms. Our ability to commercialize our products,
widen commercial therapeutic indications of Alferon N Injection and/or capitalize on our collaborations with research laboratories
to examine our products are subject to a number of significant risks and uncertainties including, but not limited to our ability
to enter into more definitive agreements with some of the research laboratories and others that we are collaborating with, to
fund and conduct additional testing and studies, whether or not such testing is successful or requires additional testing and
meets the requirements of the FDA and comparable foreign regulatory agencies. We do not know when, if ever, our products will
be generally available for commercial sale for any indication.
We
outsource certain components of our manufacturing, quality control, marketing and distribution while maintaining control over
the entire process through our quality assurance and regulatory groups. We cannot provide any guarantee that the facility or our
contract manufacturer will necessarily pass an FDA pre-approval inspection for Alferon manufacture.
The
production of new Alferon Active Pharmaceutical Ingredient, or API, inventory will begin once the validation phase is complete.
While the facility has already been approved by the FDA under the Biological License Application, or BLA, for Alferon, this status
will need to be reaffirmed by a successful Pre-Approval Inspection by the FDA prior to commercial sale of newly produced inventory
product. If and when the Company obtains a reaffirmation of FDA BLA status and has begun production of new Alferon API, it will
need FDA approval as to the quality and stability of the final product before commercial sales can resume. We will need additional
funds to finance the revalidation process in our facility to initiate commercial manufacturing, thereby readying ourselves for
an FDA Pre-Approval Inspection. If we are unable to gain the necessary FDA approvals related to the manufacturing process and/or
final product of new Alferon inventory, our operations most likely will be materially and/or adversely affected. In light of these
contingencies, there can be no assurances that the approved Alferon N Injection product will be returned to production on a timely
basis, if at all, or that if and when it is again made commercially available, it will return to prior sales levels. In addition,
we are currently manufacturing polymers in our New Brunswick facility to be used for the production of Ampligen to satisfy our
future needs. While we anticipate that we will continue to manufacturing polymers at the New Brunswick facility, we may need additional
funding. There cannot be any guarantee that we will obtain adequate funds to sustain manufacturing at the New Brunswick facility
or that the facility will be able to manufacture sufficient lots for the commercial launch of Ampligen. We believe, and are investigating,
Ampligen’s potential role in enhancing the activity of influenza vaccines. While certain studies involving rodents, non-human
primates (monkeys) and healthy human subjects indicate that Ampligen may enhance the activity of influenza vaccines by conferring
increased cross-reactivity or cross-protection, further studies will be required and no assurance can be given that Ampligen will
assist in the development of a universal vaccine for influenza or other viruses.
Because
forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified
and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events.
The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could
differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New
risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors
and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements
contained or incorporated herein, whether as a result of any new information, future events, changed circumstances or otherwise.
You should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this prospectus.
This
prospectus, including the information incorporated by reference, also refers to estimates and other statistical data made by independent
parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions
and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates
of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree
of uncertainty and risk.
USE
OF PROCEEDS
We
estimate that the net proceeds from our issuance and sale of our common stock and pre-funded warrants, and accompanying warrants,
in this offering will be approximately $6,958,328 or approximately $8,074,324 if the Underwriter exercises its option to purchase
additional shares of common stock and/or warrants in full, after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us.
We
intend to use the net proceeds from this offering, along with our available cash and cash equivalents, for the manufacturing of
Ampligen, ongoing clinical trials and general administrative and operational expenses associated with our ongoing activities.
We also may use a portion of the net proceeds
to pay down debt under our September 2018 secured promissory note with Iliad Research and Trading, L.P., or the “Iliad Note”.
Pursuant to the Iliad Note, as of September 24, 2019, there was $2,328,090 in principal and accrued interest owing. The
Iliad Note bears interest at 10%, per annum and is due on September 28, 2020. We used the net proceeds from this note for manufacturing
and operating capital.
This
expected use of net proceeds from this offering represents our intention based upon our current plans and business conditions,
which could change in the future as our plans and business conditions evolve. As a result, our management will retain broad discretion
over the allocation of the net proceeds from this offering. We have no current agreements, commitments or understandings for any
material acquisitions or licenses of any products, businesses or technologies.
DIVIDEND
POLICY
We
have never declared or paid any cash dividends on our common stock and do not anticipate paying any in the foreseeable future.
Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend
on a number of factors, including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions
and covenants and other factors that our board of directors may deem relevant.
CAPITALIZATION
The
following table sets forth our cash and cash equivalents and capitalization as of June 30, 2019:
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on
an actual basis as of June 30, 2019;
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on
an as adjusted basis to give further effect to the issuance and sale of 1,740,550 shares
of our common stock in this offering at a public offering price of $0.90 per share, and
warrants to purchase up to 1,740,550 shares of common stock, after deducting the estimated
underwriting discounts and commissions and estimated offering expenses payable by us,
and assumes no sale of pre-funded warrants in the offering or the Underwriter’s
over-allotments, and excludes the proceeds, if any, from the exercise of any pre-funded
warrants and warrants issued in this offering.
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Includes
$1.9 million of debt incurred in August 2019.
|
Our
capitalization following the closing of this offering will be adjusted based on the actual public offering price and other terms
of this offering determined at pricing. You should read this table together with the section of this prospectus titled “Use
of Proceeds,” as well as our consolidated financial statements and the related notes and the sections titled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report for the year ended December
31, 2018 and our Quarterly Report for the six months ended June 30, 2019, each of which is incorporated by reference herein.
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Actual
|
|
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As Adjusted
|
|
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(in thousands)
|
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Cash and cash equivalents(2)
|
|
$
|
959
|
|
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$
|
9,817
|
|
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Current portion of long-term loan
|
|
|
205
|
|
|
|
205
|
|
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|
|
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Stockholders’ equity:
|
|
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Preferred stock, $0.01 par value per share: 5,000,000 shares authorized
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-
|
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-
|
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8,000 shares designated as Series B Convertible Preferred Stock, state values $1,000 per share; 1,221 shares issued and outstanding and as adjusted
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1,221
|
|
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|
1,221
|
|
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Common stock, $0.001 par value per share: 350,000,000 shares authorized, 2,214,930 shares issued and outstanding, actual; 11,987,491 shares issued and outstanding, as adjusted
|
|
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2
|
|
|
|
13
|
|
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Additional paid-in capital
|
|
|
329,295
|
|
|
|
339,629
|
|
|
Accumulated deficit
|
|
|
(323,970
|
)
|
|
|
(323,970
|
)
|
|
Total stockholders’ equity
|
|
|
6,548
|
|
|
|
16,893
|
|
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Total capitalization
|
|
$
|
6,753
|
|
|
|
12,457
|
|
The
foregoing table is based on 3,098,631 shares outstanding as of September 24, 2019 and excludes:
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8,888,860
shares of common stock issuable upon exercise of the warrants and prefunded warrants
being offered in this prospectus;
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●
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214,713
shares of our common stock issuable upon the exercise of stock options, with a weighted-average
exercise price of $0.65 per share;
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364,190
shares of our common stock issuable upon the exercise of outstanding warrants, with a
weighted-average exercise price of $16.93 per share;
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89,318
shares issuable pursuant to conversion of outstanding Series B Convertible Preferred
Stock; and
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121,653
other shares of our common stock reserved for future issuance under our 2018 Equity Incentive
Plan.
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DILUTION
If
you invest in our securities in this offering, your ownership interest will be diluted immediately to the extent of the difference
between the public offering price per share of our common stock and pre-funded warrant and the as adjusted net tangible book value
per share of our common stock after this offering.
Our
historical net tangible book as of June 30, 2019 was $5,499,000 or $2.48 per share of our common stock. Historical net tangible
book per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of our
common stock outstanding as of June 30, 2019.
After
giving effect to the issuance and sale of 1,740,550 shares of our common stock and an accompanying warrant in this offering at
a public offering price of $0.90 per share, and after deducting the estimated underwriting discounts and commissions and estimated
offering expenses payable by us, and assuming no sale of pre-funded warrants in the offering and excluding the proceeds, if any,
from the exercise of the warrants and pre-funded warrant, our as adjusted net tangible book value as of September 24, 2019 would
have been $12,457,328 or $1.12 per share. This represents an immediate decrease in net tangible book value per share of $1.36
to existing stockholders and immediate dilution of $1.36 per share to new investors purchasing securities in this offering. Dilution
per share to new investors is determined by subtracting as adjusted net tangible book value per share after this offering from
the public offering price per share paid by new investors. The following table illustrates this dilution on a per share basis:
|
Assumed public offering price per share
|
|
|
|
|
|
$
|
1.47
|
|
|
Historical net tangible book per share as of June 30, 2019
|
|
$
|
2.48
|
|
|
|
|
|
|
Decrease in net tangible book value per share attributable to new investors participating in this offering
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|
$
|
1.36
|
|
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|
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As adjusted net tangible book value per share after this offering
|
|
|
|
|
|
$
|
1.12
|
|
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Dilution per share to new investors participating in this offering
|
|
|
|
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$
|
(0.35
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)
|
The
foregoing tables and calculations are based on 3,098,631 shares outstanding as of September 24, 2019, and exclude:
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8,888,860
shares of common stock issuable upon exercise of the warrants and prefunded warrants
being offered in this prospectus;
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●
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214,713
shares of our common stock issuable upon the exercise of stock options, with a weighted-average
exercise price of $0.65 per share;
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●
|
364,190
shares of our common stock issuable upon the exercise of outstanding warrants, with a
weighted-average exercise price of $16.93 per share;
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●
|
89,318
shares issuable pursuant to conversion of outstanding Series B Convertible Preferred
Stock; and
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●
|
121,653
other shares of our common stock reserved for future issuance under our 2018 Equity Incentive
Plan.
|
DESCRIPTION
OF CAPITAL STOCK
General
The
following is a summary of the rights of our common stock and outstanding warrants and related provisions of our Certificate of
Incorporation and Bylaws. For more detailed information, please see our Certificate of Incorporation and Bylaws.
All
share and per share numbers in this prospectus have been adjusted to reflect the one-for-44 reverse stock split of our issued
and outstanding shares of common stock effected on June 10, 2019.
Common
Stock
This
section describes the general terms and provisions of the shares of our common stock, $0.001 par value. We have 350,000,000 shares
of authorized common stock.
As
of September 24, 2019, there were:
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●
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3,098,631
shares of common stock issued and outstanding;
|
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●
|
364,190
warrants to purchase 364,190 shares of common stock outstanding;
|
|
●
|
options
to purchase 214,713 shares of common stock outstanding; and
|
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●
|
786
Shares of Series B Preferred Stock convertible in to 89,318 shares of common stock outstanding.
|
Voting
Rights
Holders
of our common stock are entitled to one vote per share in the election of directors and on all other matters on which stockholders
are entitled or permitted to vote. Holders of our common stock are not entitled to cumulative voting rights.
Dividend
Rights
Subject
to the terms of any then outstanding series of preferred stock, the holders of our common stock are entitled to dividends in the
amounts and at times as may be declared by our board of directors out of funds legally available therefor.
Liquidation
Rights
Upon
liquidation or dissolution, holders of our common stock are entitled to share ratably in all net assets available, if any, for
distribution to stockholders after we have paid, or provided for payment of, all of our debts and liabilities, and after payment
of any liquidation preferences to holders of any then outstanding shares of preferred stock.
Other
Matters
Holders
of our common stock have no redemption, conversion or preemptive rights. There are no sinking fund provisions applicable to our
common stock. The rights, preferences and privileges of the holders of our common stock are subject to the rights of the holders
of shares of any series of preferred stock that we may issue in the future.
All
of our outstanding shares of common stock are fully paid and nonassessable.
Our
common stock is listed on the NYSE American under the symbol “AIM.”
Preferred
Stock
This
section describes the general terms and provisions of the shares of our Preferred Stock, $0.01 par value. We have 5,000,000 shares
of authorized preferred stock. Our board of directors is authorized to designate different classes of preferred stock by filing
a certificate of designation with the Secretary of State of Delaware. The certificate of designation may be authorized by our
board of directors without approval by our stockholders.
Series
B Convertible Preferred Stock
Conversion.
Each share of Series B Convertible Stock is convertible at our option at any time on or after March 8, 2020 or at the option
of the holder at any time, into the number of shares of our common stock determined by dividing the $1,000 stated value per share
of the Series B Convertible Stock by a conversion price of $8.80 per share. In addition, the conversion price per share is subject
to adjustment for stock dividends, distributions, subdivisions, combinations or reclassifications. Subject to limited exceptions,
a holder of the Series B Convertible Stock will not have the right to convert any portion of the Series B Convertible Stock to
the extent that, after giving effect to the conversion, the holder, together with its affiliates, would beneficially own in excess
of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to its conversion.
Fundamental
Transactions. In the event we effect certain mergers, consolidations, sales of substantially all of our assets, tender or
exchange offers, reclassifications or share exchanges in which our common stock is effectively converted into or exchanged for
other securities, cash or property, we consummate a business combination in which another person acquires 50% of the outstanding
shares of our common stock, or any person or group becomes the beneficial owner of 50% of the aggregate ordinary voting power
represented by our issued and outstanding common stock, then, upon any subsequent conversion of the Series B Convertible Stock,
the holders of the Series B Convertible Stock will have the right to receive any shares of the acquiring corporation or other
consideration it would have been entitled to receive if it had been a holder of the number of shares of common stock then issuable
upon conversion in full of the Series B Convertible Stock.
Dividends.
Holders of Series B Convertible Stock shall be entitled to receive dividends (on an as-if-converted-to-common-stock basis)
in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of
common stock.
Voting
Rights. Except as otherwise provided in the certificate of designation or as otherwise required by law, the Series B Convertible
Stock has no voting rights.
Liquidation
Preference. Upon our liquidation, dissolution or winding-up, whether voluntary or involuntary, holders of Series B
Convertible Stock will be entitled to receive out of our assets, whether capital or surplus, the same amount that a holder of
common stock would receive if the Series B Convertible Stock were fully converted (disregarding for such purpose any conversion
limitations under the certificate of designation) to common stock, which amounts shall be paid pari passu with all holders of
common stock.
Redemption
Rights. We are not obligated to redeem or repurchase any shares of Series B Convertible Stock. Shares of Series B Convertible
Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous provisions.
Series
A Junior Participating Preferred Stock.
On
November 19, 2002, our board of directors declared a dividend distribution of one Right (a “Right”) for each outstanding
share of Common Stock to stockholders of record at the close of business on November 29, 2002. On November 14, 2017, at the direction
of our board of directors, we amended and restated our Rights Agreement with American Stock Transfer & Trust Company, LLC,
as amended and restated, or the Rights Agreement. Each Right entitles the registered holder to purchase from us a unit consisting
of one one-hundredth of a share, or a Unit, of Series A Junior Participating Preferred Stock, par value $0.01 per share, or the
Series A Preferred Stock, at a Purchase Price of $21.00 per Unit, subject to adjustment. The description and terms of the Rights
are set forth in the Rights Agreement. The foregoing description of the Rights and the Rights Agreement are qualified in their
entire by reference to the disclosure in our Registration Statement on Form 8-A12B (No. 0-27072) and the Rights Agreement filed
therewith, filed with the SEC on November 14, 2017, with such filing and exhibit being herein incorporated by reference.
Stock
Incentive Plan
The
2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance
Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 159,091 shares of common stock
is reserved for potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018
Equity Incentive Plan will continue in effect for a period of 10 years from its effective date. As of September 24, 2019, 121,653
shares of common stock and options to purchase 121,653 shares of common stock have been issued under this plan.
Possible
Anti-Takeover Effects of Delaware Law, our Certificate of Incorporation and Bylaws, and Stockholder Rights Plan
The
provisions of Delaware law, our certificate of incorporation and our bylaws and our Stockholder Rights Plan described below may
have the effect of delaying, deferring or discouraging another party from acquiring control of us.
Section
203 of the Delaware General Corporation Law
We
are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three years after the date that such stockholder became an
interested stockholder, with the following exceptions:
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before
such date, our board of directors of the corporation approved either the business combination
or the transaction that resulted in the stockholder becoming an interested stockholder;
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upon
completion of the transaction that resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction began, excluding for purposes of
determining the voting stock outstanding (but not the outstanding voting stock owned
by the interested stockholder) those shares owned (i) by persons who are directors and
also officers and (ii) employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or
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on
or after such date, the business combination is approved by our board of directors and
authorized at an annual or special meeting of the stockholders, and not by written consent,
by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not
owned by the interested stockholder.
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In
general, Section 203 defines business combination to include the following:
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any
merger or consolidation involving the corporation and the interested stockholder;
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any
sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation
involving the interested stockholder;
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subject
to certain exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder;
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any
transaction involving the corporation that has the effect of increasing the proportionate
share of the stock or any class or series of the corporation beneficially owned by the
interested stockholder; or
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the
receipt by the interested stockholder of the benefit of any loss, advances, guarantees,
pledges or other financial benefits by or through the corporation.
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In
general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s
affiliates and associates, beneficially owns, or within three years before the time of determination of interested stockholder
status did own, 15% or more of the outstanding voting stock of the corporation.
Certificate
of Incorporation and Bylaws
Our
certificate of incorporation and/or bylaws provide that:
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our
bylaws may be amended or repealed by our board of directors or our stockholders;
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our
board of directors will be authorized to issue, without stockholder approval, preferred
stock, the rights of which will be determined at the discretion of our board of directors
and that, if issued, could operate as a “poison pill” to dilute the stock
ownership of a potential hostile acquirer to prevent an acquisition that our board of
directors does not approve;
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our
stockholders do not have cumulative voting rights, and therefore our stockholders holding
a majority of the shares of common stock outstanding will be able to elect all of our
directors; and
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our
stockholders must comply with advance notice provisions to bring business before or nominate
directors for election at a stockholder meeting.
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Stockholder
Rights Plan
As
discussed above in “Description of Capital Stocks - Series A Junior Participating Preferred Stock” we have a Stockholder
Rights Plan which could dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of
directors does not approve.
Potential
Effects of Authorized but Unissued Stock
We
have shares of common stock and preferred stock available for future issuance without stockholder approval. We may utilize these
additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, to facilitate
corporate acquisitions or payment as a dividend on the capital stock.
The
existence of unissued and unreserved common stock and preferred stock may enable our board of directors to issue shares to persons
friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party
attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity
of our management. In addition, our board of directors has the discretion to determine designations, rights, preferences, privileges
and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences
of each series of preferred stock, all to the fullest extent permissible under the Delaware General Corporation Law and subject
to any limitations set forth in our certificate of incorporation. The purpose of authorizing our board of directors to issue preferred
stock and to determine the rights and preferences applicable to such preferred stock is to eliminate delays associated with a
stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with
possible financings, acquisitions and other corporate purposes, could have the effect of making it more difficult for a third-party
to acquire, or could discourage a third-party from acquiring, a majority of our outstanding voting stock.
Transfer
Agent and Warrant Agent
The
transfer agent and registrar for our common stock and the warrant agent for the warrants is American Stock Transfer & Trust
Company, LLC.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
We
are offering 16,037,170 shares of our common stock and/or pre-funded warrants to purchase up to 7,148,310 shares of our common
stock and warrants to purchase up to 8,888,860 shares of our common stock. The shares of common stock and the pre-funded warrants
will be issued separately. We are also registering the shares of common stock issuable from time to time upon exercise of the
pre-funded warrants and the warrants offered hereby.
Common
Stock
The
material terms and provisions of our common stock and each other class of securities which qualifies or limits our common stock
are described under the caption “Description of Capital Stock” in this prospectus.
Pre-Funded
Warrants
The
following summary of certain terms and provisions of pre-funded warrants that are being offered hereby is not complete and is
subject to, and qualified in its entirety by, the provisions of the pre-funded warrant, the form of which is filed as an exhibit
to the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and
provisions of the form of pre-funded warrant for a complete description of the terms and conditions of the pre-funded warrants.
Duration
and Exercise Price
Each
pre-funded warrant offered hereby will have an initial exercise price per share equal to $0.001. The pre-funded warrants will
be immediately exercisable and may be exercised at any time until the pre-funded warrants are exercised in full. The exercise
price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends,
stock splits, reorganizations or similar events affecting our common stock and the exercise price.
Exercisability
The
pre-funded warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed
exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except
in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of
the pre-funded warrant to the extent that the holder would own more than 4.99% or 9.99% at the election of the holder prior to
issuance of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from
the holder to us, the holder may increase or decrease the amount of ownership of outstanding stock after exercising the holder’s
pre-funded warrants, but not above 9.99%. No fractional shares of common stock will be issued in connection with the exercise
of a pre-funded warrant. In lieu of fractional shares, we shall, at our election, either pay a cash adjustment in respect of such
final fraction in an amount equal to such fraction multiplied by the exercise price or round up to the next whole share.
Cashless
Exercise
If
a registration statement registering the issuance of the shares of common stock underlying the pre-funded warrants under the Securities
Act is not effective or no current prospectus is available then the pre-funded warrant may only be exercised, in whole or in part,
through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock
determined according to the formula set forth in the pre-funded warrant. No fractional shares of common stock will be issued in
connection with the exercise of a pre-funded warrant. In lieu of fractional shares, we shall, at our election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the exercise price or round up
to the next whole share.
Fundamental
Transaction
In
the event of a fundamental transaction, as described in the pre-funded warrants and generally including any reorganization, recapitalization
or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our properties
or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common
stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock,
the holders of the pre-funded warrants will be entitled to receive upon exercise of the pre-funded warrants the kind and amount
of securities, cash or other property that the holders would have received had they exercised the pre-funded warrants immediately
prior to such fundamental transaction.
Transferability
Subject
to applicable laws, a pre-funded warrant may be transferred at the option of the holder upon surrender of the pre-funded warrant
to us together with the appropriate instruments of transfer.
Exchange
Listing
We
do not intend to list the pre-funded warrants on any securities exchange or nationally recognized trading system.
Rights
as a Stockholder
Except
as otherwise provided in the pre-funded warrants or by virtue of such holder’s ownership of shares of our common stock,
the holders of the pre-funded warrants do not have the rights or privileges of holders of our common stock, including any voting
rights, until they exercise their pre-funded warrants. The pre-funded warrants provide that holders thereof are entitled to participate
in certain distributions by us to our common stock holders to the same extent that such pre-funded warrant holders would have
participated therein if they had held the number of shares of common stock acquirable upon exercise of such warrants.
Choice
of Forum Provision
The
pre-funded warrants provide that the state and federal courts sitting in the City of New York, Borough of Manhattan will be the
exclusive jurisdiction for any legal proceeding concerning the interpretation, enforcement and defense of the transactions contemplated
by the pre-funded warrant. It is possible that a court could find this type of provision to be inapplicable or unenforceable.
Warrants
The
following summary of certain terms and provisions of warrants that are being offered hereby is not complete and is subject to,
and qualified in its entirety by, the provisions of the warrant, the form of which is filed as an exhibit to the registration
statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the
form of warrant for a complete description of the terms and conditions of the warrants.
Duration
and Exercise Price
Each
warrant will be exercisable at any time after their original issuance and will expire on the fifth anniversary of the original
issuance date. The exercise price per whole share of our common stock purchasable upon the exercise of the warrants is 110% of
the public offering price of the common stock. The exercise price and number of shares of common stock issuable upon exercise
is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting
our common stock and the exercise price. A warrant to purchase one share of our common stock will be issued for every one share
of common stock or pre-funded warrant purchased in this offering.
Exercisability
Each
warrant will be exercisable at any time after their original issuance and will expire on the fifth anniversary of the original
issuance date. The warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly
executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise
(except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion
of the warrant to the extent that the holder would own more than 4.99% % or 9.99% at the election of the holder prior to issuance
of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder
to us, the holder may increase or decrease the amount of ownership of outstanding stock after exercising the holder’s warrants,
but not above 9.99%. No fractional shares of common stock will be issued in connection with the exercise of a warrant. In lieu
of fractional shares, we shall, at our election, either pay a cash adjustment in respect of such final fraction in an amount equal
to such fraction multiplied by the exercise price or round up to the next whole share.
Cashless
Exercise
If
a registration statement registering the issuance of the shares of common stock underlying the warrants under the Securities Act
is not effective or no current prospectus is available then the warrant may only be exercised, in whole or in part, through a
cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined
according to the formula set forth in the warrant. The warrants also are automatically exercised on a cashless basis on the termination
date. No fractional shares of common stock will be issued in connection with the exercise of a warrant. In lieu of fractional
shares, we shall, at our election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the exercise price or round up to the next whole share.
Fundamental
Transaction
In
the event of a fundamental transaction, as described in the warrants and generally including any reorganization, recapitalization
or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our properties
or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common
stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock,
the holders of the warrants will be entitled to receive upon exercise of the warrants the kind and amount of securities, cash
or other property that the holders would have received had they exercised the warrants immediately prior to such fundamental transaction.
Transferability
Subject
to applicable laws, a warrant may be transferred at the option of the holder upon surrender of the warrant to us together with
the appropriate instruments of transfer. The warrants will be issued separately from the common stock and pre-funded warrants,
and may be transferred separately immediately thereafter.
Exchange
Listing
We
do not intend to list the warrants on any securities exchange or nationally recognized trading system.
Rights
as a Stockholder
Except
as otherwise provided in the warrants or by virtue of such holder’s ownership of shares of our common stock, the holders
of the warrants do not have the rights or privileges of holders of our common stock, including any voting rights, until they exercise
their warrants. The warrants provide that holders thereof are entitled to participate in certain distributions by us to our common
stock holders to the same extent that such warrant holders would have participated therein if they had held the number of shares
of common stock acquirable upon exercise of such warrants.
Choice
of Forum Provision
The
warrants provide that the state and federal courts sitting in the City of New York, Borough of Manhattan will be the exclusive
jurisdiction for any legal proceeding concerning the interpretation, enforcement and defense of the transactions contemplated
by the warrant. It is possible that a court could find this type of provision to be inapplicable or unenforceable.
U.S.
Tax Consequences
In
the event of an adjustment (or nonoccurrence of an adjustment) to the exercise price or the number of shares or other consideration
for which a warrant or pre-funded warrants may be exercised, the holders of the warrants or pre-funded warrants may, in certain
circumstances, be deemed to have received a distribution subject to U.S. federal income tax as a dividend. See “Material
U.S. Federal Income Tax Consequences.” Because this deemed income would not give rise to any cash from which any applicable
withholding tax could be satisfied, if withholding taxes (including backup withholding taxes) are paid on behalf of a holder,
those withholding taxes may be set off against any cash or shares received pursuant to the warrants or pre-funded warrants (or,
in some circumstances, against any payments on the shares).
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
The
following discussion is a summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition
of the shares of common stock and pre-funded warrants and accompanying warrants or components thereof, which we refer to collectively
as the Securities, issued pursuant to this offering, but does not purport to be a complete analysis of all potential tax effects.
The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or foreign tax laws
are not discussed. This discussion is based on the Internal Revenue Code of 1986, as amended, or the Code, Treasury Regulations
promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue
Service, or IRS, in effect as of the date of this offering. 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
Securities. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be
no assurance the IRS or a court will not take a contrary position regarding the tax consequences of the purchase, ownership and
disposition of the Securities.
This
discussion is limited to holders that hold the Securities as a “capital asset” within the meaning of Section 1221
of the Code (property held for investment). This discussion does not address all U.S. federal income tax consequences relevant
to a holder’s particular circumstances, including the impact of the alternative minimum tax or the unearned income Medicare
contribution tax. In addition, it does not address consequences relevant to holders subject to particular rules, including, without
limitation:
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U.S.
expatriates and certain former citizens or long-term residents of the United States;
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persons
holding the Securities as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction
or other integrated investment;
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banks,
insurance companies, and other financial institutions;
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brokers,
dealers or traders in securities;
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controlled
foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings
to avoid U.S. federal income tax;
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partnerships
or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
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tax-exempt
organizations or governmental organizations;
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persons
deemed to sell the Securities under the constructive sale provisions of the Code;
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persons
for whom our stock and pre-funded warrants constitutes “qualified small business stock” within the meaning of
Section 1202 of the Code;
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persons
who hold or receive the Securities pursuant to the exercise of any employee stock option or otherwise as compensation;
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persons
subject to special tax accounting rules as a result of any item of gross income with respect to the stock being taken into
account in an “applicable financial statement” (as defined in the Code);
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“qualified
foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held
by qualified foreign pension funds; and
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tax-qualified
retirement plans.
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If
a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds the Securities, the tax treatment
of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations
made at the partner level. Accordingly, partnerships holding the Securities and the partners in such partnerships should consult
their tax advisors regarding the U.S. federal income tax consequences to them.
THIS
DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT INTENDED AS LEGAL OR TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SECURITIES ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE
LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Allocation
of Purchase Price
Each
share of common stock or pre-funded warrant, as applicable, and accompanying warrant will be treated for U.S. federal income tax
purposes as an investment unit consisting of one share of our common stock or pre-funded warrant, as applicable, and a warrant
to purchase a share of our common stock. In determining their tax basis for the common stock or pre-funded warrant and warrant
constituting a unit, holders of Securities should allocate their purchase price for the unit between the common stock or pre-funded
warrant, as applicable, and the warrant on the basis of their relative fair market values at the time of issuance. The Company
does not intend to advise holders of the Securities with respect to this determination, and holders of the Securities are advised
to consult their tax and financial advisors with respect to the relative fair market values of the common stock or pre-funded
warrant, as applicable, and the warrants for U.S. federal income tax purposes.
Treatment
of Pre-funded Warrants
Although
not free from doubt, a pre-funded warrant should be treated as a share of our common stock for U.S. federal income tax purposes,
and a holder of pre-funded warrants should generally be taxed in the same manner as a holder of common stock, as described below.
Accordingly, no gain or loss should be recognized (other than with respect to cash paid in lieu of a fractional share) upon the
exercise of a pre-funded warrant (except in the case of a cashless exercise, the treatment of which for U.S. federal income tax
purposes is not clear) and, upon exercise, the holding period of a pre-funded warrant should carry over to the share of common
stock received. Similarly, the tax basis of the pre-funded warrant should carry over to the share of common stock received upon
exercise, increased by the exercise price of $0.001. The discussion below assumes the characterization described above is respected
for U.S. federal income tax purposes. Holders should consult their tax advisors regarding the risks associated with the acquisition
of pre-funded warrants pursuant to this offering (including alternative characterizations).
Tax
Considerations Applicable to U.S. Holders
Definition
of a U.S. Holder
For
purposes of this discussion, a “U.S. holder” is any beneficial owner of the Securities that, for U.S. federal income
tax purposes, is:
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an
individual who is a citizen or resident of the United States;
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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;
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an
estate, the income of which is subject to U.S. federal income tax regardless of its source; or
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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.
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Distributions
As
described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends to holders
of our common stock or pre-funded warrants in the foreseeable future. However, if we do make distributions on our common stock
or pre-funded warrants, such distributions of cash or property on our common stock will constitute dividends to the extent paid
out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. Dividends received
by a corporate U.S. holder may be eligible for a dividends received deduction, subject to applicable limitations. Dividends received
by certain non-corporate U.S. holders, including individuals, are generally taxed at the lower applicable capital gains rate provided
certain holding period and other requirements are satisfied. Distributions in excess of our current and accumulated earnings and
profits will constitute a return of capital and first be applied against and reduce a U.S. holder’s adjusted tax basis in
its common stock, but not below zero.
Although not free from doubt, if we make
any distributions of cash or property to holders of our warrants, such distributions should be taxable as ordinary income.
Any
excess will be treated as capital gain and will be treated as described below in the section relating to the sale or disposition
of our common stock or pre-funded warrants, as applicable.
Although
not free from doubt, if we make any distributions of cash or property to holder of our warrants, such distributions should be
taxable as ordinary income.
Sale
or Other Taxable Disposition of Common Stock or Pre-funded Warrants
Upon
the sale, exchange or other taxable disposition of the common stock or pre-funded warrants, a U.S. holder generally will recognize
capital gain or loss equal to the difference between (i) the amount of cash and the fair market value of any property received
upon the sale, exchange or other taxable disposition and (ii) such U.S. holder’s adjusted tax basis in the common stock
or pre-funded warrant. Such capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period
in such common stock or pre-funded warrant is more than one year at the time of the sale, exchange or other taxable disposition.
Long-term capital gains recognized by certain non-corporate U.S. holders, including individuals, generally will be subject to
reduced rates of U.S. federal income tax. The deductibility of capital losses is subject to certain limitations.
Sale
or Other Disposition, Exercise or Expiration of Warrants
Upon the sale or other disposition of a warrant
(other than by exercise or upon
the exercise of the holder’s right to sell the warrant to the Company in exchange for cash upon the consummation of a Fundamental
Transaction), a U.S. holder will generally recognize capital
gain or loss equal to the difference between the amount realized on the sale or other disposition and the U.S. holder’s
tax basis in the warrant. This capital gain or loss will be long-term capital gain or loss if the U.S. holder’s holding
period in such warrant is more than one year at the time of the sale or other disposition. The deductibility of capital losses
is subject to certain limitations. A warrant holder who receives cash in exchange for warrants sold to the Company upon the
consummation of a Fundamental Transaction could recognize capital gain or loss for United States federal income tax purposes equal
to the difference, if any, between the amount of cash received and the holder's adjusted tax basis in the warrants sold. Any such
capital gain or loss should be long-term capital gain or loss if the holder has held the warrants for more than one year at the
time of the sale. Because there is no authority directly on point, alternative federal income tax characterizations and consequences
of any such sale are possible.
In
general, a U.S. holder will not be required to recognize income, gain or loss upon exercise of a warrant for its exercise price
(except to the extent the U.S. holder receives a cash payment for a such fractional share that would otherwise have been issuable
upon exercise of the warrant, which will be treated as a sale as described above under “Sale or Other Taxable Disposition
of Common Stock or Pre-funded Warrants”). A U.S. holder’s tax basis in a share of common stock received upon exercise
of warrants will be equal to the sum of (1) the U.S. holder’s tax basis in the warrants exchanged therefor and (2) the exercise
price of such warrants. A U.S. holder’s holding period in the shares of common stock received upon exercise will commence
on the day after such U.S. holder exercises the warrants. Although there is no direct legal authority as to the U.S. federal income
tax treatment of an exercise of a warrant on a cashless basis, we intend to take the position that such exercise will not be taxable,
either because the exercise is not a gain realization event or because it qualifies as a tax-free recapitalization. In the former
case, the holding period of the shares of common stock received upon exercise of warrants should commence on the day after the
warrants are exercised. In the latter case, the holding period of the shares of common stock received upon exercise of warrants
would include the holding period of the exercised warrants. However, our position is not binding on the IRS, and the IRS may treat
a cashless exercise of a warrant as a taxable exchange. U.S. holders are urged to consult their tax advisors as to the consequences
of an exercise of a warrant on a cashless basis, including with respect to their holding period and tax basis in the common stock
received.
If
a warrant expires without being exercised, a U.S. holder will recognize a capital loss in an amount equal to such holder’s
tax basis in the warrant. Such loss will be long-term capital loss if, at the time of the expiration, the U.S. holder’s
holding period in such warrant is more than one year. The deductibility of capital losses is subject to certain limitations.
Constructive
Dividends on Warrants or Pre-funded Warrants
As
described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends to holders
of our common stock in the foreseeable future. However, if at any time during the period in which a U.S. holder holds warrants,
the exercise price is adjusted in certain circumstances or other adjustments are made (or in certain circumstances, there is a
failure to make adjustments), such adjustments may result in the deemed payment of a taxable dividend to a U.S. holder of the
warrants to the extent of our earnings and profits, notwithstanding the fact that such holder will not receive a cash payment.
In addition, a holder of a pre-funded warrant may, in some circumstances, be deemed to have received a distribution subject to
U.S. federal income tax as a result of an adjustment or the non-occurrence of an adjustment to the exercise price or number of
shares of common stock issuable upon exercise of the pre-funded warrant. U.S. holders should consult their tax advisors regarding
the proper treatment of any adjustments to the warrants and pre-funded warrants.
Information
Reporting and Backup Withholding
A
U.S. holder may be subject to information reporting and backup withholding when such holder receives payments on the common stock
or pre-funded warrants or warrants (including constructive dividends) or receives proceeds from the sale or other taxable disposition
of common stock, pre-funded warrants, or warrants. Certain U.S. holders are exempt from backup withholding, including corporations
and certain tax-exempt organizations. A U.S. holder will be subject to backup withholding if such holder is not otherwise exempt
and such holder:
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|
●
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fails
to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security
number;
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|
|
|
|
|
|
●
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furnishes
an incorrect taxpayer identification number;
|
|
|
|
|
|
|
●
|
is
notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or fails to certify
under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not
notified the holder that the holder is subject to backup withholding.
|
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a
credit against a U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished
to the IRS. U.S. holders should consult their tax advisors regarding their qualification for an exemption from backup withholding
and the procedures for obtaining such an exemption.
Tax
Considerations Applicable to Non-U.S. Holders
For
purposes of this discussion, a “Non-U.S. holder” is a beneficial owner of the Securities that is neither a U.S. holder
nor an entity treated as a partnership for U.S. federal income tax purposes.
Distributions
As
described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends on our capital
stock. However, if we do make distributions on our common stock or pre-funded warrants, such distributions of cash or property
on our common stock or pre-funded warrants will constitute dividends for U.S. federal income tax purposes to the extent paid from
our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as
dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a non-U.S.
holder’s adjusted tax basis in its common stock or pre-funded warrants, but not below zero. Any excess will be treated as
capital gain and will be treated as described below in the section relating to the sale or disposition of our common stock, pre-funded
warrants or warrants. Because we may not know the extent to which a distribution is a dividend for U.S. federal income tax purposes
at the time it is made, for purposes of the withholding rules discussed below we or the applicable withholding agent may treat
the entire distribution as a dividend.
Subject
to the discussion below on backup withholding and foreign accounts, dividends paid to a non-U.S. holder of our common stock or
pre-funded warrants, and distributions paid to a non-U.S. holder of our warrants, in each case that are not effectively connected
with the non-U.S. holder’s conduct of a trade or business within the United States will be subject to U.S. federal withholding
tax at a rate of 30% of the gross amount of the dividends or distributions, as applicable (or such lower rate specified by an
applicable income tax treaty).
Non-U.S.
holders will be entitled to a reduction in or an exemption from withholding on dividends or distributions as a result of either
(a) an applicable income tax treaty or (b) the non-U.S. holder holding our common stock, pre-funded warrants or warrants in connection
with the conduct of a trade or business within the United States and dividends being effectively connected with that trade or
business. To claim such a reduction in or exemption from withholding, the non-U.S. holder must provide the applicable withholding
agent with a properly executed (a) IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) claiming an exemption from
or reduction of the withholding tax under the benefit of an income tax treaty between the United States and the country in which
the non-U.S. holder resides or is established, or (b) IRS Form W-8ECI stating that the dividends or distributions are not subject
to withholding tax because they are effectively connected with the conduct by the non-U.S. holder of a trade or business within
the United States, as may be applicable. These certifications must be provided to the applicable withholding agent prior to the
payment of dividends or distributions and must be updated periodically. Non-U.S. holders that do not timely provide the applicable
withholding agent with the required certification, but that qualify for a reduced rate under an applicable income tax treaty,
may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.
If
dividends or distributions paid to a non-U.S. holder are effectively connected with the non-U.S. holder’s conduct of a trade
or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent
establishment in the United States to which such dividends or distributions are attributable), then, although exempt from U.S.
federal withholding tax (provided the non-U.S. holder provides appropriate certification, as described above), the non-U.S. holder
will be subject to U.S. federal income tax on such dividends or distributions on a net income basis at the regular graduated U.S.
federal income tax rates. In addition, a non-U.S. holder that is a corporation may be subject to a branch profits tax at a rate
of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits for
the taxable year that are attributable to such dividends, as adjusted for certain items. Non-U.S. holders should consult their
tax advisors regarding their entitlement to benefits under any applicable income tax treaty.
Exercise
of Warrants or Pre-funded Warrants
A
non-U.S. holder generally will not be subject to U.S. federal income tax on the exercise of warrants into shares of common stock
or pre-funded warrants. However, if a cashless exercise of warrants or pre-funded warrants results in a taxable exchange, as described
in “- Treatment of the Pre-funded Warrants” and “- Tax Considerations Applicable to U.S. holders - Sale or Other
Disposition, Exercise or Expiration of Warrants,” the rules described below under “Sale or Other Disposition of Common
Stock, Pre-funded Warrants or Warrants” would apply.
Sale
or Other Disposition of Common Stock, Pre-funded Warrants or Warrants
Subject
to the discussions below on backup withholding and foreign accounts, a non-U.S. holder will not be subject to U.S. federal income
tax on any gain realized upon the sale or other disposition of our common stock, pre-funded warrants or warrants unless:
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●
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the
gain is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and,
if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States
to which such gain is attributable);
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●
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the
non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year
of the disposition and certain other requirements are met; or
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●
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our
common stock, pre-funded warrants, or warrants constitute U.S. real property interests, or USRPIs, by reason of our status
as a U.S. real property holding corporation, or USRPHC, for U.S. federal income tax purposes.
|
Gain
described in the first bullet point above will generally be subject to U.S. federal income tax on a net income basis at the regular
graduated U.S. federal income tax rates. A non-U.S. holder that is a foreign corporation also may be subject to a branch profits
tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as
adjusted for certain items.
A
non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such
lower rate specified by an applicable income tax treaty) on any gain derived from the disposition, which may be offset by certain
U.S. source capital losses of the non-U.S. holder (even though the individual is not considered a resident of the United States)
provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
With
respect to the third bullet point above, we believe we are not currently and do not anticipate becoming a USRPHC. Because the
determination of whether we are a USRPHC depends on the fair market value of our USRPIs relative to the fair market value of our
other business assets and our non-U.S. real property interests, however, there can be no assurance we are not a USRPHC or will
not become one in the future.
Non-U.S.
holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different
rules.
Constructive
Dividends on Warrants or Pre-funded Warrants
As
described in the section entitled “Dividend Policy,” we do not anticipate declaring or paying dividends on our capital
stock. However, if at any time during the period in which a non-U.S. holder holds warrants the exercise price is adjusted in certain
circumstances (or in certain circumstances, there is a failure to make adjustments), such adjustments may result in the deemed
payment of a taxable dividend to a non-U.S. holder of the warrants to the extent of our earnings and profits, notwithstanding
the fact that such holder will not receive a cash payment. A holder of pre-funded warrants can similarly be treated as receiving
deemed payment of a taxable dividend under certain circumstances. Any resulting withholding tax attributable to deemed dividends
may be collected from other amounts payable or distributable to the non-U.S. holder. Non-U.S. holders should consult their tax
advisors regarding the proper treatment of any adjustments (or absence of adjustments) to the warrants and pre-funded warrants.
Information
Reporting and Backup Withholding
Subject
to the discussion below on foreign accounts, a non-U.S. holder will not be subject to backup withholding with respect to distributions
on our common stock or pre-funded warrants or warrants we make to the non-U.S. holder (including constructive dividends with respect
to warrants and pre-funded warrants), provided the applicable withholding agent does not have actual knowledge or reason to know
such holder is a United States person and the holder certifies its non-U.S. status, such as by providing a valid IRS Form W-8BEN,
W-8BEN-E or W-8ECI, or other applicable certification. However, information returns generally will be filed with the IRS in connection
with any distributions (including deemed distributions) made on our common stock, pre-funded warrants and warrants to the non-U.S.
holder, regardless of whether any tax was actually withheld. Copies of these information returns may also be made available under
the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or
is established.
Information
reporting and backup withholding may apply to the proceeds of a sale or other taxable disposition of our common stock, pre-funded
warrants or warrants within the United States, and information reporting may (although backup withholding generally will not)
apply to the proceeds of a sale or other taxable disposition of our common stock, pre-funded warrants or warrants outside the
United States conducted through certain U.S.- related financial intermediaries, in each case, unless the beneficial owner certifies
under penalty of perjury that it is a non-U.S. holder on IRS Form W-8BEN or W-8BEN-E, or other applicable form (and the payor
does not have actual knowledge or reason to know that the beneficial owner is a U.S. person) or such owner otherwise establishes
an exemption. Proceeds of a disposition of our common stock, pre-funded warrants or warrants conducted through a non-U.S. office
of a non-U.S. broker generally will not be subject to backup withholding or information reporting.
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a
credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished
to the IRS.
Additional
Withholding Tax on Payments Made to Foreign Accounts
Withholding
taxes may be imposed under the Foreign Account Tax Compliance Act, or FATCA, on certain types of payments made to non-U.S. financial
institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends (including deemed
dividends) paid on our common stock, pre-funded warrants or on distributions paid on our warrants, or (subject to the proposed
Treasury Regulations discussed below) gross proceeds from the sale or other disposition of our common stock, pre-funded warrants
or warrants paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined
in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial
foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or
furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or
non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution
and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department
of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United
States persons” or “United States-owned foreign entities” (each as defined in the Code), annually report certain
information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain
other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the
United States governing FATCA may be subject to different rules.
Under
the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends
(including deemed dividends) or distributions that constitute “fixed or determinable annual or periodical gains, profits
and income”. Because we may not know the extent to which a distribution is a dividend for U.S. federal income tax purposes
at the time it is made, for purposes of these withholding rules we or the applicable withholding agent may treat the entire distribution
as a dividend. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition
of our common stock, pre-funded warrants or warrants on or after January 1, 2019, recently proposed Treasury Regulations eliminate
FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations
until final Treasury Regulations are issued. Prospective investors should consult their tax advisors regarding the potential application
of these withholding provisions.
UNDERWRITING
We
and the Underwriter have entered into an underwriting agreement, dated September 25, 2019, with respect to the shares of common
stock, the purchase warrants and pre-funded warrants. Subject to certain conditions, we have agreed to sell to the Underwriter,
and the underwriter has agreed to purchase, the shares of common stock, the purchase warrants and pre-funded warrants indicated
in the following table on a best efforts basis:
|
Underwriter
|
|
Number of
Shares
|
|
|
Number of
Warrants
|
|
|
Number of
Pre-Funded
Warrants
|
|
|
Total
|
|
|
A.G.P./Alliance Global Partners
|
|
|
1,740,550
|
|
|
|
8,888,860
|
|
|
|
7,148,310
|
|
|
|
17,777,720
|
|
|
Total
|
|
|
1,740,550
|
|
|
|
8,888,860
|
|
|
|
7,148,310
|
|
|
|
17,777,720
|
|
This
offering is being completed on a “best efforts” basis and the Underwriter has no obligation to buy any securities
from us or to arrange for the purchase or sale of any specific number or dollar amount of securities. As a “best efforts”
offering, there can be no assurance that the offering contemplated hereby will ultimately be consummated. The obligations of the
Underwriter may be terminated upon the occurrence of certain events specified in the underwriting agreement. Furthermore, pursuant
to the underwriting agreement, the underwriter’s obligations are subject to customary conditions, representations and warranties
contained in the underwriting agreement, such as receipt by the Underwriter of officers’ certificates and legal opinions.
This offering will terminate upon the earliest of (i) such time as all of the securities offered pursuant to this offering have
been sold or (ii) ten (10) days from the date of this prospectus. While this is a “best efforts” offering, the Underwriter
will purchase the securities from us and resell them to you, rather than you purchasing the securities from us directly. You will
fund your account at the Underwriter and the Underwriter will only withdraw those funds at the closing of the offering. We have
not made any arrangements to place your funds received from this offering in an escrow, trust or similar account with any third-party
agent because your funds will be placed directly in your account at the Underwriter’s. In the event that at least 80% of
the aggregate dollar amount of the securities offered pursuant to this offering have not been sold within the ten (10) day offering
period from the date of this prospectus, the Underwriter will promptly return to investors who have deposited funds into their
accounts such funds without interest or offset.
Over-Allotment
Option
Pursuant
to the underwriting agreement, we have granted the Underwriter an option, exercisable for up to 45 days from the date of this
prospectus, to purchase up to an additional 1,333,329 shares of common stock and/or warrants on the same terms as the other securities
being purchased by the underwriter from us. The Underwriter may exercise the option solely to cover over-allotments. If the over-allotment
option to purchase additional shares of common stock (excluding warrants) is exercised in full, the total public offering price,
underwriting compensation (including discounts, but not including any other compensation described hereunder) and proceeds to
us before offering expenses will be approximately $1,100,000, $105,000 and $995,000, respectively, and excluding the proceeds,
if any, from the exercise of the pre-funded warrants.
Indemnification
We
have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act and liabilities
arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments
that the underwriter may be required to make in respect of those liabilities.
Underwriter
Compensation
We
have agreed to sell the securities to the underwriter at the offering price of $0.837 per share of common stock and the accompanying
warrant, and $0.83607 per pre-funded warrant and the accompanying warrant, as applicable, which represents the offering price
of such securities set forth on the cover page of this prospectus, less the applicable 7% underwriting discount.
We
have also agreed to pay a non-accountable expense allowance to the underwriter equal to $50,000. In addition, we have agreed to
reimburse the Underwriter for accountable legal expenses incurred by it in connection with this transaction in the amount of $75,000.
We estimate that the total expenses of the offering payable by us, excluding the total underwriting discount, will be approximately
$475,000.
The
following table summarizes the underwriting discount we will pay to the Underwriter. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option.
|
|
|
Per
|
|
|
Per
Pre-Funded
|
|
|
Total
|
|
|
|
|
Share and
Accompanying
Warrant
|
|
|
Warrant and
Accompanying
Warrant
|
|
|
Without
Over-
Allotment
|
|
|
With
Over-
Allotment
|
|
|
Public offering price
|
|
$
|
0.90
|
|
|
$
|
0.899
|
|
|
$
|
7,992,826
|
|
|
$
|
9,192,822
|
|
|
Underwriting discounts and commissions (7%)
|
|
$
|
0.063
|
|
|
$
|
0.06293
|
|
|
$
|
560,120
|
|
|
$
|
559,498
|
|
|
Proceeds, before expenses, to us
|
|
$
|
0.837
|
|
|
$
|
0.83607
|
|
|
$
|
7,432,706
|
|
|
$
|
8,633,324
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|
Underwriter’s
Warrant
Upon
closing of this offering, we will issue to A.G.P. a compensation warrant entitling A.G.P. or its designees to purchase 266,665
shares of our common stock at an exercise price of $0.99 per share, subject to any reductions necessary to comply with the rules
and regulations of the Financial Industry Regulatory Authority, Inc., or FINRA. This warrant will be exercisable at any time and
from time to time, in whole or in part, during the four year period commencing one year from the effective date of the registration
statement of which this prospectus forms a part. The warrant will provide for registration rights for the shares underlying the
warrant, pursuant to FINRA Rule 5110(f)(2)G), including a one-time demand registration right and piggyback rights for period of
not more than seven years, as well as contain customary anti-dilution provisions. Pursuant to FINRA Rule 5110(g), the underwriter
warrants and any shares issued upon exercise of the underwriter warrants shall not be sold, transferred, assigned, pledged, or
hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective
economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness
or commencement of sales of this offering, except the transfer of any security: (i) by operation of law or by reason of our reorganization;
(ii) to any FINRA member firm participating in the offering and the officers or partners thereof, if all securities so transferred
remain subject to the lock-up restriction set forth above for the remainder of the time period; (iii) if the aggregate amount
of our securities held by the underwriter or related persons do not exceed 1% of the securities being offered; (iv) that is beneficially
owned on a pro rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise
directs investments by the fund and the participating members in the aggregate do not own more than 10% of the equity in the fund;
or (v) the exercise or conversion of any security, if all securities remain subject to the lock-up restriction set forth above
for the remainder of the time period.
Lock-Up
Agreements and Trading Restrictions
In
connection with this offering, we, along with our directors and executive officers have agreed with the Underwriter that for a
90-day “lock-up” period, commencing from the date of this prospectus, subject to specified exceptions, without the
prior written consent of the Underwriter, we and they will not offer, sell, pledge or otherwise dispose of these securities without
the prior written consent of the underwriter.
Beginning
on the public announcement of the final pricing of this offering and ending 30 days after the date of closing of the offering
(the “Leak-out Period”), certain investors who decide to purchase more than $250,000 of securities offered in this
offering, if they decide to sell any securities during the Leak-out Period, may only be permitted to sell securities in such amount
as shall equal up 35% in the aggregate of the trading volume of Common Stock as reported by Bloomberg, LP on any given trading
day.
Price
Stabilization
The
rules of the SEC generally prohibit the Underwriter from trading in our securities on the open market during this offering. However,
the Underwriter is allowed to engage in some open market transactions and other activities during this offering that may cause
the market price of our securities to be above or below that which would otherwise prevail in the open market. These activities
may include stabilization, short sales and over-allotments, syndicate covering transactions and penalty bids.
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Stabilizing
transactions consist of bids or purchases made by the Underwriter for the purpose of preventing or slowing a decline in the
market price of our securities while this offering is in progress.
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●
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Short
sales and over-allotments occur when the Underwriter sells more of our shares of common stock than it purchases from us in
this offering. To cover the resulting short position, the Underwriter may exercise the over-allotment option described above
or may engage in syndicate covering transactions. There is no contractual limit on the size of any syndicate covering transaction.
The Underwriter will make available a prospectus in connection with any such short sales. Purchasers of shares sold short
by the Underwriter are entitled to the same remedies under the federal securities laws as any other purchaser of shares covered
by the registration statement.
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●
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Syndicate
covering transactions are bids for or purchases of our securities on the open market by the underwriter in order to reduce
a short position.
|
|
|
|
|
|
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●
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Penalty
bids permit the underwriter to reclaim a selling concession from a syndicate member when the shares of common stock originally
sold by the syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions.
|
If
the Underwriter commences these activities, it may discontinue them at any time without notice. The Underwriter will carry out
any such transactions on the NYSE American.
Listing
Our
common stock is listed on the NYSE American under the symbol “AIM”.
Electronic
Distribution
A
prospectus in electronic format may be made available on websites or through other online services maintained by the Underwriter
of this offering, or by its affiliates. Other than the prospectus in electronic format, the information on the Underwriter’s
website and any information contained in any other website maintained by the Underwriter is not part of this prospectus or the
registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the Underwriter in
its capacity as an Underwriter.
Other
Relationships
The
Underwriter and its affiliates may in the future engage in, investment banking and other commercial dealings in the ordinary course
of business with us or our affiliates. They may in the future receive, customary fees and commissions for these transactions.
In the course of its businesses, the Underwriter and its affiliates may actively trade our securities or loans for its own account
or for the accounts of customers, and, accordingly, the Underwriter and its affiliates may at any time hold long or short positions
in such securities or loans.
Except
for services provided in connection with this offering, and except as set forth in this section, the underwriter has not provided
any investment banking or other financial services during the 180-day period preceding the date of this prospectus and we do not
expect to retain the Underwriter to perform any investment banking or other financial services for at least 90 days after the
date of this prospectus.
Notice
to Investors in the United Kingdom
In
relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant
Member State”) an offer to the public of any securities which are the subject of the offering contemplated by this prospectus
may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any such securities
may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant
Member State:
|
|
a)
|
to
legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
|
|
|
|
|
|
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b)
|
to
any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total
balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its
last annual or consolidated accounts;
|
|
|
|
|
|
|
c)
|
by
the Underwriter to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive);
or
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d)
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in
any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of these securities
shall result in a requirement for the publication by the issuer or the Underwriter of a prospectus pursuant to Article 3 of
the Prospectus Directive.
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For
the purposes of this provision, the expression an “offer to the public” in relation to any of the securities in any
Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer
and any such securities to be offered so as to enable an investor to decide to purchase any such securities, as the same may be
varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression”
Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member
State.
The
Underwriter has represented, warranted and agreed that:
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a)
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it
has only communicated or caused to be communicated and will only communicate or cause to be
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b)
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communicated
any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services
and Markets Act 2000 (the FSMA)) received by it in connection with the issue or sale of any of the securities in circumstances
in which section 21(1) of the FSMA does not apply to the issuer; and
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c)
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it
has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation
to the securities in, from or otherwise involving the United Kingdom.
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European
Economic Area
In
particular, this document does not constitute an approved prospectus in accordance with European Commission’s Regulation
on Prospectuses no. 809/2004 and no such prospectus is to be prepared and approved in connection with this offering. Accordingly,
in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (being the Directive
of the European Parliament and of the Council 2003/71/EC and including any relevant implementing measure in each Relevant Member
State) (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented
in that Relevant Member State (the Relevant Implementation Date) an offer of securities to the public may not be made in that
Relevant Member State prior to the publication of a prospectus in relation to such securities which has been approved by the competent
authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from
and including the Relevant Implementation Date, make an offer of securities to the public in that Relevant Member State at any
time:
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a)
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to
legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
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b)
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to
any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total
balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in the
last annual or consolidated accounts; or
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c)
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in
any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus
Directive.
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For
the purposes of this provision, the expression an “offer of securities to the public” in relation to any of the securities
in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the
offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the
same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. For these purposes
the shares offered hereby are “securities.”
LEGAL
MATTERS
The
validity of the securities offered hereby is being passed upon for us by Silverman Shin & Byrne PLLC, New York, New York.
Zysman, Aharoni, Gayer and Sullivan & Worcester LLP, New York, New York, is acting as counsel for the Underwriter in connection
with this offering.
EXPERTS
The
consolidated financial statements of the Company and its subsidiaries as of and for the year ended December 31, 2018, incorporated
in this Prospectus by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, have
been audited by Morrison, Brown, Argiz & Farra, LLC, an independent registered public accounting firm, as stated in their
report thereon, incorporated herein by reference, and have been incorporated in this Prospectus and Registration Statement in
reliance upon such report and upon the authority of such firm as experts in accounting and auditing. The consolidated financial
statements of the Company and its subsidiaries as of and for the year ended December 31, 2017, incorporated in this Prospectus
by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, have been audited by RSM
US LLP, an independent registered public accounting firm, as stated in their report thereon, incorporated herein by reference,
and have been incorporated in this Prospectus and Registration Statement in reliance upon such report and upon the authority of
such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC. We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the offer and sale of our
securities 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 offered under this
prospectus, we refer you to the registration statement and the exhibits filed as a part of the registration statement. The SEC
also maintains an internet site that contains reports, proxy and information statements and other information regarding issuers
that file electronically with the SEC, including the Company. The SEC’s internet site can be found at www.sec.gov. We maintain
a website at www.aimimmuno.com. Information found on, or accessible through, our website is not a part of, and is not incorporated
into, this prospectus, and you should not consider it part of this prospectus.
INCORPORATION
BY REFERENCE
The
SEC’s rules allow 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 information incorporated
by reference is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically
update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be
deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus
modifies or replaces that statement. Any statement contained in this prospectus or in a document incorporated or deemed to be
incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or any other subsequently filed document that is deemed to be incorporated
by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
We
incorporate by reference our documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act between the date of this prospectus and the termination of the offering of the securities described
in this prospectus. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed
below or filed in the future, that are not deemed “filed” with the SEC, including our Compensation Committee report
and performance graph or any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits furnished pursuant
to Item 9.01 of Form 8-K.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously
been filed with the SEC:
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our
Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on April 1, 2019;
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our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019 filed with the SEC, respectively, on
May 15, 2019 and August 14, 2019;
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●
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our
Current Reports on Form 8-K filed with the SEC on May 2, 2019, June 5, 2019, June 25, 2019, July 22, 2019, August 23, 2019,
August 26, 2019, September 9, 2019, September 16, 2019 and September 24, 2019;
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our
Definitive Proxy Statement on Schedule 14A (other than information furnished) filed with the SEC on August 20, 2019;
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●
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a
description of our common stock contained in our registration statement on Form S-1, SEC File No. 333-117178, filed on July
6, 2004, and any amendment or report filed for the purpose of updating this description; and
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●
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a
description of the Rights to purchase shares of our Series A Junior Participating Preferred Stock, which are attached to all
shares of Common Stock, is contained in our registration statement on Form 8-A12B, SEC File No. 0-27072, filed on November
14, 2017.
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All
reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of offerings under this prospectus, including all such documents we may file with the SEC after the date of the initial
registration statement of which this prospectus forms a part and prior to the effectiveness of the registration statement, but
excluding any information furnished to, rather than filed with, the SEC, will also be incorporated by reference into this prospectus
and deemed to be part of this prospectus from the date of the filing of such reports and documents.
We
will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon written
or oral request, a copy of any or all documents that are incorporated by reference into this prospectus, but not delivered with
the prospectus, other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the
documents that this prospectus incorporates. You should direct written requests to: AIM ImmunoTech Inc., 2117 SW Highway 484,
Ocala, FL 34473, Attn: Secretary, or you may call us at (352) 448-7797.
1,740,550
Shares of Common Stock
Pre-Funded
Warrants to Purchase Up to 7,148,310
Shares
of Common Stock
Warrants
to Purchase 8,888,860 Shares of Common Stock
AIM
IMMUNOTECH INC.
PROSPECTUS
A.G.P.
September
25, 2019
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