|
Delaware
(State or jurisdiction of incorporation or organization) |
| |
3861
(Primary Standard Industrial Classification Code Number) |
| |
20-0232845
(I.R.S. Employer Identification No.) |
|
|
Thomas J. Poletti, Esq.
Katherine J. Blair, Esq. Manatt, Phelps & Phillips, LLP 695 Town Center Drive, 14th Floor Costa Mesa, California 92626 (714) 371-2501 |
| |
Ralph V. De Martino, Esq.
Cavas S. Pavri, Esq. Schiff Hardin LLP 901 K Street, NW, Suite 700 Washington, DC 20001 (202) 724-6848 |
|
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☒ | | | Smaller reporting company ☒ | |
| | | | Emerging growth company ☒ | |
Title of each class of securities to be registered
|
| |
Proposed Maximum
Aggregate Offering Price(1)(2) |
| |
Amount of
Registration Fee(3) |
| ||||||
Common Stock, par value $0.001 per share(4)
|
| | | $ | 11,902,500 | | | | | $ | 1,544.95 | | |
Underwriters’ Warrants
|
| | | $ | — | | | | | $ | — | | |
Common Stock issuable upon exercise of Underwriters’ Warrants(4)(5)
|
| | | $ | 1,190,250 | | | | | $ | 154.50 | | |
Total
|
| | | $ | 13,092,750 | | | | | $ | 1,699.45* | | |
| | |
Per Share
|
| |
Without
Over-allotment option |
| |
With
Over-allotment option |
| |||||||||
Public Offering Price
|
| | | $ | | | | | $ | | | | | $ | | | |||
Underwriting discounts and commissions paid(1)
|
| | | $ | | | | | | $ | | | | | | $ | | | |
Proceeds, before expenses, to us
|
| | | $ | | | | | | $ | | | | | | $ | | | |
| Westpark Capital, Inc. | | |
Boustead Securities, LLC
|
|
| | |
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| | | | F-1 | | |
| | |
As of September 30,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
| | |
(in thousands)
|
| |||||||||
| | | | $ | 7,800 | | | | | $ | 8,600 | | |
| | |
MiT
|
| |
Caddy
|
| |
Pro Forma
Combined |
| |||||||||
| | |
Three months ended
September 30, 2019 |
| |
Three months ended
September 30, 2019 |
| |
Three months ended
September 30, 2019 |
| |||||||||
| | |
(in thousands)
|
| |
(in thousands)
|
| |
(in thousands)
|
| |||||||||
Net sales
|
| | | $ | 6,148 | | | | | $ | 158 | | | | | $ | 6,306 | | |
Gross profit
|
| | | $ | 1,556 | | | | | $ | 52 | | | | | $ | 1,608 | | |
Net income
|
| | | $ | 220 | | | | | $ | 6 | | | | | $ | 226 | | |
| | |
Year Ended
June 30, |
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
| | |
(in thousands, except share
and per share data) |
| |||||||||
Statement of Operations Data: | | | | | | | | | | | | | |
Net sales
|
| | | $ | 25,335 | | | | | $ | 20,269 | | |
Cost of sales
|
| | | | 20,012 | | | | | | 15,032 | | |
Gross profit
|
| | | | 5,322 | | | | | | 5,237 | | |
Expenses:
|
| | | | | | | | | | | | |
Research and development
|
| | | | 425 | | | | | | 318 | | |
Selling, general and administrative
|
| | | | 4,338 | | | | | | 4,958 | | |
Other expense (income), net
|
| | | | (18) | | | | | | (4) | | |
Total expenses
|
| | | | 4,745 | | | | | | 5,272 | | |
Net income (loss)
|
| | | $ | 577 | | | | | $ | (35) | | |
Pro Forma C Corporation Information (Unaudited) | | | | ||||||||||
| | | | ||||||||||
Historical net income (loss) before income taxes
|
| | | $ | 577 | | | | | $ | (35) | | |
Pro forma provision (benefit) for income taxes
|
| | | | 162 | | | | | | (10) | | |
Pro forma net income (loss)
|
| | | $ | 415 | | | | | $ | (25) | | |
Pro forma net income (loss) per common share basic(1)(2)
|
| | | $ | .08 | | | | | $ | (.01) | | |
Pro forma shares outstanding basic(2)
|
| | | | 4,923,654 | | | | | | 4,923,654 | | |
Pro forma net income (loss) per common share diluted(1)(2)
|
| | | $ | .08 | | | | | $ | (.01) | | |
Pro forma shares outstanding diluted(2)
|
| | | | 5,000,000 | | | | | | 5,000,000 | | |
| | |
As of June 30, 2019
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma(1)(3)
|
| |
Pro Forma
As Adjusted(4) |
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash
|
| | | $ | 582 | | | | | $ | 681 | | | | | $ | 8,631 | | |
Working capital
|
| | | | (306) | | | | | | (18) | | | | | | 7,762 | | |
Total assets
|
| | | | 4,712 | | | | | | 6,875 | | | | | | 14,655 | | |
Total members’/stockholders’ equity (deficit)
|
| | | | (86) | | | | | | (86) | | | | | | 7,694 | | |
| | |
As of June 30, 2019(1)
|
| |||||||||||||||
| | |
Actual
|
| |
Pro Forma
|
| |
Pro Forma
As Adjusted |
| |||||||||
| | |
(in thousands, except share and per share data)
|
| |||||||||||||||
Cash and cash equivalents
|
| | | $ | 582 | | | | | $ | 681 | | | | | $ | 8,631 | | |
Stockholders’/members’ equity: | | | | | | | | | | | | | | | | | | | |
Preferred stock, $0.001 par value; no shares authorized, issued or outstanding, actual; 10,000,0000 authorized, no shares issued or outstanding actual, pro forma and pro forma as adjusted
|
| | | | | | | | | | | | | | | | | | |
Common stock, $0.001 par value; no shares authorized, no shares issued and outstanding, actual; 100,000,000 shares authorized, 4,923,654 shares issued and outstanding, pro forma; 100,000,000 shares authorized, 7,223,654 shares issued and outstanding, pro forma as adjusted
|
| | | $ | — | | | | | $ | 5 | | | | | $ | 7 | | |
Members’ equity (deficit)
|
| | | | (11,660) | | | | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | — | | | | | | (11,665) | | | | | | (3,887) | | |
Accumulated earnings
|
| | | | 11,574 | | | | | | 11,574 | | | | | | 11,574 | | |
Total stockholders’/members’ equity (deficit)
|
| | | | (86) | | | | | | (86) | | | | | | 7,694 | | |
Total capitalization
|
| | | $ | (86) | | | | | $ | (86) | | | | | | 7,694 | | |
|
Assumed initial public offering price per share
|
| | | | | | | | | $ | 4.25 | | |
|
Pro forma net tangible book value as of June 30, 2019
|
| | | $ | (.38) | | | | | | | | |
|
Increase attributable to new investors in this offering
|
| | | $ | 1.22 | | | | | | | | |
|
Adjusted pro forma net tangible book value after this offering
|
| | | $ | .84 | | | | | | | | |
|
Dilution in pro forma net tangible book value to new investors in this offering
|
| | | | | | | | | $ | 3.41 | | |
| | |
Shares
Acquired |
| |
Total
Consideration |
| |
Average
Price Per Share |
| |||||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Existing stockholders
|
| | | | 4,923,654 | | | | | | 68.2% | | | | | $ | 223,529 | | | | | | 2.2% | | | | | $ | 0.05 | | |
New investors in this offering
|
| | | | 2,300,000 | | | | | | 31.8% | | | | | $ | 9,775,000 | | | | | | 97.8% | | | | | $ | 4.25 | | |
Total
|
| | | | 7,223,654 | | | | | | 100.0% | | | | | $ | 9,998,529 | | | | | | 100.0% | | | | | | | | |
| | |
Year Ended
June 30, |
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
Net sales
|
| | | $ | 25,335 | | | | | $ | 20,269 | | |
Cost of sales
|
| | | | 20,013 | | | | | | 15,032 | | |
Gross profit
|
| | | | 5,322 | | | | | | 5,237 | | |
Operating expenses: | | | | ||||||||||
Research and development
|
| | | | 425 | | | | | | 318 | | |
Selling and marketing
|
| | | | 2,290 | | | | | | 2,455 | | |
General and administrative
|
| | | | 2,048 | | | | | | 2,503 | | |
Total expenses
|
| | | | 4,763 | | | | | | 5,276 | | |
Operating income (loss)
|
| | | | 559 | | | | | | (39) | | |
Other expense (income) | | | | | | | | | | | | | |
Interest expense
|
| | | | 1 | | | | | | — | | |
Interest and other income
|
| | | | (19) | | | | | | (4) | | |
Total other income
|
| | | | (18) | | | | | | (4) | | |
Net income (loss)
|
| | | $ | 577 | | | | | $ | (35) | | |
| | |
June 30,
|
| |||||||||
| | |
2018
|
| |
2019
|
| ||||||
ASSETS | | | | ||||||||||
Current assets:
|
| | | | | | | | | | | | |
Cash
|
| | | $ | 597 | | | | | $ | 582 | | |
Accounts receivable, net
|
| | | | 2,181 | | | | | | 2,128 | | |
Inventories, net
|
| | | | 2,199 | | | | | | 1,683 | | |
Prepaid expenses and other
|
| | | | 73 | | | | | | 99 | | |
Due from related party
|
| | | | 267 | | | | | | — | | |
Total current assets
|
| | | | 5,317 | | | | | | 4,492 | | |
Long-term assets:
|
| | | ||||||||||
Property, plant and equipment, net
|
| | | | 45 | | | | | | 32 | | |
Other assets
|
| | | | 17 | | | | | | 188 | | |
Total long-term assets
|
| | | | 62 | | | | | | 220 | | |
Total assets
|
| | | $ | 5,379 | | | | | $ | 4,712 | | |
LIABILITIES AND MEMBERS’ EQUITY (DEFICIT) | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 3,682 | | | | | $ | 2,926 | | |
Accrued liabilities
|
| | | | 687 | | | | | | 793 | | |
Customer deposits
|
| | | | 840 | | | | | | 1,011 | | |
Unearned warranty revenue
|
| | | | 44 | | | | | | 68 | | |
Total current liabilities
|
| | | | 5,253 | | | | | | 4,798 | | |
Members’ equity (deficit)
|
| | | | 126 | | | | | | (86) | | |
Total liabilities and members’ equity (deficit)
|
| | | $ | 5,379 | | | | | $ | 4,712 | | |
(in thousands, except share data and per share data)
|
| |
6/30/2019
Historical MiT |
| |
6/30/2019
Historical Caddy |
| |
6/30/2019
Historical NLM |
| |
Spin-co
Adjustments |
| |
Proforma
Adjustments (*) |
| |
Pro Forma
Combined |
| ||||||||||||||||||
Consolidated Statement of Operations Data: | | | | | | | | ||||||||||||||||||||||||||||||
Revenue
|
| | | $ | 20,269 | | | | | $ | 1,877 | | | | | $ | 9 | | | | | $ | (9) | | | | | $ | — | | | | | $ | 22,146 | | |
Cost of sales
|
| | | | 15,032 | | | | | | 1,240 | | | | | | 10 | | | | | | (10) | | | | | | 120 | | | | | | 16,392 | | |
Gross profit
|
| | | | 5,237 | | | | | | 637 | | | | | | (1) | | | | | | 1 | | | | | | 120 | | | | | | 5,754 | | |
Operating expenses: | | | | | | | | ||||||||||||||||||||||||||||||
Selling, general and administrative
|
| | | | 5,276 | | | | | | 651 | | | | | | 1,106 | | | | | | (1,106) | | | | | | 84 | | | | | | 6,011 | | |
Total operating expenses
|
| | | | 5,276 | | | | | | 651 | | | | | | 1,106 | | | | | | (1,106) | | | | | | 84 | | | | | | 6,011 | | |
Other (income) expense: | | | | | | | | ||||||||||||||||||||||||||||||
Interest and other expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 115 | | | | | | 115 | | |
Other expense (income)
|
| | | | (4) | | | | | | 26 | | | | | | — | | | | | | — | | | | | | — | | | | | | 22 | | |
Total other (income) expense
|
| | | | (4) | | | | | | 26 | | | | | | — | | | | | | — | | | | | | 115 | | | | | | 137 | | |
(in thousands, except share data and per share data)
|
| |
6/30/2019
Historical MiT |
| |
6/30/2019
Historical Caddy |
| |
6/30/2019
Historical NLM |
| |
Spin-co
Adjustments |
| |
Proforma
Adjustments (*) |
| |
Pro Forma
Combined |
| ||||||||||||||||||
Provision for income taxes
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Income (loss) before income taxes
|
| | | | (35) | | | | | | (40) | | | | | | (1,107) | | | | | | 1,107 | | | | | | (319) | | | | | | (394) | | |
Net Loss
|
| | | $ | (35) | | | | | $ | (40) | | | | |
$
|
(1,107) |
| | | | $ | 1,107 | | | | | $ | (319) | | | | | $ | (394) | | |
Net income per share, basic(a)
|
| | | $ | (.01) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (.08) | | |
Common shares used in net income per share, basic(a)
|
| | | | 4,923,654 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,923,654 | | |
Net income per share, diluted(a)
|
| | | $ | (.01) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (.08) | | |
Common shares used in net income per share, diluted(a)
|
| | | | 5,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,000,000 | | |
(in thousands, except share data and per share data)
|
| |
NLM
Holding Consolidated |
| |
Spin-co
Adjustments[A] |
| |
NLM
Merger Sub |
| |
Historical
MiT |
| |
Historical
Caddy |
| |
Further
Pro Forma Adjustments |
| |
Ref
|
| |
Pro Forma
Combined |
| ||||||||||||||||||||||||
ASSETS | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Current assets: | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Cash
|
| | | $ | 12 | | | | | $ | (12) | | | | | $ | — | | | | | $ | 582 | | | | | $ | 99 | | | | | $ | | | | | | | | | | | | $ | 681 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Accounts receivable
|
| | | | | | | | | | | | | | | | | | | | | | 2,128 | | | | | | 207 | | | | | | | | | | | | | | | | | | 2,335 | | |
Inventories
|
| | | | | | | | | | | | | | | | | | | | | | 1,683 | | | | | | | | | | | | | | | | | | | | | | | | 1,683 | | |
Prepaid and other
|
| | | | 2 | | | | | | (2) | | | | | | — | | | | | | 99 | | | | | | 90 | | | | | | | | | | | | | | | | | | 189 | | |
| | | | | 14 | | | | | | (14) | | | | | | — | | | | | | 4,492 | | | | | | 396 | | | | | | — | | | | | | | | | | | | 4,888 | | |
Customer relationships
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 820 | | | | | | i | | | | | | 820 | | |
Patents | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 80 | | | | | | i | | | | | | 80 | | |
Trademark | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 85 | | | | | | i | | | | | | 85 | | |
Goodwill
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 607 | | | | | | i | | | | | | 607 | | |
Propery and equipment, net
|
| | | | | | | | | | | | | | | | | | | | | | 32 | | | | | | 63 | | | | | | 112 | | | | | | | | | | | | 207 | | |
Deposits and other
|
| | | | | | | | | | | | | | | | | | | | | | 188 | | | | | | | | | | | | | | | | | | | | | | | | 188 | | |
Total
|
| | | $ | 14 | | | | | $ | (14) | | | | | $ | — | | | | | $ | 4,712 | | | | | $ | 459 | | | | | $ | 1,704 | | | | | | | | | | | $ | 6,875 | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
| | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Current liabilities | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Accounts payable
|
| | | $ | 66 | | | | | $ | (66) | | | | | $ | — | | | | | $ | 2,926 | | | | | $ | 106 | | | | | $ | | | | | | | | | | | | $ | 3,032 | | |
Accrued expenses
|
| | | | 100 | | | | | | (100) | | | | | | | | | | | | 793 | | | | | | 2 | | | | | | | | | | | | | | | | | | 795 | | |
Customer deposits
|
| | | | | | | | | | | | | | | | | | | | | | 1,011 | | | | | | | | | | | | | | | | | | | | | | | | 1,011 | | |
Note payable
|
| | | | 138 | | | | | | (138) | | | | | | | | | ||||||||||||||||||||||||||||||
Deferred revenue
|
| | | | | | | | | | | | | | | | | | | | | | 68 | | | | | | | | | | | | | | | | | | | | | | | | 68 | | |
| | | | | 304 | | | | | | (304) | | | | | | — | | | | | | 4,798 | | | | | | 108 | | | | | | — | | | | | | | | | | | | 4,906 | | |
Deferred rent
|
| | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Long Term Debt
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,055 | | | | | | | | | | | | 2,055 | | |
Members’/Shareholders’ equity: | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Common Stock/APIC
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (11,660) | | | | | | iii | | | | | | (11,660) | | |
Members’ equity
|
| | | | | | | | | | | | | | | | | | | | | | (11,660) | | | | | | (1,304) | | | | | | 1,304 | | | | | | iii | | | | | | 0 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,660 | | | | | | iii | | | | |||||
Retained Earnings (accumulated
deficit) |
| | | | (1,691) | | | | | | 1,691 | | | | | | | | | | | | 11,574 | | | | | | 1,655 | | | | | | (1,655) | | | | | | iii | | | | | | 11,574 | | |
Common stock
|
| | | | 10 | | | | | | | | | | | | 10 | | | | | | | | | | | | | | | | | | (10) | | | | | | iii | | | | | | — | | |
Additional paid-in capital
|
| | | | 1,391 | | | | | | (1,401) | | | | | | (10) | | | | | | | | | | | | | | | | | | 10 | | | | | | iii | | | | | | — | | |
| | | | | (290) | | | | | | 290 | | | | | | 0 | | | | | | (86) | | | | | | 351 | | | | | | (351) | | | | | | | | | | | | (86) | | |
Total
|
| | | $ | 14 | | | | | $ | (14) | | | | | $ | — | | | | | $ | 4,712 | | | | | $ | 459 | | | | | $ | 1,704 | | | | | | | | | | | $ | 6,875 | | |
|
|
Purchase Consideration
|
| | |||||
|
Note issued for the acquisition
|
| | | $ | 2,055 | | |
|
Liabilities assumed
|
| | | | 108 | | |
|
Total purchase price consideration
|
| | | $ | 2,163 | | |
|
Assets acquired
|
| | |||||
|
Cash
|
| | | $ | 99 | | |
|
Accounts receivable and other assets
|
| | | | 297 | | |
|
Property and equipment, net
|
| | | | 175 | | |
|
Total assets acquired
|
| | | | 571 | | |
| | | ||||||
|
Customer relationships
|
| | | | 820 | | |
| Patents | | | | | 80 | | |
| Trademark | | | | | 85 | | |
|
Goodwill
|
| | | | 607 | | |
| | | | | $ | 2,163 | | |
|
Year Ended June 30,
|
| |||||||||
|
2019
|
| |
2018
|
| ||||||
|
(in 000’s)
|
| |||||||||
|
Actual
|
| |
Pro Forma
|
| |
Actual
|
| |
Pro Forma
|
|
|
$20,269
|
| |
$22,146
|
| |
$25,335
|
| |
$27,382
|
|
|
Year Ended June 30,
|
| |||||||||
|
2019
|
| |
2018
|
| ||||||
|
(in 000’s)
|
| |||||||||
|
Actual
|
| |
Pro Forma
|
| |
Actual
|
| |
Pro Forma
|
|
|
$5,237
|
| |
$5,754
|
| |
$5,322
|
| |
$6,187
|
|
|
Year Ended June 30,
|
| |||||||||
|
2019
|
| |
2018
|
| ||||||
|
(in 000’s)
|
| |||||||||
|
Actual
|
| |
Pro Forma
|
| |
Actual
|
| |
Pro Forma
|
|
|
$318
|
| |
$318
|
| |
$425
|
| |
$425
|
|
|
Year Ended June 30,
|
| |||||||||
|
2019
|
| |
2018
|
| ||||||
|
(in 000’s)
|
| |||||||||
|
Actual
|
| |
Pro Forma
|
| |
Actual
|
| |
Pro Forma
|
|
|
$4,958
|
| |
$5,693
|
| |
$4,338
|
| |
$5,163
|
|
|
Year Ended June 30,
|
| |||||||||
|
2019
|
| |
2018
|
| ||||||
|
(in 000’s)
|
| |||||||||
|
Actual
|
| |
Pro Forma
|
| |
Actual
|
| |
Pro Forma
|
|
|
$4
|
| |
$(137)
|
| |
$18
|
| |
$32
|
|
|
Year Ended June 30,
|
| |||||||||
|
2019
|
| |
2018
|
| ||||||
|
(in 000’s)
|
| |||||||||
|
Actual
|
| |
Pro Forma
|
| |
Actual
|
| |
Pro Forma
|
|
|
$(35)
|
| |
$(394)
|
| |
$577
|
| |
$631
|
|
Operating leases
|
| | | ||||
2020
|
| | | $ | 268 | | |
2021
|
| | | | 276 | | |
2022
|
| | | | 285 | | |
2023
|
| | | | 293 | | |
2024
|
| | | | 175 | | |
Total future lease payments
|
| | | $ | 1,297 | | |
Name
|
| |
Age
|
| |
Title
|
|
Executive Officers and Directors:
|
| | | | | | |
Glenn Sherman, PhD | | | 75 | | | President and Chief Executive Officer | |
Phil Rafnson | | | 72 | | | Chairman of the Board | |
Jose Delgado | | | 55 | | | Executive Vice President, Sales and Marketing | |
Bevan Wright | | | 50 | | | Executive Vice President, Operations | |
Michael Sherman | | | 56 | | | Interim Chief Financial Officer | |
Key Personnel: | | | | | | | |
Jerry Van de Rydt | | | 65 | | | Senior Vice President, FF& E Sales | |
David Richards | | | 62 | | | Senior Vice President, Engineering | |
Thomas Lipiec | | | 55 | | | Senior Vice President, Sales and Customer Service | |
Frank Tees | | | 45 | | | Vice President, Technical Sales & Support | |
Director Nominees | | | | | | | |
Katherine D. Crothall, Ph.D. | | | 70 | | | Director Nominee | |
John C. Stiska | | | 76 | | | Director Nominee | |
Scott Anderson | | | 65 | | | Director Nominee | |
Name and Principal Position
|
| |
Fiscal
Year |
| |
Salary(1)
|
| |
Bonus
|
| |
Option
Awards |
| |
All Other
Compensation |
| |
Total
|
| ||||||||||||||||||
Glenn Sherman
President and Chief Executive Officer |
| | | | 2019 | | | | | $ | 120,750 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 120,750 | | |
| | | 2018 | | | | | $ | 118,760 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 118,760 | | | ||
Jose Delgado
Executive Vice President, Sales and Marketing |
| | | | 2019 | | | | | $ | 220,500 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 220,500 | | |
| | | 2018 | | | | | $ | 201,577 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 201,577 | | | ||
Bevan Wright
Executive Vice President, Operations |
| | | | 2019 | | | | | $ | 220,500 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 220,500 | | |
| | | 2018 | | | | | $ | 216,865 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 216,865 | | | ||
Michael Sherman
Interim Chief Financial Officer(1) |
| | | | 2019 | | | | | $ | 208,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 208,000 | | |
| | | 2018 | | | | | $ | 88,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 88,000 | | |
| | |
Shares Beneficially
Owned Before this Offering |
| |
Shares Beneficially
Owned after this Offering |
| ||||||||||||||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percentage
|
| |
Number
|
| |
Percentage
|
| ||||||||||||
Named Executive Officers and directors: | | | | | | | | | | | | | | | | | | | | | | | | | |
Phil Rafnson(1)
|
| | | | 2,005,567 | | | | | | 40.7% | | | | | | 2,005,567 | | | | | | 27.8% | | |
Bevan Wright
|
| | | | 582,570 | | | | | | 11.8% | | | | | | 582,570 | | | | | | 8.1% | | |
Jose Delgado
|
| | | | 504,556 | | | | | | 10.2% | | | | | | 504,556 | | | | | | 7.0% | | |
Glenn Sherman, PhD
|
| | | | 267,855 | | | | | | 5.4% | | | | | | 267,855 | | | | | | 3.7% | | |
Michael Sherman
|
| | | | 0 | | | | | | * | | | | | | 0 | | | | | | * | | |
| | |
Shares Beneficially
Owned Before this Offering |
| |
Shares Beneficially
Owned After this Offering |
| ||||||||||||||||||
Name of Beneficial Owner
|
| |
Number
|
| |
Percentage
|
| |
Number
|
| |
Percentage
|
| ||||||||||||
Director Nominees: | | | | | | | | | | | | | | | | | | | | | | | | | |
Katherine D. Crothall, Ph.D.(2)
|
| | | | 0 | | | | | | * | | | | | | | | | | | | * | | |
John C. Stiska(2)
|
| | | | 0 | | | | | | * | | | | | | | | | | | | * | | |
Scott Anderson(2)
|
| | | | 0 | | | | | | * | | | | | | | | | | | | * | | |
All executive officers, directors and director nominees as a
group (10 persons) |
| | | | 3,360,548 | | | | | | 68.3% | | | | | | 3,360,548 | | | | | | 46.5% | | |
5% Stockholders: | | | | | | | | | | | | | | | | | | | | | | | | | |
David Richards
|
| | | | 319,006 | | | | | | 6.5% | | | | | | 319,006 | | | | | | 4.4% | | |
Jerry Van de Rydt
|
| | | | 278,712 | | | | | | 5.7% | | | | | | 278,712 | | | | | | 3.9% | | |
Date
|
| |
Number of Shares
|
| |||
On the date of this Prospectus
|
| | | | 632,478 | | |
Between 90 and 180 days after the date of this Prospectus
|
| | | | 0 | | |
At various times beginning more than 180 days after the date of this Prospectus
|
| | | | 4,291,176 | | |
Underwriters
|
| |
Number of Shares
|
| |||
Westpark Capital, Inc.
|
| |
|
| |||
Boustead Securities, LLC.
|
| | | | | | |
Total
|
| | | | 2,300,000 | | |
| | |
Per Share of
Common Stock |
| |
Total without Exercise of
Over-allotment option |
| ||||||
Public offering price
|
| | | $ | | | | | $ | | | ||
Underwriting discount(1)
|
| | | $ | | | | | | $ | | | |
Non-accountable expense allowance(2)
|
| | | $ | | | | | | $ | | | |
Net proceeds to us(3)
|
| | | $ | | | | | | $ | | | |
| | |
June 30,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Assets | | | | ||||||||||
Current Assets: | | | | ||||||||||
Cash and cash equivalents
|
| | | $ | 582 | | | | | $ | 597 | | |
Accounts receivable, net
|
| | | | 2,128 | | | | | | 2,181 | | |
Inventories, net
|
| | | | 1,683 | | | | | | 2,199 | | |
Prepaid expenses and other
|
| | | | 99 | | | | | | 73 | | |
Due from related party
|
| | | | — | | | | | | 267 | | |
Total Current Assets
|
| | | | 4,492 | | | | | | 5,317 | | |
Non-Current Assets: | | | | ||||||||||
Property, plant and equipment, net
|
| | | | 32 | | | | | | 45 | | |
Other assets
|
| | | | 188 | | | | | | 17 | | |
Total Non-Current Assets
|
| | | | 220 | | | | | | 62 | | |
Total Assets
|
| | | $ | 4,712 | | | | | $ | 5,379 | | |
Liabilities And Members’ Equity (Deficit) | | | | ||||||||||
Current Liabilities: | | | | ||||||||||
Accounts payable
|
| | | $ | 2,926 | | | | | $ | 3,682 | | |
Accrued expenses
|
| | | | 793 | | | | | | 687 | | |
Customer deposits
|
| | | | 1,011 | | | | | | 840 | | |
Unearned warranty revenue
|
| | | | 68 | | | | | | 44 | | |
Total Current Liabilities
|
| | | | 4,798 | | | | | | 5,253 | | |
Members’ Equity (Deficit)
|
| | | | (86) | | | | | | 126 | | |
Total Liabilities and Members’ Equity (Deficit)
|
| | | $ | 4,712 | | | | | $ | 5,379 | | |
| | |
Year Ended
June 30, 2019 |
| |
Year Ended
June 30, 2018 |
| ||||||
Net sales
|
| | | $ | 20,269 | | | | | $ | 25,335 | | |
Cost of goods sold
|
| | | | 15,032 | | | | | | 20,013 | | |
Gross profit
|
| | | | 5,237 | | | | | | 5,322 | | |
Operating expenses: | | | | ||||||||||
Research and development
|
| | | | 318 | | | | | | 425 | | |
Selling and marketing
|
| | | | 2,455 | | | | | | 2,290 | | |
General and administrative
|
| | | | 2,503 | | | | | | 2,048 | | |
Total operating expenses
|
| | | | 5,276 | | | | | | 4,763 | | |
Operating income (loss)
|
| | | | (39) | | | | | | 559 | | |
Other expenses (income) | | | | ||||||||||
Interest and other income
|
| | | | (4) | | | | | | (19) | | |
Interest expense
|
| | | | — | | | | | | 1 | | |
Total other income
|
| | | | (4) | | | | | | (18) | | |
Net income (loss)
|
| | | $ | (35) | | | | | $ | 577 | | |
Pro Forma C Corporation Information (Unaudited) — See Note 8 | | | | ||||||||||
Historical net income (loss) before income taxes
|
| | | $ | (35) | | | | | $ | 577 | | |
Pro forma provision (benefit) for income taxes
|
| | | | (10) | | | | | | 162 | | |
Pro forma net income (loss)
|
| | | $ | (25) | | | | | $ | 415 | | |
Pro forma net income (loss) per common share basic
|
| | | $ | (.01) | | | | | $ | .08 | | |
Pro forma shares outstanding basic
|
| | | | 4,923,654 | | | | | | 4,923,654 | | |
Pro forma net income (loss) per common share diluted
|
| | | $ | (.01) | | | | | $ | .08 | | |
Pro forma shares outstanding diluted
|
| | | | 5,000,000 | | | | | | 5,000,000 | | |
|
Balance June 30, 2017
|
| | | $ | 162 | | |
|
Distributions
|
| | | | (613) | | |
|
Net income
|
| | | | 577 | | |
|
Balance June 30, 2018
|
| | | | 126 | | |
|
Distributions
|
| | | | (177) | | |
|
Net loss
|
| | | | (35) | | |
|
Balance June 30, 2019
|
| | | $ | (86) | | |
| | |
Year Ended
June 30, 2019 |
| |
Year Ended
June 30, 2018 |
| ||||||
Cash flows from operating activities: | | | | ||||||||||
Net income (loss)
|
| | | $ | (35) | | | | | $ | 577 | | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
| | | ||||||||||
Provision for (reversal of) doubtful accounts
|
| | | | (105) | | | | | | 32 | | |
Depreciation expense
|
| | | | 17 | | | | | | 16 | | |
Deferred rent
|
| | | | 7 | | | | | | (8) | | |
Changes in operating assets and liabilities:
|
| | | ||||||||||
Accounts receivable
|
| | | | 158 | | | | | | (246) | | |
Inventories
|
| | | | 516 | | | | | | 63 | | |
Prepaid expenses and other
|
| | | | (198) | | | | | | (25) | | |
Accounts payable
|
| | | | (755) | | | | | | (182) | | |
Accrued expenses
|
| | | | 97 | | | | | | 67 | | |
Unearned warranty revenue
|
| | | | 24 | | | | | | (39) | | |
Customer deposits
|
| | | | 172 | | | | | | 408 | | |
Net cash provided by (used in) operating activities
|
| | | | (102) | | | | | | 663 | | |
Cash flows from investing activities | | | | ||||||||||
Due from related party
|
| | | | 167 | | | | | | (37) | | |
Purchases of property, plant and equipment
|
| | | | (3) | | | | | | (20) | | |
Net cash provided by (used in) investing activities
|
| | | | 164 | | | | | | (57) | | |
Cash flows from financing activities | | | | ||||||||||
Member distributions
|
| | | | (77) | | | | | | (613) | | |
Net cash used in financing activities
|
| | | | (77) | | | | | | (613) | | |
Net (decrease) in cash
|
| | | | (15) | | | | | | (7) | | |
Cash, beginning of the year
|
| | | | 597 | | | | | | 604 | | |
Cash, end of the year
|
| | | $ | 582 | | | | | $ | 597 | | |
Non-cash operating/financing activities: | | | | ||||||||||
Distribution to member to settle related party receivable
|
| | | $ | 100 | | | | | $ | — | | |
Cash paid for interest
|
| | | $ | — | | | | | $ | 1 | | |
| | |
2019
|
| |
2018
|
| ||||||
| | |
(in 000’s)
|
| |||||||||
Product warranty liability beginning of year
|
| | | $ | 118 | | | | | $ | 115 | | |
Accruals for warranties issued
|
| | | | 105 | | | | | | 118 | | |
Settlements made
|
| | | | (112) | | | | | | (115) | | |
Product warranty liability end of the year
|
| | | $ | 111 | | | | | $ | 118 | | |
| | |
June 30,
2019 |
| |
June 30,
2018 |
| ||||||
Leasehold improvements
|
| | | $ | 202 | | | | | $ | 202 | | |
Furniture and fixtures
|
| | | | 45 | | | | | | 45 | | |
Production equipment
|
| | | | 66 | | | | | | 66 | | |
Computer equipment
|
| | | | 39 | | | | | | 33 | | |
Other equipment
|
| | | | 114 | | | | | | 133 | | |
| | | | | 466 | | | | | | 479 | | |
Accumulated depreciation
|
| | | | 434 | | | | | | 434 | | |
Net property and equipment
|
| | | $ | 32 | | | | | $ | 45 | | |
| | |
Useful Lives
|
|
Leasehold improvements | | | 5 years | |
Furniture and fixtures | | | 5 years | |
Production equipment | | | 3 – 7 years | |
Computer equipment | | | 3 years | |
Other equipment | | | 3 – 7 years | |
| | |
June 30,
2019 |
| |
June 30,
2018 |
| ||||||
Employee compensation
|
| | | $ | 230 | | | | | $ | 229 | | |
Others
|
| | | | 563 | | | | | | 458 | | |
Total
|
| | | $ | 793 | | | | | $ | 687 | | |
Operating leases
|
| | | ||||
2020
|
| | | $ | 268 | | |
2021
|
| | | | 276 | | |
2022
|
| | | | 285 | | |
2023
|
| | | | 293 | | |
2024
|
| | | | 175 | | |
Total future minimum lease payments
|
| | | $ | 1,297 | | |
| | |
June 30,
2019 |
| |
December 31,
|
| ||||||||||||
| | |
2018
|
| |
2017
|
| ||||||||||||
| | |
(UNAUDITED)
|
| | | |||||||||||||
ASSETS | | | | | |||||||||||||||
Current assets | | | | | |||||||||||||||
Cash
|
| | | $ | 99 | | | | | $ | 54 | | | | | $ | 16 | | |
Other assets
|
| | | | 90 | | | | | | 11 | | | | | | — | | |
Accounts receivable
|
| | | | 207 | | | | | | 133 | | | | | | 149 | | |
Total current assets
|
| | | | 396 | | | | | | 198 | | | | | | 165 | | |
Property, plant and equipment, net
|
| | | | 63 | | | | | | 106 | | | | | | 213 | | |
Total assets
|
| | | $ | 459 | | | | | $ | 304 | | | | | $ | 378 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |||||||||||||||
Current liabilities | | | | | |||||||||||||||
Accounts payable
|
| | | $ | 106 | | | | | $ | 39 | | | | | $ | 12 | | |
Accrued expenses
|
| | | | 2 | | | | | | 11 | | | | | | 28 | | |
Line of credit
|
| | | | — | | | | | | — | | | | | | 50 | | |
Total current liabilities
|
| | | | 108 | | | | | | 50 | | | | | | 90 | | |
Related party note payable
|
| | | | — | | | | | | — | | | | | | 20 | | |
Common stock – no par value, 1,000 shares outstanding at December 31, 2017 and 2018, and June 30, 2019
|
| | | | — | | | | | | — | | | | | | — | | |
Retained earnings
|
| | | | 351 | | | | | | 254 | | | | | | 268 | | |
Stockholders’ equity
|
| | | | 351 | | | | | | 254 | | | | | | 268 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 459 | | | | | $ | 304 | | | | | $ | 378 | | |
| | |
Six Months
Ended June 30, 2019 |
| |
Six Months
Ended June 30, 2018 |
| |
Year Ended
December 31, 2018 |
| |
Year Ended
December 31, 2017 |
| ||||||||||||
| | |
(UNAUDITED)
|
| |
(UNAUDITED)
|
| | | ||||||||||||||||
Net sales
|
| | | $ | 1,002 | | | | | $ | 1,017 | | | | | $ | 1,892 | | | | | $ | 2,259 | | |
Cost of goods sold
|
| | | | 654 | | | | | | 590 | | | | | | 1,176 | | | | | | 1,352 | | |
Gross profit
|
| | | | 348 | | | | | | 427 | | | | | | 716 | | | | | | 907 | | |
Operating expenses | | | | | | ||||||||||||||||||||
Selling, general and administrative
|
| | | | 254 | | | | | | 286 | | | | | | 683 | | | | | | 886 | | |
Total operating expenses
|
| | | | 254 | | | | | | 286 | | | | | | 683 | | | | | | 886 | | |
Operating profit
|
| | | | 94 | | | | | | 141 | | | | | | 33 | | | | | | 21 | | |
Other expense (income)
|
| | | | | ||||||||||||||||||||
Interest expense
|
| | | | — | | | | | | 1 | | | | | | 1 | | | | | | — | | |
Interest and other (income)
|
| | | | (3) | | | | | | (9) | | | | | | 20 | | | | | | (22) | | |
Total other expense (income)
|
| | | | (3) | | | | | | (8) | | | | | | 21 | | | | | | (22) | | |
Net income (loss)
|
| | | $ | 97 | | | | | $ | 149 | | | | | $ | 12 | | | | | $ | 43 | | |
|
Balance December 31, 2016
|
| | | $ | 258 | | |
|
Distributions
|
| | | | (33) | | |
|
Net Loss
|
| | | | 43 | | |
|
Balance December 31, 2017
|
| | | | 268 | | |
|
Distributions
|
| | | | (26) | | |
|
Net Income
|
| | | | 12 | | |
|
Balance December 31, 2018
|
| | | | 254 | | |
|
Distributions (UNAUDITED)
|
| | | | — | | |
|
Net income (UNAUDITED)
|
| | | | 97 | | |
|
Balance June 30, 2019 (UNAUDITED)
|
| | | $ | 351 | | |
| | |
Six Months
Ended June 30, 2019 |
| |
Six Months
Ended June 30, 2018 |
| |
Year Ended
December 31, 2018 |
| |
Year Ended
December 31, 2017 |
| ||||||||||||
| | |
(UNAUDITED)
|
| |
(UNAUDITED)
|
| | | ||||||||||||||||
Cash flows from operating activities | | | | | | ||||||||||||||||||||
Net income
|
| | | $ | 97 | | | | | $ | 149 | | | | | $ | 12 | | | | | $ | 43 | | |
Adjustments to reconcile net income to net cash provided by operating activities:
|
| | | | | ||||||||||||||||||||
Depreciation expense
|
| | | | 43 | | | | | | 75 | | | | | | 119 | | | | | | 146 | | |
Changes in operating assets and liabilities: | | | | | | ||||||||||||||||||||
Accounts receivable
|
| | | | (74) | | | | | | 10 | | | | | | 17 | | | | | | 49 | | |
Other assets
|
| | | | (79) | | | | | | | | | | | | (11) | | | | | | — | | |
Accounts payable
|
| | | | 67 | | | | | | 65 | | | | | | 27 | | | | | | (42) | | |
Accrued expenses
|
| | | | (9) | | | | | | (27) | | | | | | (19) | | | | | | (13) | | |
Net cash provided by operating activities
|
| | | | 45 | | | | | | 272 | | | | | | 145 | | | | | | 183 | | |
Cash flows from investing activities | | | | | | ||||||||||||||||||||
Purchases of property, plant and equipment
|
| | | | — | | | | | | (11) | | | | | | (11) | | | | | | (87) | | |
Net cash used in investing activities
|
| | | | — | | | | | | (11) | | | | | | (11) | | | | | | (87) | | |
Cash flows from financing activities | | | | | | ||||||||||||||||||||
Due from related party
|
| | | | — | | | | | | — | | | | | | (20) | | | | | | — | | |
Payments of related party notes payable
|
| | | | — | | | | | | — | | | | | | — | | | | | | 8 | | |
Line of credit
|
| | | | — | | | | | | (50) | | | | | | (50) | | | | | | (55) | | |
Stockholder distributions
|
| | | | — | | | | | | (40) | | | | | | (26) | | | | | | (33) | | |
Net cash used in financing activities
|
| | | | — | | | | | | (90) | | | | | | (96) | | | | | | (80) | | |
Net increase in cash
|
| | | | 45 | | | | | | 171 | | | | | | 38 | | | | | | 16 | | |
Cash, beginning of the period
|
| | | | 54 | | | | | | 16 | | | | | | 16 | | | | | | — | | |
Cash, end of the period
|
| | | $ | 99 | | | | | $ | 187 | | | | | $ | 54 | | | | | $ | 16 | | |
Supplemental disclosure of cash flow information | | | | | | ||||||||||||||||||||
Cash paid during the year and for the period: | | | | | | ||||||||||||||||||||
Interest
|
| | | $ | — | | | | | $ | — | | | | | $ | 1 | | | | | $ | 6 | | |
| | |
December 31,
|
| |||||||||
| | |
2018
|
| |
2017
|
| ||||||
Molds
|
| | | $ | 3,047 | | | | | $ | 3,034 | | |
Furniture and fixtures
|
| | | | 163 | | | | | | 163 | | |
Leasehold improvements
|
| | | | 82 | | | | | | 82 | | |
Computer equipment
|
| | | | 126 | | | | | | 126 | | |
Other equipment
|
| | | | 67 | | | | | | 67 | | |
| | | | | 3,485 | | | | | | 3,472 | | |
Accumulated depreciation
|
| | | | 3,379 | | | | | | 3,259 | | |
Net property and equipment
|
| | | $ | 106 | | | | | $ | 213 | | |
| | |
Useful Lives
|
|
Leasehold improvements | | | 5 years | |
Furniture and fixtures | | | 5 years | |
Molds | | | 3 years | |
Computer equipment | | | 3 years | |
Other equipment | | | 3 — 7 years | |
|
January 1, 2016 through July 31, 2017
|
| | | $ | 4,581 | | |
|
August 1, 2017 through November 15, 2018
|
| | | $ | 5,377 | | |
| | |
June 30,
2019 |
| |
December 31,
2018 |
| |
December 31,
2017 |
| |||||||||
| | |
(unaudited)
|
| | | | | | | |
(Note 1)
|
| ||||||
ASSETS | | | | | |||||||||||||||
Current assets | | | | | |||||||||||||||
Cash
|
| | | $ | 12 | | | | | $ | 202 | | | | | $ | 426 | | |
Accounts receivable, net of allowances of $25, $29 and $271,
respectively |
| | | | — | | | | | | — | | | | | | 90 | | |
Inventories
|
| | | | — | | | | | | — | | | | | | 101 | | |
Prepaid expenses and other
|
| | | | 2 | | | | | | 2 | | | | | | 46 | | |
Total current assets
|
| | | | 14 | | | | | | 204 | | | | | | 663 | | |
Deposits and other assets
|
| | | | — | | | | | | — | | | | | | 14 | | |
Total assets
|
| | | $ | 14 | | | | | $ | 204 | | | | | $ | 677 | | |
LIABILITIES AND SHAREHOLDERS’ DEFICIT | | | | | |||||||||||||||
Current liabilities | | | | | |||||||||||||||
Accounts payable
|
| | | $ | 66 | | | | | $ | 23 | | | | | $ | 441 | | |
Accrued expenses
|
| | | | 100 | | | | | | 160 | | | | | | 690 | | |
Customer refund
|
| | | | — | | | | | | — | | | | | | 125 | | |
Due to related parties
|
| | | | — | | | | | | — | | | | | | 33 | | |
Notes payable
|
| | | | 138 | | | | | | 38 | | | | | | 1,359 | | |
Total current liabilities
|
| | | | 304 | | | | | | 221 | | | | | | 2,648 | | |
Commitments and contingencies | | | | | |||||||||||||||
Shareholders’ deficit | | | | | |||||||||||||||
Common stock; $.0001 par value; 100,000,000 shares
authorized; 94,784,166, 94,784,166 and 0 shares issued and outstanding, respectively |
| | | | 10 | | | | | | 10 | | | | | | — | | |
Additional paid-in capital
|
| | | | 1,391 | | | | | | 1,391 | | | | | | — | | |
Net deficit – Monster Digital
|
| | | | — | | | | | | — | | | | | | (1,971) | | |
Accumulated deficit
|
| | | | (1,691) | | | | | | (1,418) | | | | | | — | | |
Total shareholders’ deficit
|
| | | | (290) | | | | | | (17) | | | | | | (1,971) | | |
Total liabilities and shareholders’ deficit
|
| | | $ | 14 | | | | | $ | 204 | | | | | $ | 677 | | |
| | |
For the Six Months Ended
|
| |
For the Years Ended
|
| ||||||||||||||||||
| | |
June 30,
2019 |
| |
June 30,
2018 |
| |
December 31,
2018 |
| |
December 31,
2017 |
| ||||||||||||
| | |
(unaudited)
|
| |
(unaudited)
|
| | | | | | | |
(Note 1)
|
| |||||||||
Net sales
|
| | | $ | — | | | | | $ | 61 | | | | | $ | 70 | | | | | $ | 1,883 | | |
Cost of goods sold
|
| | | | — | | | | | | 101 | | | | | | 111 | | | | | | 1,947 | | |
Gross profit (loss)
|
| | | | — | | | | | | (40) | | | | | | (41) | | | | | | (64) | | |
Operating expenses | | | | | | ||||||||||||||||||||
Research and development
|
| | | | — | | | | | | — | | | | | | — | | | | | | 190 | | |
Selling and marketing
|
| | | | — | | | | | | 31 | | | | | | 31 | | | | | | 1,428 | | |
General and administrative
|
| | | | 273 | | | | | | 638 | | | | | | 1,471 | | | | | | 4,984 | | |
Trademark impairment
|
| | | | — | | | | | | — | | | | | | | | | | | | 2,286 | | |
Total operating expenses
|
| | | | 273 | | | | | | 669 | | | | | | 1,502 | | | | | | 8,888 | | |
Operating loss
|
| | | | (273) | | | | | | (709) | | | | | | (1,543) | | | | | | (8,952) | | |
Other (income) expense, net | | | | | | ||||||||||||||||||||
Interest and finance expense
|
| | | | — | | | | | | 489 | | | | | | 489 | | | | | | 93 | | |
Gain on extinguishment of debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | (200) | | |
Gain on settlement of customer refund
|
| | | | — | | | | | | — | | | | | | — | | | | | | (920) | | |
Total other (income) expense
|
| | | | — | | | | | | 489 | | | | | | 489 | | | | | | (1,027) | | |
Loss before income taxes
|
| | | | (273) | | | | | | (1,198) | | | | | | (2,032) | | | | | | (7,925) | | |
Provision for income taxes
|
| | | | — | | | | | | 3 | | | | | | 3 | | | | | | — | | |
Net loss
|
| | | | (273) | | | | | | (1,201) | | | | | | (2,035) | | | | | | (7,925) | | |
Warrant tender offer inducement charge
|
| | | | — | | | | | | — | | | | | | — | | | | | | 896 | | |
Net loss attributable to common shareholders
|
| | | $ | (273) | | | | | $ | (1,201) | | | | | $ | (2,035) | | | | | $ | (8,821) | | |
Weighted average loss per share | | | | | | ||||||||||||||||||||
Weighted average basic and diluted
|
| | | $ | (0.00) | | | | | $ | (0.05) | | | | | $ | (0.04) | | | | | $ | (9.36) | | |
Weighted average shares used in computation
|
| | | | 94,784 | | | | | | 23,374 | | | | | | 48,571 | | | | | | 942 | | |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Net Equity
(Deficit) Monster Digital |
| |
Accumulated
Deficit |
| |
Shareholders’
Equity (Deficit) |
| |||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balance December 31, 2016
|
| | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | 2,490 | | | | | $ | — | | | | | $ | 2,490 | | |
Parent issuance of common stock in connection with warrant exercise, net of issuance costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,190 | | | | | | — | | | | | | 1,190 | | |
Conversion of related party debt to parent equity
|
| | | | — | | | | | | — | | | | | | — | | | | | | 100 | | | | | | — | | | | | | 100 | | |
Parent issuance of common stock pursuant to debt payment agreement
|
| | | | — | | | | | | — | | | | | | — | | | | | | 600 | | | | | | — | | | | | | 600 | | |
Parent issuance of common stock, net of issuance costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | 419 | | | | | | — | | | | | | 419 | | |
Parent company warrants issued in connection
with convertible notes |
| | | | — | | | | | | — | | | | | | — | | | | | | 44 | | | | | | — | | | | | | 44 | | |
Amortization of non-cash stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,111 | | | | | | — | | | | | | 1,111 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (7,925) | | | | | | — | | | | | | (7,925) | | |
Balance December 31, 2017
|
| | | | — | | | | | | — | | | | | | — | | | | | | (1,971) | | | | | | — | | | | | | (1,971) | | |
Issuance of common stock, net of issuance costs
|
| | | | 57,250,000 | | | | | | 6 | | | | | | 1,002 | | | | | | — | | | | | | — | | | | | | 1,008 | | |
Issuance of common stock for investment services rendered
|
| | | | 12,500,000 | | | | | | 1 | | | | | | 249 | | | | | | — | | | | | | — | | | | | | 250 | | |
Issuance of common stock for officers and employees
|
| | | | 6,400,000 | | | | | | 1 | | | | | | 127 | | | | | | — | | | | | | — | | | | | | 128 | | |
Liabilities transferred in connection with spin-off
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,000 | | | | | | — | | | | | | 1,000 | | |
Transfer from parent
|
| | | | — | | | | | | — | | | | | | — | | | | | | 275 | | | | | | — | | | | | | 275 | | |
Liabilities settled with issuance of common stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | 94 | | | | | | — | | | | | | 94 | | |
Effect of spin-off from Monster Digital and conversion of notes payable
|
| | | | 18,634,166 | | | | | | 2 | | | | | | (249) | | | | | | 776 | | | | | | — | | | | | | 529 | | |
Beneficial conversion charge
|
| | | | — | | | | | | — | | | | | | — | | | | | | 443 | | | | | | — | | | | | | 443 | | |
Amortization of non-cash stock-based compensation
|
| | | | — | | | | | | — | | | | | | 262 | | | | | | — | | | | | | — | | | | | | 262 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (617) | | | | | | (1,418) | | | | | | (2,035) | | |
December 31, 2018
|
| | | | 94,784,166 | | | | | | 10 | | | | | | 1,391 | | | | | | — | | | | | | (1,418) | | | | | | (17) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (273) | | | | | | (273) | | |
June 30, 2019
|
| | | | 94,784,166 | | | | | $ | 10 | | | | | $ | 1,391 | | | | | $ | — | | | | | $ | (1,691) | | | | | $ | (290) | | |
|
| | |
Six Months
Ended June 30, 2019 |
| |
Six Months
Ended June 30, 2018 |
| |
Years Ended
December 31, |
| |||||||||||||||
| | |
2018
|
| |
2017
|
| ||||||||||||||||||
| | |
(unaudited)
|
| |
(unaudited)
|
| | | | | | | |
(Note 1)
|
| |||||||||
Cash flows from operating activities | | | | | | ||||||||||||||||||||
Net loss
|
| | | $ | (273) | | | | | $ | (1,201) | | | | | $ | (2,035) | | | | | $ | (7,925) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | ||||||||||||||||||||
Stock-based compensation
|
| | | | — | | | | | | 262 | | | | | | 640 | | | | | | 1,111 | | |
Beneficial conversion charge
|
| | | | — | | | | | | 443 | | | | | | 443 | | | | | | — | | |
Non-cash interest related to debt conversion
|
| | | | — | | | | | | 44 | | | | | | 44 | | | | | | — | | |
Amortization
|
| | | | — | | | | | | — | | | | | | — | | | | | | 141 | | |
Trademark impairment
|
| | | | — | | | | | | — | | | | | | — | | | | | | 2,286 | | |
Gain on settlement of customer refund
|
| | | | — | | | | | | — | | | | | | — | | | | | | (920) | | |
Gain on extinguishment of debt
|
| | | | — | | | | | | — | | | | | | — | | | | | | (200) | | |
Provision for doubtful accounts
|
| | | | — | | | | | | 13 | | | | | | 13 | | | | | | 20 | | |
Changes in operating assets and liabilities:
|
| | | | | ||||||||||||||||||||
Accounts receivable
|
| | | | — | | | | | | 61 | | | | | | 77 | | | | | | 746 | | |
Inventories
|
| | | | — | | | | | | 91 | | | | | | 101 | | | | | | 1,004 | | |
Prepaid expenses and other
|
| | | | — | | | | | | 11 | | | | | | 59 | | | | | | 573 | | |
Accounts payable
|
| | | | 43 | | | | | | (200) | | | | | | (260) | | | | | | 173 | | |
Accrued expenses
|
| | | | (60) | | | | | | (470) | | | | | | (506) | | | | | | (805) | | |
Customer refund
|
| | | | — | | | | | | (50) | | | | | | (50) | | | | | | (195) | | |
Due to related parties
|
| | | | — | | | | | | (33) | | | | | | (33) | | | | | | (11) | | |
Net cash used in operating activities
|
| | | | (290) | | | | | | (1,029) | | | | | | (1,507) | | | | | | (4,002) | | |
Cash flows from financing activities | | | | | | ||||||||||||||||||||
Issuance of common stock, net of issuance cost
|
| | | | — | | | | | | 475 | | | | | | 1,008 | | | | | | 419 | | |
Issuance of common stock in connection with warrant exercise
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,190 | | |
Proceeds from issuance of convertible notes
|
| | | | 100 | | | | | | — | | | | | | — | | | | | | 1,346 | | |
Debt discount
|
| | | | — | | | | | | — | | | | | | — | | | | | | (80) | | |
Proceeds from credit facility
|
| | | | — | | | | | | — | | | | | | — | | | | | | 168 | | |
Payments on credit facility
|
| | | | — | | | | | | — | | | | | | — | | | | | | (168) | | |
Short-term loan – related party
|
| | | | — | | | | | | — | | | | | | — | | | | | | 100 | | |
Transfer from parent
|
| | | | — | | | | | | 275 | | | | | | 275 | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 100 | | | | | | 750 | | | | | | 1,283 | | | | | | 2,975 | | |
Net decrease in cash
|
| | | | (190) | | | | | | (279) | | | | | | (224) | | | | | | (1,027) | | |
Cash, beginning of the period
|
| | | | 202 | | | | | | 426 | | | | | | 426 | | | | | | 1,453 | | |
Cash, end of the period
|
| | | $ | 12 | | | | | $ | 147 | | | | | $ | 202 | | | | | $ | 426 | | |
Supplemental disclosure of cash flow information | | | | | | ||||||||||||||||||||
Cash paid during the period for:
|
| | | | | ||||||||||||||||||||
Interest
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 6 | | |
Income taxes
|
| | | $ | — | | | | | $ | 3 | | | | | $ | 3 | | | | | $ | — | | |
Non-cash investing and financing activities: | | | | | | ||||||||||||||||||||
Conversion of related party debt into equity
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 100 | | |
Warrant issued in connection with notes payable
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 44 | | |
Exchange of debt for equity
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 600 | | |
Liabilities settled with issuance of common stock
|
| | | $ | — | | | | | $ | 94 | | | | | $ | 94 | | | | | $ | — | | |
Liabilities transferred in connection with spin-off
|
| | | $ | — | | | | | $ | 1,000 | | | | | $ | 1,000 | | | | | $ | — | | |
Effect of spin-off from Monster Digital and conversion of notes payable
|
| | | $ | — | | | | | $ | 528 | | | | | $ | 528 | | | | | $ | — | | |
| | |
June 30,
2019 |
| |
December 31,
2018 |
| |
December 31,
2017 |
| |||||||||
| | |
(unaudited)
|
| | | |||||||||||||
Royalties
|
| | | $ | — | | | | | $ | — | | | | | $ | 180 | | |
Reserve for charges against sales
|
| | | | 6 | | | | | | 30 | | | | | | 40 | | |
Others
|
| | | | 94 | | | | | | 130 | | | | | | 470 | | |
Total
|
| | | $ | 100 | | | | | $ | 160 | | | | | $ | 690 | | |
| | |
Amount to be
Paid |
| |||
SEC registration fee
|
| | | $ | 2,206 | | |
FINRA filing fee
|
| | | | 2,463 | | |
NYSE listing fee
|
| | | | 50,000 | | |
Printing and mailing
|
| | | | 150,000 | | |
Legal fees and expenses
|
| | | | 500,000 | | |
Accounting fees and expenses
|
| | | | 200,000 | | |
Transfer agent and registrar fees and expenses
|
| | | | 25,000 | | |
Miscellaneous | | | | | 33,267 | | |
Total | | | | $ | 1,000,00 | | |
Exhibit
No. |
| |
Exhibit Description
|
|
1.1** | | | Form of Underwriting Agreement | |
3.1** | | | Certificate of Incorporation | |
3.2** | | | Bylaws | |
4.1** | | | Form of Common Stock certificate | |
4.2** | | | Form of Underwriters’ Warrant | |
5.1** | | | Opinion of Manatt, Phelps & Phillips, LLP | |
10.1* | | | Management Services Agreement dated October 3, 2018 between the Company and Caddy Products, Inc. | |
10.2** | | | Form of Indemnification Agreement between the Company and its directors and officers | |
10.3†* | | | 2019 Omnibus Incentive Plan | |
10.3(a)* | | | Form of Stock Option Award Agreement | |
10.3(b)* | | | Form of Restricted Stock Award Agreement | |
10.3(c)* | | | Form of Restricted Stock Unit Agreement | |
10.4* | | | Westpark Capital, Inc. Consulting Agreement dated June 1, 2018 | |
10.5* | | | Form of Share Exchange Agreement by and between Moving image Technologies, LLC, its members, and NLM Holding Co., Inc. | |
10.6* | | | Term Sheet dated July 24, 2018 between the Company and Caddy Products, Inc. | |
10.7* | | | Agreement and Plan of Merger and Reorganization dated July 3, 2017 among Monster Digital, Inc., the Company and Innovate Biopharmaceuticals, Inc. (incorporated by reference to exhibit 2.1 of Form 8-K filed by Innovate Biopharmaceuticals, Inc. (formerly monster Digital, Inc.) with the Securities and Exchange Commission on July 6, 2017) | |
10.8** | | | Asset Purchase Agreement dated effective as of January 1, 2019 by and among Moving iMage Technologies, LLC, MiT Acquisition Co. LLC, Caddy Products, Inc., and the Estate of Peter Bergin | |
10.9** | | | Loan Agreement dated as of October 24, 2019 by and between Agility Capital III, LLC Moving iMage Technologies, LLC and MiT Acquisition Co. LLC | |
10.10** | | | Form of Warrant to purchase Common Stock to be granted by Moving iMage Technologies, Inc. to Agility Capital III, LLC | |
10.11** | | | Amendment No.1 to Share Exchange Agreement dated October 29, 2019 by and between Moving iMage Technologies, LLC, its members, and NLM Holding Co., Inc. | |
23.1 | | | Consent of CohnReznick LLP | |
23.2** | | | Consent of Manatt, Phelps & Phillips, LLP (included in Exhibit 5.1) | |
24* | | | Power of Attorney (included on signature page) | |
99.1(a) | | | Consent of Katherine D. Crothall, Ph.D., Director Nominee | |
99.1(b) | | | Consent of John C. Stiska, Director Nominee | |
99.1(c) | | | Consent of Scott Anderson, Director Nominee | |
|
Name and Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Glenn H. Sherman, PhD
Glenn H. Sherman, PhD
|
| | President and Chief Executive Officer | | | November 11, 2019 | |
|
*
Phil Rafnson
|
| | Chairman of the Board | | | November 11, 2019 | |
|
*
Michael Sherman
|
| | Interim Chief Financial Officer and Principal Accounting Officer | | | November 11, 2019 | |
|
* By
/s/ Glenn H. Sherman, PhD
/s/ Glenn H. Sherman, PhD
|
| | Attorney-in-fact | | |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the inclusion of our reports appearing in this Registration Statement on Amendment No. 2 to Form S-1 (file no. 333-234159) of Moving iMage Technologies, Inc.,
(1) | Our report dated October 8, 2019, except for the effects of matters disclosed in Note 9 which is as of October 28, 2019, with respect to our audits of the Moving iMage Technologies, LLC balance sheets as of June 30, 2019 and 2018, and the related statements of operations, changes in members’ equity(deficit) and cashflows for the years then ended; |
(2) | Our report dated June 10, 2019, except for the effects of matters discussed in the third paragraph of Note 1 which is as of July 28, 2019, with respect to our audits of the Caddy Products, Inc., balance sheets as of December 31, 2018 and 2017, and the related statements of operations, changes in stockholders’ equity and cash flows for the years then ended; and |
(3) | Our report dated June 10, 2019 with respect to our audits of the NLM Holding Co. Inc., consolidated balance sheets as of December 31, 2018 and 2017, and the related consolidated statements of operations, shareholders’ equity (deficit) and cash flows for the years then ended, which includes an explanatory paragraph related to NLM Holding Co. Inc.’s ability to continue as a going concern. |
We also consent to the reference to our firm under the caption “Experts.”
/s/ CohnReznick LLP
Roseland, New Jersey
November 11, 2019