As
filed with the Securities and Exchange Commission on June 22, 2015
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
ATRM
HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
Minnesota |
|
3825 |
|
41-1439182 |
(State
or other jurisdiction of
incorporation or organization) |
|
(Primary
Standard Industrial
Classification Code Number) |
|
(I.R.S.
Employer
Identification Number) |
3050
Echo Lake Avenue, Suite 300
Mahtomedi, Minnesota
(651)
704-1800
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Daniel
M. Koch
President
and Chief Executive Officer
3050 Echo Lake Avenue, Suite 300
Mahtomedi,
Minnesota 55115
(651)
704-1800
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copy
to:
Adam
Finerman, Esq.
Olshan
Frome Wolosky LLP
Park
Avenue Tower
65 East 55th Street
New
York, New York 10022
(212)
451-2300
Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration
Statement.
If
any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [X]
If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. [ ]
If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act:
Large
accelerated filer. [ ] |
Accelerated
filer. [ ] |
Non-accelerated
filer. [ ] |
Smaller reporting
company. [X] |
(Do
not check if a smaller reporting company) |
|
CALCULATION
OF REGISTRATION FEE
Title
Of Each Class Of
Securities To Be Registered(1) | |
Amount
to be Registered | | |
Proposed
Maximum Offering Price Per Share | | |
Proposed
Maximum Aggregate Offering Price | | |
Amount
of
Registration Fee | |
Rights to purchase common stock | |
| — | | |
| — | | |
| — | | |
| — | |
Common Stock, $0.001 par value per share | |
| [●] | | |
$ | [●] | | |
$ | 2,500,000 | (2) | |
$ | 290.50 | (3) |
(1) |
This
registration statement relates to shares of our common stock issuable upon the exercise of subscription rights. Each share
of common stock includes one stock purchase right. No separate consideration is payable for the stock purchase rights. |
|
|
(2) |
Represents
the aggregate gross proceeds from the issuance of the maximum number of shares of common stock that may be issued pursuant
to the exercise of rights. |
|
|
(3) |
Calculated
pursuant to Rule 457(o) of the rules and regulations under the Securities Act of 1933, as amended, based on an estimate of
the proposed maximum aggregate offering price. |
The
registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell
these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is
not permitted.
PRELIMINARY
PROSPECTUS |
SUBJECT TO COMPLETION,
DATED June 22, 2015 |
ATRM
HOLDINGS, INC.
Up
to [●] Shares of Common Stock
Issuable Upon the Exercise of Rights to Subscribe for such Shares at
$[●] per Share
We
are distributing, at no charge to our shareholders, non-transferable subscription rights to purchase up to an aggregate of [●]
shares of our common stock, $0.001 par value per share. In the rights offering, you will receive one subscription right for each
share of common stock you hold as of 5:00 p.m. Eastern Time, on [●], 2015, the record date of the rights offering.
Each
subscription right will entitle you to purchase [●] shares of our common stock at a subscription price of $[●] per
share, which we refer to as the “basic subscription right,” subject to certain limitations. If you fully exercise
your basic subscription right and other shareholders do not fully exercise their basic subscription rights, you will be entitled
to exercise an over-subscription privilege, subject to certain limitations and subject to allotment, to purchase a portion of
the unsubscribed shares of our common stock at the same subscription price of $[●] per share. To the extent you properly
exercise your over-subscription privilege for an amount of shares that exceeds the number of the unsubscribed shares available
to you, any excess subscription payments received by the subscription agent will be returned to you promptly, without interest,
following the expiration of the rights offering.
Lone
Star Value Investors, LP, referred to as “LSVI,” which owns 167,885 shares of our common stock, or approximately 13.5%
of the shares outstanding, has indicated to us that it intends to exercise all of its basic subscription rights as well as exercise
its over-subscription privilege, subject to the limitations to comply with our NOL Protection Mechanics and other protection mechanics
described herein, but has not made a formal commitment to do so. Jeffrey E. Eberwein, the Company’s Chairman of the Board,
is the manager of Lone Star Value Investors GP, LLC, the general partner of LSVI, and sole member of Lone Star Value Management,
LLC, the investment manager of LSVI.
We
will not issue fractional shares. If the number of subscription rights you receive would otherwise permit you to purchase a fraction
of a share, the number of shares that you may purchase will be rounded down to the nearest whole share.
The
subscription rights will expire if they are not exercised before 5:00 p.m., Eastern Time, on [●], 2015. We reserve
the right to extend the expiration date one or more times, but in no event will we extend the rights offering beyond [●],
2015. You should carefully consider whether to exercise your subscription rights before the expiration of the rights offering.
All exercises of subscription rights are irrevocable. The subscription rights may not be sold, transferred or assigned. There
is no minimum subscription amount required for consummation of this rights offering.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “ATRM.” The shares of common stock issued in
the rights offering will also be listed on the NASDAQ Capital Market under the same symbol. The subscription rights will not be
listed for trading on the NASDAQ Capital Market or any other stock exchange or market. On June 19, 2015, the last reported sale
price of our common stock was $4.69 per share. As of the close of business on June 19, 2015, there were 1,246,473 shares of common
stock issued and outstanding. Our principal executive offices are located at 3050 Echo Lake Avenue, Suite 300, Mahtomedi, Minnesota
55115, and our telephone number is (651) 704-1800.
Our
Board of Directors is not making any recommendation regarding your exercise of the subscription rights. You should carefully consider
whether to exercise your subscription rights prior to the expiration of the rights offering.
Investing
in our common stock involves risks. See “Risk Factors” beginning on page 18 to read about factors you should consider
before exercising your subscription rights.
We
may in our sole discretion cancel the rights offering at any time and for any reason. If we cancel this offering, the subscription
agent will return all subscription payments it has received for the cancelled rights offering without interest or penalty.
We
anticipate retaining Computershare Inc. to serve as the subscription agent in connection with the rights offering. The subscription
agent will hold in escrow the funds we receive from subscribers until we complete or cancel the rights offering.
This
is not an underwritten offering. The subscription rights are being offered directly by us without the services of an underwriter
or selling agent.
Upon
completion of the rights offering, shareholders who do not fully exercise their subscription rights will own a smaller proportional
interest in ATRM than if they had timely and fully exercised their subscription rights.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is ,
2015.
Table
of Contents
ABOUT
THIS PROSPECTUS
You
should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with additional
or different information from that contained in this prospectus. The information contained in this prospectus is accurate only
as of the date on the front cover of this prospectus regardless of the time of delivery of this prospectus or any exercise of
the rights.
The
distribution of this prospectus and the rights offering and the sale of shares of our common stock in certain jurisdictions may
be restricted by law. This prospectus does not constitute an offer of, or a solicitation of an offer to buy any shares of common
stock in any jurisdiction in which such offer or solicitation is not permitted. No action is being taken in any jurisdiction outside
the United States to permit an offering of the common stock or possession or distribution of this prospectus in that jurisdiction.
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 those jurisdictions.
References
in this prospectus to “ATRM”, “the Company”, “we”, “us”, or “our”,
unless the context otherwise requires, refer to ATRM Holdings, Inc. and its subsidiaries and their respective predecessors, and
references to “KBS” refer to our modular housing business operated by our wholly-owned subsidiaries KBS Builders,
Inc. and Maine Modular Haulers, Inc. References in this prospectus to our “2014 Form 10-K” refer to our Annual Report
on Form 10-K for the fiscal year ended December 31, 2014 filed with the Securities and Exchange Commission on May 12, 2015.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus includes “forward-looking statements”, as such term is used within the meaning of the Private Securities
Litigation Reform Act of 1995. These “forward-looking statements” are not based on historical fact and involve assessments
of certain risks, developments, and uncertainties in our business looking to the future. Such forward-looking statements can be
identified by the use of terminology such as “may”, “will”, “should”, “expect”,
“anticipate”, “estimate”, “intend”, “continue”, or “believe”, or the
negatives or other variations of these terms or comparable terminology. Forward-looking statements may include projections, forecasts,
or estimates of future performance and developments. Forward-looking statements contained in this prospectus are based upon assumptions
and assessments that we believe to be reasonable as of the date of this prospectus. Whether those assumptions and assessments
will be realized will be determined by future factors, developments, and events, which are difficult to predict and may be beyond
our control. Actual results, factors, developments, and events may differ materially from those we assumed and assessed. Risks,
uncertainties, contingencies, and developments, including those identified in the “Risk Factors” section of
this prospectus and in Part I, Item 1A in our 2014 Form 10-K, could cause our future operating results to differ materially from
those set forth in any forward-looking statement. There can be no assurance that any such forward-looking statement, projection,
forecast or estimate contained can be realized or that actual returns, results, or business prospects will not differ materially
from those set forth in any forward-looking statement. Given these uncertainties, readers are cautioned not to place undue reliance
on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the results
of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments.
QUESTIONS
AND ANSWERS RELATING TO THE RIGHTS OFFERING
The
following are examples of what we anticipate will be common questions about the rights offering. The answers are based on selected
information included elsewhere in this prospectus. The following questions and answers do not contain all of the information that
may be important to you and may not address all of the questions that you may have about the rights offering. This prospectus
and the documents incorporated by reference contain more detailed descriptions of the terms and conditions of the rights offering
and provide additional information about us and about our business, including potential risks related to the rights offering,
ATRM common stock, and our business.
Exercising
the subscription rights and investing in our securities involve a high degree of risk. We urge you to carefully read the section
entitled “Risk Factors” beginning on page 18 of this prospectus and all other information included in, or incorporated
by reference into, this prospectus in its entirety before you decide whether to exercise your subscription rights.
What
is the rights offering?
We
are distributing to holders of shares of our common stock as of 5:00 p.m., Eastern Time, on [●], 2015, which is the record
date for the rights offering, at no charge, non-transferable subscription rights to purchase shares of our common stock. You will
receive one subscription right for each share of common stock you owned as of 5:00 p.m., Eastern Time, on the record date. Each
subscription right entitles the holder to a basic subscription right and an over-subscription privilege, which are described below.
The common stock to be issued in the rights offering, like our existing shares of common stock, will be traded on the NASDAQ Capital
Market under the symbol “ATRM.”
Why
are we conducting the rights offering?
We
are conducting the rights offering to raise equity capital to repay a portion of our outstanding indebtedness and to provide for
our general working capital needs. For a detailed discussion, see “Use of Proceeds.”
Based
on the information and analyses regarding the rights offering prepared by management, and the recommendation of management that
the rights offering is in the best interests of the Company in light of the information available to management, and the additional
information and documentation reviewed by our Board of Directors (the “Board”), the Board approved the rights offering
and determined that the rights offering is in the best interests of the Company and its shareholders. However, the Board is not
making any recommendation regarding your exercise of the subscription rights.
How
was the subscription price determined?
We
established a special committee (the “Special Committee”) of our Board, comprised of Morgan P. Hanlon, Alfred John
Knapp, Jr. and Galen Vetter, who are all disinterested and independent directors. The terms of the rights offering, including
the subscription price, was approved by the Special Committee. The subscription price was determined based on a variety of factors,
including historical and current trading prices for our common stock, general business conditions, our need for capital, alternatives
available to us for raising capital, potential market conditions, and our desire to provide an opportunity to our shareholders
to participate in the rights offering on a pro rata basis. In conjunction with its review of these factors, the Special Committee
also reviewed our history and prospects, including our past and present earnings, our prospects for future earnings, and the outlook
for our industry, and our current financial condition.
The
subscription price is not necessarily related to our book value, tangible book value, multiple of earnings or any other established
criteria of value and may or may not be considered the fair value of our common stock to be offered in the rights offering. You
should not consider the subscription price as an indication of value of the Company or our common stock. You should not assume
or expect that, after the rights offering, our shares of common stock will trade at or above the subscription price in any given
time period. The market price of our common stock may decline during or after the rights offering and you may not be able to sell
the shares of our common stock purchased during the rights offering at a price equal to or greater than the subscription price.
You should obtain a current quote for our common stock before exercising your subscription rights and make your own assessment
of our business and financial condition, our prospects for the future, and the terms of this rights offering.
What
is the basic subscription right?
Each
basic subscription right gives our shareholders the opportunity to purchase [●] shares of our common stock at a subscription
price of $[●] per share, subject to the limits described below. We have granted to you, as a shareholder of record as of
5:00 p.m., Eastern Time, on the record date, one subscription right for each share of our common stock you owned at that time.
For example, if you owned 100 shares of our common stock as of 5:00 p.m., Eastern Time, on the record date, you would have received
100 subscription rights and would have the right to purchase [●] shares of common stock for $[●] per share subject
to certain limitations. You may exercise all or a portion of your basic subscription rights, subject to the NOL Protection Mechanics
(as defined below), or you may choose not to exercise any subscription rights at all. However, if you exercise fewer than all
of your basic subscription rights, you will not be entitled to purchase any additional shares pursuant to the over-subscription
privilege.
If
you hold an ATRM stock certificate, the number of basic subscription rights you may exercise is indicated on the enclosed rights
certificate. If you hold your shares in the name of a custodian bank, broker, dealer or other nominee, you will not receive a
rights certificate. Instead, the Depository Trust Company (“DTC”) will issue one subscription right to the nominee
record holder for each share of our common stock that you own at the record date. If you are not contacted by your custodian bank,
broker, dealer or other nominee, you should contact your nominee as soon as possible.
What
is the over-subscription privilege?
We
do not expect all of our shareholders to exercise all of their basic subscription rights. The over-subscription privilege provides
shareholders that exercise all of their basic subscription rights the opportunity to purchase the shares that are not purchased
by other shareholders. If you fully exercise your basic subscription right, the over-subscription privilege of each right entitles
you to subscribe for additional shares of our common stock unclaimed by other holders of rights in this rights offering at the
same subscription price per share. If an insufficient number of shares are available to fully satisfy all over-subscription privilege
requests, the available shares will be distributed proportionately among rights holders who exercise their over-subscription privilege
based on the number of shares each rights holder subscribed for under the basic subscription right, subject to the NOL Protection
Mechanics.
In
order to properly exercise your over-subscription privilege, you must deliver the subscription payment for exercise of your over-subscription
privilege before the expiration of the rights offering. Because we will not know the total number of unsubscribed shares before
the expiration of the rights offering, if you wish to maximize the number of shares you purchase pursuant to your over-subscription
privilege, you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of shares
available, assuming that no shareholder other than you has purchased any shares pursuant to their basic subscription right and
over-subscription privilege. The subscription agent will return any excess payments by mail without interest or deduction promptly
after the expiration of the subscription period. See “The Rights Offering — The Subscription Rights — Over-Subscription
Privilege.”
Are
there any limits on the number of shares I may purchase in the rights offering or own as a result of the rights offering?
In
addition to any limitation resulting from allocation of over-subscription shares, in order to protect the Company from loss of
its net operating loss carryforwards (“NOLs”) and ensure compliance with the NOL protective provisions of the Amended
and Restated Articles of Incorporation (the “Charter”) and the Company’s Tax Benefit Preservation Plan (the
“Rights Plan”), a person or entity, together with related persons or entities, may not exercise subscription rights
(including the over-subscription privilege) to purchase shares of our common stock in this rights offering that would result in
such person or entity, together with any related persons or entities, owning, directly or indirectly, 62,199 shares or more of
our common stock upon the consummation of the rights offering, unless otherwise determined by the Company to not have an unfavorable
effect on our ability to preserve our NOLs (the “NOL Protection Mechanics”). If you currently own, directly or indirectly,
62,199 shares or more, or would potentially increase your direct or indirect holdings of our common stock from fewer than 62,199
shares to an amount equal to or greater than 62,199 shares, but would like to participate in the rights offering, please contact
the Company’s information agent, InvestorCom, Inc., to discuss your level of subscription, by email at info@investor-com.com,
by telephone at (203) 972-9300 or toll free at (877) 972-0090, or by mail at 65 Locust Avenue, New Canaan, CT 06840. Without limiting
the foregoing, we do not intend to accept any subscriptions pursuant to the basic subscription rights or over-subscription privileges
if we believe such subscriptions or over-subscriptions may have an unfavorable effect on our ability to preserve our NOLs. See
“The Rights Offering — NOL Protection Mechanics.”
If
I am a holder of stock options, may I participate in the rights offering?
No.
Holders of stock options on the record date will not be entitled to participate in the rights offering. Stock option holders must
have exercised their options for shares of our common stock prior to the record date. Following the consummation of the rights
offering, the Company anticipates making an equitable adjustment to unexercised stock options to reflect the issuance of shares
in the rights offering.
Am
I required to exercise all of the subscription rights I receive in the rights offering?
No.
You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights. If you do
not exercise any subscription rights, the number of shares of our common stock you own will not change; however, you will own
a smaller proportional interest in the Company than if you had timely exercised all or a portion of your subscription rights.
If you choose not to exercise your subscription rights or you exercise fewer than all of your subscription rights and other shareholders
fully exercise their subscription rights or exercise a greater proportion of their subscription rights than you exercise, the
percentage of our common stock owned by these other shareholders will increase relative to your ownership percentage, and your
voting and other rights in the Company will likewise be diluted. In addition, if you do not exercise your basic subscription right
in full, you will not be entitled to participate in the over-subscription privilege.
How
soon must I act to exercise my subscription rights?
If
you received a rights certificate and elect to exercise any or all of your subscription rights, the subscription agent must receive
your completed and signed rights certificate and payment (and your payment must clear) prior to the expiration of the rights offering,
which is [●], 2015, at 5:00 p.m., Eastern Time. If you hold your shares in the name of a custodian bank, broker, dealer
or other nominee, your nominee may establish a deadline prior to 5:00 p.m., Eastern Time, on [●], 2015 by which you must
provide it with your instructions to exercise your subscription rights and payment for your shares. The Board may, in its discretion,
extend the rights offering one or more times, but in no event will the expiration date be later than [●], 2015. The Board
may cancel or amend the rights offering at any time before its expiration. In the event that the rights offering is cancelled,
all subscription payments received will be returned promptly, without interest or penalty.
Although
we will make reasonable attempts to provide this prospectus to holders of subscription rights, the rights offering and all subscription
rights will expire at 5:00 p.m., Eastern Time, on [●], 2015 (unless extended), whether or not we have been able to locate
each person entitled to subscription rights.
May
I transfer my subscription rights?
No.
You may not sell, transfer or assign your subscription rights to anyone. Subscription rights will not be listed for trading on
the NASDAQ Capital Market or any other stock exchange or market. Rights certificates may only be completed by the shareholder
who receives them.
Are
we requiring a minimum subscription to complete the rights offering?
There
is no aggregate minimum we must receive to complete the rights offering.
Has
our Board made a recommendation to our shareholders regarding the rights offering?
No.
The Board is not making a recommendation regarding your exercise of the subscription rights. Shareholders who exercise subscription
rights risk investment loss on new money invested. We cannot predict the price at which our shares of common stock will trade,
and therefore, we cannot assure you that the market price for our common stock will be above the subscription price or that anyone
purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price.
You are urged to make your decision based on your own assessment of our business and the rights offering. Please see “Risk
Factors” for a discussion of some of the risks involved in investing in our common stock.
How
do I exercise my subscription rights if I own shares in certificate form?
If
you hold an ATRM stock certificate and you wish to participate in the rights offering, you must take the following steps:
|
● |
deliver
a properly completed and signed rights certificate, and related subscription documents, to the subscription agent before 5:00
p.m., Eastern Time, on [●], 2015; and |
|
|
|
|
● |
deliver
payment to the subscription agent (as described below) before 5:00 p.m., Eastern Time, on [●], 2015. |
In
certain cases, you may be required to provide additional documentation or signature guarantees.
Please
follow the delivery instructions on the rights certificate. Do not deliver documents to ATRM. You are solely responsible for completing
delivery to the subscription agent of your subscription documents, rights certificate and payment. We urge you to allow sufficient
time for delivery of your subscription materials to the subscription agent so that the subscription agent receives the materials
before 5:00 p.m., Eastern Time, on [●], 2015.
If
you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you requested
is not specified in the forms, the payment received will be applied to exercise your subscription rights to the fullest extent
possible based on the amount of the payment received, subject to the availability of shares in the rights offering and the elimination
of fractional shares. Any excess subscription payments received by the subscription agent will be returned promptly, without interest,
following the expiration of the rights offering.
What
form of payment is required to purchase the shares of our common stock?
As
described in the instructions accompanying the rights certificate, payments submitted to the subscription agent must be made in
full United States currency by:
|
● |
check
or bank draft payable to Computershare Inc., the subscription agent, drawn upon a United States bank; or |
|
|
|
|
● |
wire
transfer to Computershare Inc., the subscription agent. |
Payment
will be deemed to have been received by the subscription agent only upon the subscription agent’s receipt of any certified
check or bank check or, in the case of an uncertified personal check, receipt and clearance of such check.
Please
note that funds paid by uncertified personal check may take at least seven business days to clear. Accordingly, if you wish to
pay by means of an uncertified personal check, we urge you to make payment sufficiently in advance of the expiration date to ensure
that the subscription agent receives cleared funds before that time. We also urge you to consider payment by means of a certified
check, bank check, bank draft or money order.
What
should I do if I want to participate in the rights offering, but my shares are held in the name of a custodian bank, broker, dealer
or other nominee?
If
you hold your shares of common stock through a custodian bank, broker, dealer or other nominee, then your nominee is the record
holder of the shares you own. If you are not contacted by your nominee, you should contact your nominee as soon as possible. Your
nominee must exercise the subscription rights on your behalf for the shares of common stock you wish to purchase. You will not
receive a rights certificate. Please follow the instructions of your nominee. Your nominee may establish a deadline that may be
before 5:00 p.m., Eastern Time, on [●], 2015, the expiration date for the rights offering.
When
will I receive my new shares?
All
shares that you purchase in the rights offering to which you are entitled will be issued in book-entry, or uncertificated, form.
When issued, the shares will be registered in the name of the subscription rights holder of record. As soon as practicable after
the expiration of the rights offering period, the subscription agent will arrange for the issuance of the shares of common stock
purchased in the rights offering. Subject to state securities laws and regulations, we have the discretion to delay distribution
of any shares you may have elected to purchase by exercise of your rights in order to comply with state securities laws.
After
I send in my payment and rights certificate, may I cancel my exercise of subscription rights?
No.
All exercises of subscription rights are irrevocable unless the rights offering is terminated, even if the market price of our
common stock falls below the $[●] per share subscription price or you later learn information about us or the rights offering
that you consider to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights
unless you are certain that you wish to purchase shares of our common stock in the rights offering.
Have
any shareholders indicated that they will exercise their rights?
Yes.
Lone Star Value Investors, LP (“LSVI”), which owns 167,885 shares of our common stock, or approximately 13.5% of the
shares outstanding, has indicated to us that it intends to exercise all of its basic subscription rights as well as exercise its
over-subscription privilege, subject to the limitations to comply with our NOL Protection Mechanics described herein, but has
not made a formal commitment to do so. Jeffrey E. Eberwein, the Company’s Chairman of the Board, is the manager of Lone
Star Value Investors GP, LLC (“LSVGP”), the general partner of LSVI, and sole member of Lone Star Value Management,
LLC (“LSVM”), the investment manager of LSVI. Mr. Eberwein became aware of this rights offering in his capacity as
a director of the Company.
Will
our directors and officers participate in the rights offering?
All
holders of our common stock as of the record date for the rights offering will receive, at no charge, the non-transferable subscription
rights to purchase shares of our common stock as described in this prospectus. To the extent that our directors and officers held
shares of our common stock (including shares of restricted common stock) as of the record date, they will receive the subscription
rights and, while they are under no obligation to do so, will be entitled to participate in the rights offering. Our directors
and officers have not indicated to us whether they will purchase shares of our common stock in the offering.
All
of our outstanding equity awards to employees, officers and directors, including outstanding stock options, were issued pursuant
to plans previously adopted by our Board. Holders of stock options, which will convert into common stock at some point in the
future, will not receive rights in connection with this rights offering.
How
will the rights offering affect our outstanding common stock?
As
of June 19, 2015, we had 1,246,473 shares of our common stock outstanding. Assuming no additional shares of common stock are issued
by the Company prior to consummation of the rights offering and assuming all shares are sold in the rights offering, we expect
approximately [●] shares of our common stock will be outstanding immediately after completion of the rights offering.
The
issuance of shares of our common stock in the rights offering will dilute, and thereby reduce, your proportionate ownership in
our shares of common stock, unless you fully exercise your basic subscription rights. In addition, the issuance of shares of our
common stock at a subscription price that is less than the market price as of the record date for the rights offering will likely
reduce the price per share of shares of common stock held by you prior to the rights offering.
How
much will we receive in net proceeds from the rights offering?
We
expect the aggregate proceeds, net of expenses, from the rights offering to be approximately $[●] million, assuming all
rights are exercised. We intend to use the net proceeds to repay a portion of our outstanding indebtedness and to provide for
our general working capital needs. Please see “Use of Proceeds.”
Are
there risks in exercising my subscription rights?
Yes.
The exercise of your subscription rights involves risks. Exercising your subscription rights involves the purchase of additional
shares of our common stock and should be considered as carefully as you would consider any other equity investment. Among other
things, you should carefully consider the risks described under the heading “Risk Factors” in this prospectus.
If
the rights offering is not completed, will my subscription payment be refunded to me?
Yes.
The subscription agent will hold all funds it receives in a segregated bank account until the rights offering is completed. If
the rights offering is not completed, all subscription payments received by the subscription agent will be returned promptly,
without interest or penalty. If your shares are held in the name of a custodian bank, broker, dealer or other nominee, it may
take longer for you to receive the refund of your subscription payment because the subscription agent will return payments through
the record holder of your shares.
Will
I receive interest on any funds I deposit with the subscription agent?
No.
You will not be entitled to any interest on any funds that are deposited with the subscription agent pending completion or cancellation
of the rights offering. If the rights offering is cancelled for any reason, the subscription agent will return this money to subscribers,
without interest or penalty, as soon as practicable.
When
can I sell the shares of common stock I receive upon exercise of the subscription rights?
If
you exercise your subscription rights, you will be able to resell the shares of common stock purchased by exercising your subscription
rights once your account has been credited with those shares, provided you are not otherwise restricted from selling the shares
(for example, because you are an insider or affiliate of the Company or because you possess material nonpublic information about
the Company). Although we will endeavor to issue the shares as soon as practicable after completion of the rights offering, there
may be a delay between the expiration date of the rights offering and the time that the shares are issued. In addition, we cannot
assure you that, following the exercise of your subscription rights, you will be able to sell your common stock at a price equal
to or greater than the subscription price.
What
are the U.S. federal income tax consequences of exercising my subscription rights?
The
receipt and exercise of subscription rights by common shareholders should generally not be taxable for U.S. federal income tax
purposes. You should seek specific tax advice from your tax advisor in light of your particular circumstances and as to the applicability
and effect of any other tax laws. See “Material U.S. Federal Income Tax Consequences.”
What
fees or charges apply if I purchase shares of common stock in the rights offering?
We
are not charging any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise your
subscription rights (other than the subscription price). If you exercise your subscription rights through a custodian bank, broker,
dealer or other nominee, you are responsible for paying any fees your nominee may charge you.
Whom
should I contact if I have other questions?
If
you have other questions regarding the rights offering, please contact our information agent, InvestorCom, Inc., by e-mail at
info@investor-com.com, by telephone at (203) 972-9300 or toll free at (877) 972-0090, or by mail at 65 Locust Avenue, New Canaan,
CT 06840.
To
whom should I send my forms and payment?
If
your shares are held in the name of a broker, dealer, custodian bank or other nominee, then you should send your subscription
documents and subscription payment to that record holder. If you are the record holder, then you should send your rights certificate
and other documents and subscription payment to the address provided below. If sent by mail, we recommend that you send documents
and payments by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed
to ensure delivery to the subscription agent. Do not send or deliver these materials to ATRM.
By
Registered Certified or Express Mail |
By
Overnight Courier |
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Computershare
Trust Company, N.A. |
Computershare
Trust Company, N.A. |
c/o
Voluntary Corporate Actions |
c/o
Voluntary Corporate Actions |
P.O.
Box 43011 |
250
Royall Street Suite V |
Providence,
RI 02940 |
Canton,
MA 02021 |
You,
or, if applicable, your nominee, are solely responsible for ensuring the subscription agent receives your subscription rights
election form, subscription payment, and other documents. You should allow sufficient time for delivery of your subscription materials
to the subscription agent and clearance of payment before the expiration of the rights offering period.
SUMMARY
This
summary highlights the information contained elsewhere in this prospectus. Because this is only a summary, it does not contain
all of the information that you should consider before deciding whether to exercise your subscription rights. You should carefully
read this entire prospectus, including the information contained in the sections entitled “Risk Factors” and “The
Rights Offering,” our audited consolidated financial statements and the accompanying notes for the year ended December 31,
2014, and our unaudited condensed consolidated financial statements for the quarter ended March 31, 2015, both of which are incorporated
into this prospectus by reference, in their entirety before you decide to exercise your subscription rights.
Overview
Through
KBS, we manufacture modular buildings for commercial and residential applications. Commercial buildings include apartments, condominiums,
townhouses, dormitories, hospitals, office buildings and other structures. The buildings are manufactured in two production facilities
located in South Paris and Waterford, Maine. Our strategy is to offer top quality products for both commercial and residential
buildings, with a focus on customization to suit the project requirements, to customers including builders, general contractors
and owners of commercial buildings.
Recent
Developments
Prior
to April 2014, we were a manufacturer of a variety of equipment used in the semiconductor industry. In July 2013, we sold the
assets related to our reliability test (“RTP”) line of products to Cascade Microtech, Inc., a semiconductor equipment
manufacturer based in Beaverton, Oregon (“Cascade”), and in April 2014 we transferred our test handler product line
to Boston Semi Automation LLC, a semiconductor equipment company based in Boston, Massachusetts (“BSA”), in return
for a future stream of earn-out payments based on the product line’s revenues. On April 2, 2014, we purchased substantially
all of the assets and assumed certain liabilities of KBS Building Systems, Inc. and certain of its affiliates related to its business
of manufacturing, selling, and distributing modular housing units for residential and commercial use. KBS now operates the acquired
business. Following these transactions, KBS represents our sole operating business.
Products
and Strategy
KBS
is a Maine-based manufacturer that started business in 2001 as a builder of modular homes. In 2008, KBS began building modular
multi-family housing units. In subsequent years, KBS expanded its product offerings to include a variety of commercial buildings
including apartments, condominiums, townhouses, dormitories, hospitals, office buildings, and other structures. The structures
are built inside our climate-controlled factories and transported to the site where they are set and secured on the foundation.
Electrical, plumbing, and HVAC systems are inspected and tested in the factory, prior to transportation to the site, to ensure
the modules meet all local building codes and quality requirements. Modular construction has gained increased acceptance and is
a preferred method of building by many architects and general contractors. The advantages of modular construction include: modules
are constructed in a climate-controlled environment; weather conditions usually do not interrupt or delay construction; the building
is protected from weather, reducing the risk of mold due to materials absorbing moisture from rain or snow; reduced site work;
reduced vandalism and attrition, as the building is immediately secured; and a significant reduction in overall project time.
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The
KBS strategy is to offer top quality products for both commercial and residential buildings
with a focus on customization to suit the project requirements. Our production strategy
is to maintain and grow the resources necessary to build a variety of commercial and
residential buildings. We attempt to utilize the most efficient methods of manufacturing
and high quality materials in all of our projects. Our sales team works to attract new
architects and contractors in New England who need the flexibility that KBS offers. Our
competitive strategy is to offer a superior product unique to the project’s requirements,
provide value with our engineering and design expertise, and provide the product in the
timeframe needed by the customer.
Competition
KBS
is a regional manufacturer of modular housing units. We compete for sales based on price, delivery, and our unique ability to
customize to the customer’s specific needs. Our market is the New England states (Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island, and Vermont). Several modular manufacturers are located in these New England states and in nearby Pennsylvania.
Some competitors have manufacturing locations in Canada and ship their products to the United States.
Our
largest competitor in New England is Excel Homes which is a subsidiary of Innovative Building Systems (“IBS”). IBS
owns several brand name modular manufacturers and has manufacturing locations in Maine and Pennsylvania. Modular manufacturers
owned by IBS include Keiser Homes, Excel Homes, All American Homes, Future Home Technology, Inc., HandCrafted Homes, and Modukraft
Homes. Other competitors include Maple Leaf Homes (Canada), Pennwest Homes, Champion Home Builders, Muncy Homes, and Professional
Building Systems.
Manufacturing
and Supplies
Our
manufacturing operations are based in Maine. KBS owns two manufacturing plants; a 90,000 square foot facility in South Paris,
Maine and a 60,000 square foot facility in Waterford, Maine. Lumber and supplies for both facilities are purchased from our main
location in South Paris. Homes and buildings are manufactured in climate controlled facilities. We emphasize quality and conformance
to all the local building codes where the home or building will be located. Independent building code inspectors are on site almost
daily inspecting every stage of the manufacturing process.
Lumber
costs are subject to market fluctuations. Some of our required construction materials are only available through limited sources
in New England. KBS can source such items from other parts of the country if a New England supplier is unable to provide the material.
We do not maintain long-term agreements with our suppliers and we purchase all of the materials used in our products through individual
purchase orders. KBS keeps a limited inventory of most commonly used materials on hand at both locations.
Sales
and Marketing
We
market our products through direct sales people and through a network of independent dealers and contractors in New England. Our
direct sales organization is responsible for all commercial building projects, and works with developers, architects, owners,
and general contractors to establish the scope of work, terms of payment, and general conditions for each project. We also have
a group of three employees who market single family homes directly to the public using model homes on our site in South Paris,
Maine. Our sales people also work with independent dealers and contractors to accurately configure and place orders for single
family homes for their end customers. Our network of independent dealers and contractors do not work with us exclusively, although
many have KBS model homes on display at their retail centers. We do not assign exclusive territories to our independent dealers
and contractors, but they tend to sell in areas of New England where they will not be competing against another KBS dealer or
contractor.
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Our
marketing efforts include participation in industry trade shows and production of product
literature and sales support tools. These efforts are designed to generate sales leads
for our independent builders and dealers, and direct salespeople.
Debt
Financings
As
reported in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 we had interest-bearing debt totaling approximately
$16.1 million. Our debt includes approximately $5.5 million principal amount under a promissory note issued by our wholly-owned
subsidiary KBS Builders, Inc. to the former owner of KBS as partial consideration for the acquisition (the “KBS Note”).
We were unable to repay the KBS Note on its maturity date, December 1, 2014, and it remains unpaid as of the date hereof. Our
debt also includes $6.0 million principal amount of promissory notes issued to LSVI and $4.5 million principal amount of promissory
notes issued to Lone Star Value Co-Invest I, LP (“LSV Co-Invest I”). Interest on these notes is payable semiannually
and any unpaid principal and interest is due on April 1, 2019. Jeffrey E. Eberwein, our Chairman of the Board, is the manager
of LSVGP, the general partner of LSVI and LSV Co-Invest I, and sole member of LSVM, the investment manager of LSVI.
Net
Operating Loss Carryforwards
As
of December 31, 2014, we had approximately $90 million in federal NOLs, and state NOLs of approximately $35 million. Our ability
to use NOLs to offset future taxable income will depend on the amount of taxable income we generate in future periods and whether
we become subject to annual limitations on the amount of taxable income that may be offset by our NOLs.
Section
382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”), imposes an annual limitation
on the amount of taxable income that may be offset by a corporation’s NOLs if the corporation experiences an “ownership
change” as defined in Section 382. An ownership change occurs when the corporation’s “5-percent shareholders”
(as defined in Section 382) collectively increase their ownership in the corporation by more than 50 percentage points (by value)
over a rolling three-year period. Additionally, various states have similar limitations on the use of state NOLs following an
ownership change.
Our
Charter includes provisions designed to protect the tax benefits of our NOLs by generally restricting any direct or indirect transfers
of our common stock that increase the direct or indirect ownership of our common stock by any person from less than 4.99% to 4.99%
or more, or increase the percentage of our common stock owned directly or indirectly by a person owning or deemed to own 4.99%
or more of our common stock. Further, any direct or indirect transfer attempted in violation of these transfer restrictions will
be void as of the date of the prohibited transfer as to the purported transferee. Additionally, we have adopted and our shareholders
have approved our Rights Plan that generally is designed to deter any person from acquiring shares of our common stock if the
acquisition would result in such person beneficially owning 4.99% or more of our common stock without the approval of our Board.
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OFFERING
SUMMARY
The
following summary describes the principal terms of the rights offering, but is not intended to be complete. See the information
under the heading “The Rights Offering” in this prospectus for a more detailed description of the terms and conditions
of the rights offering.
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Securities
Offered |
We
are distributing to you, at no charge, one non-transferable subscription right for each share of our common stock that you
owned as of 5:00 p.m., Eastern Time, on [●], 2015, either as a holder of record or, in the case of shares held of record
by custodian banks, brokers, dealers or other nominees on your behalf, as a beneficial owner of such shares. |
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Subscription
Price |
$[●]
per share of common stock. To be effective, any payment related to the exercise of a subscription right must clear prior to
the expiration of the rights offering period. You may exercise all or a portion of your subscription rights, or you may choose
not to exercise any subscription rights at all. |
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Record
Date |
5:00
p.m., Eastern Time, on [●], 2015. |
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Expiration
of the Rights Offering |
5:00
p.m., Eastern Time, on [●], 2015. We may extend the rights offering without notice to you until [●], 2015. |
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Use
of Proceeds |
We
expect the aggregate net proceeds from the rights offering to be approximately $[●] million if all subscription rights
are exercised. We intend to use the net proceeds to repay a portion of our outstanding indebtedness and to provide for our
general working capital needs. The precise amount and timing of the application of such proceeds will depend upon our funding
requirements and the availability and cost of other funds. See “Use of Proceeds.” |
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Basic
Subscription Right |
Each
subscription right entitles you to purchase one share of our common stock at a subscription price of $[●] per share.
The number of subscription rights you may exercise appears on your rights certificate. We have NOL Protection Mechanics in
place to preserve our ability to utilize our NOLs, including the ability to limit the amount of shares that certain shareholders
may subscribe for. |
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Over-Subscription
Privilege |
We
do not expect all of our shareholders to exercise all of their basic subscription rights. If you fully exercise your basic
subscription right, the over subscription privilege of each right entitles you to subscribe for additional shares of our common
stock unclaimed by other holders of rights in this offering at the same subscription price per share. If an insufficient number
of shares are available to fully satisfy all over-subscription privilege requests, the available shares will be distributed
proportionately among rights holders who exercise their over-subscription privilege based on the number of shares each rights
holder subscribed for under the basic subscription right. Also, we have NOL Protection Mechanics in place to preserve our
ability to utilize our NOLs, including the ability to limit the amount of shares that certain shareholders may subscribe for.
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Limitations
on the Purchase of Shares |
Shareholders
who currently own, directly or indirectly, 62,199 shares or more, or who would increase their direct or indirect holdings
from fewer than 62,199 to an amount equal to or greater than 62,199 shares, of our common stock by virtue of the exercise
of their basic subscription rights and/or over-subscription privileges in this rights offering may not be able to subscribe
to the extent otherwise allowable. If you currently own, directly or indirectly, 62,199 shares or more, or would potentially
increase your direct or indirect holdings from fewer than 62,199 shares to an amount equal to or greater than 62,199 shares,
but would like to participate in the rights offering, please contact the Company’s information agent, InvestorCom, Inc.,
to discuss your level of subscription, by email at info@investor-com.com, by telephone at (203) 972-9300 or toll free at (877)
972-0090, or by mail at 65 Locust Avenue, New Canaan, CT 06840. We will only permit such shareholders to participate in this
offering up to such amounts as will not have an unfavorable effect on our ability to preserve our NOLs. We will reduce the
amount of a subscription or an over-subscription exercise by the amount necessary in our sole discretion to preserve our ability
to utilize our NOLs. See “NOL Protection Mechanics.” The subscription agent will return any excess payments
by mail without interest or deduction promptly after the expiration of the subscription period. |
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NOL Protection Mechanics |
We
have implemented certain NOL Protection Mechanics and reserve the right to limit the exercise of subscription rights or over-subscription
privileges by certain shareholders in order to protect against an unexpected “ownership change” for federal income
tax purposes. See “The Rights Offering — NOL Protection Mechanics.” By signing the rights certificate
and exercising your right, you are agreeing that: |
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● |
the
NOL Protection Mechanics are valid, binding and enforceable against you and you will either make the representation set forth
in the first bullet point below or, in the alternative, follow the procedures set forth in the second, third and fourth bullet
points below: |
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● |
by
purchasing shares of common stock, each subscriber will represent to us that it will not be, after giving effect to its basic
subscription rights and/or over-subscription privileges, an owner, either direct or indirect, record or beneficial, or by
application of Section 382 attribution provisions summarized above, of 62,199 shares or more of our common stock; |
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● |
if
an exercise of basic subscription rights and/or over-subscription privileges would result in the subscriber owning, directly
or indirectly, 62,199 shares or more of our common stock, the subscriber must notify the subscription agent at the telephone
number set forth under the heading “The Rights Offering — Subscription Agent;” |
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● |
if
requested, each subscriber will be required to provide us with additional information regarding the amount of common stock
that the subscriber owns; |
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● |
we
have the right to instruct the subscription agent to reduce the amount of a subscription or an over-subscription exercise
by the amount necessary in our sole discretion to preserve our ability to utilize our NOLs; |
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● |
any
purported exercise of rights in violation of the NOL Protection Mechanics will be void and of no force and effect; and |
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● |
we
have the right to void and cancel (and treat as if never exercised) any exercise of rights, and shares issued pursuant to
an exercise of rights, if any of the agreements, representations or warranties of a subscriber in the subscription documents
are false. |
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In
order to participate in the rights offering, you must execute the subscription agreement. The NOL Protection Mechanics described
above are binding and enforceable solely against those shareholders who properly execute the subscription agreement and the
NOL Protection Mechanics relate solely to the exercise by shareholders of rights in this rights offering and do not restrict
a shareholder’s ability to purchase shares other than in this rights offering. |
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Notwithstanding
any of the foregoing, we do not intend to accept any subscriptions or over-subscriptions if we believe such subscriptions
or over-subscriptions may have an unfavorable effect on our ability to preserve our NOLs. |
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Non-Transferability
of Rights |
The
subscription rights may not be sold, transferred or assigned and will not be listed for trading on the NASDAQ Capital Market
or on any other stock exchange or market. |
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No
Board Recommendation |
Our
Board is not making any recommendation regarding the exercise of your subscription rights. You are urged to make your decision
based on your own assessment of our business and the rights offering. |
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Revocation |
All
exercises of subscription rights are irrevocable, even if the market price of our common stock falls below the subscription
price or you later learn of information that you consider to be unfavorable to the exercise of your subscription rights. You
should not exercise your subscription rights unless you are certain that you wish to purchase shares of our common stock in
the rights offering. |
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Material
U.S. Federal Income Tax Considerations |
For
U.S. federal income tax purposes, common shareholders should not recognize gain or loss upon receipt or exercise of a subscription
right. You should consult with your own tax advisor as to the tax consequences to you of the receipt, exercise or lapse of
the rights in light of your particular circumstances. Please see “Material U.S. Federal Income Tax Consequences.” |
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Extension
and Cancellation |
Although
we do not presently intend to do so, we have the option to extend the rights offering expiration date, but in no event will
we extend the rights offering beyond [●], 2015. The Board may cancel the rights offering at any time before its expiration
for any reason. In the event that the rights offering is cancelled, all subscription payments received by the subscription
agent will be returned promptly, without interest or penalty. |
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Procedures
for Exercising Rights |
To
exercise your subscription rights, you must take the following steps: |
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If
you hold an ATRM stock certificate, you must deliver payment and a properly completed and signed rights certificate to the
subscription agent to be received before 5:00 p.m., Eastern Time, on [●], 2015. You may deliver the documents and payment
by U.S. mail or courier service. If U.S. mail is used for this purpose, we recommend using registered mail, properly insured,
with return receipt requested. |
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If you are a
beneficial owner of shares that are registered in the name of a custodian bank, broker, dealer or other nominee, you will
not receive a rights certificate. You should instruct your nominee to exercise your subscription rights on your behalf. Please
follow the instructions of your nominee, who may require that you meet a deadline earlier than 5:00 p.m., Eastern Time, on
[●], 2015. |
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Subscription Agent |
We
anticipate retaining Computershare Inc. to serve as the subscription agent. The subscription agent will hold funds received
in payment for shares of our common stock in a segregated account pending completion of the rights offering. The subscription
agent will hold this money in escrow until the rights offering is completed or is withdrawn and canceled. If the rights offering
is canceled for any reason, all subscription payments received by the subscription agent will be returned promptly, without
interest or penalty. |
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Fees and Expenses |
We
are not charging any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise
your subscription rights (other than the subscription price). If you exercise your subscription rights through a custodian
bank, broker, dealer or other nominee, you are responsible for paying any fees your nominee may charge you. |
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Shares
Outstanding Before the Rights Offering |
As
of June 19, 2015, 1,246,473 shares of our common stock were issued and outstanding. |
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Shares
Outstanding After the Rights Offering |
Assuming
that all of the subscription rights are exercised, we will issue approximately [●] shares of common stock in this rights
offering and, assuming no additional shares of common stock are issued by the Company prior to consummation of the rights
offering, will have approximately [●] shares of common stock outstanding after consummation of this rights offering.
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Trading
Symbols |
Our
common stock is traded on the NASDAQ Capital Market under the trading symbol “ATRM.” The shares of common stock
issued in the rights offering will also be listed on the NASDAQ Capital Market under the same symbol. The subscription rights
will not be listed for trading on the NASDAQ Capital Market or any other stock exchange or market. |
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Risk
Factors |
Exercising
the subscription rights and investing in our securities involve a high degree of risk. We urge you to carefully read the section
entitled “Risk Factors” beginning on page 18 of this prospectus and all other information included in,
or incorporated by reference into, this prospectus in its entirety before you decide whether to exercise your subscription
rights. |
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Information
Agent |
You
should direct any questions or requests for assistance concerning the method of subscribing for common shares or for additional
copies of this prospectus to InvestorCom, Inc., the information agent, by e-mail at info@investor-com.com, by telephone at
(203) 972-9300 or toll free at (877) 972-0090, or by mail at 65 Locust Avenue, New Canaan, CT 06840. |
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RISK
FACTORS
Investing
in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other
information contained in our 2014 Form 10-K, including our consolidated financial statements and notes thereto, and the other
documents incorporated by reference into this prospectus, before deciding whether to invest in our common stock. Additional risks
and uncertainties that we are unaware of may become important factors that affect us. If any of these risks actually occurs, our
business, financial condition or operating results may suffer, the trading price of our common stock could decline, and you may
lose all or part of your investment.
RISKS
RELATED TO THE RIGHTS OFFERING
The
future price of our shares of common stock may be less than the $[●] subscription price per share in the rights offering.
If
you exercise your subscription rights to purchase shares of common stock in the rights offering, you may not be able to sell them
later at or above the $[●] subscription price in the rights offering. The actual market price of our common stock could
be subject to wide fluctuations in response to numerous factors, some of which are beyond our control. These factors include,
among other things, our operating results and cash flow, business conditions in our industry, the general state of the securities
markets, as well as general economic and market conditions, such as downturns in our economy and recessions.
You
may be committed to buying common stock at a price above the prevailing market price of our common stock.
Once
you exercise your subscription rights, you may not revoke them. If you exercise your subscription rights and, afterwards, the
public trading market price of our shares of common stock decreases below the subscription price, you will have committed to buying
shares of our common stock at a price above the prevailing market price and could have an immediate unrealized loss. Our common
stock is traded on the NASDAQ Capital Market under the ticker symbol “ATRM,” and the last reported sales price of
our common stock on the NASDAQ Capital Market on June 19, 2015 was $4.69 per share. We cannot assure you that the market price
of our shares of common stock will not decline after you exercise your subscription rights. Moreover, we cannot assure you that
following the exercise of your subscription rights you will be able to sell your shares of common stock at a price equal to or
greater than the subscription price.
This
offering may cause the market price of our common stock to decrease.
The
subscription price, together with the number of shares of common stock we propose to issue and ultimately will issue in this rights
offering, may result in an immediate decrease in the market price of our common stock. This decrease may continue throughout and
after the completion of this rights offering. If that occurs, you may have committed to buy common stock in the rights offering
at a price greater than the prevailing market price of our common stock. Further, if a substantial number of subscription rights
are exercised and the subscribing holders choose to sell some or all of the shares of common stock received upon exercise of those
rights, the resulting sales could depress the market price of our common stock. There is no assurance that following the rights
offering you will be able to sell your common stock at a price equal to or greater than the subscription price.
The
subscription price determined by the Special Committee is not an indication of the fair value of our common stock and does not
represent the price at which a buyer can be found for the shares now or in the future.
The
terms of the rights offering, including the subscription price, were approved by the Special Committee. In determining the subscription
price, the Special Committee considered a number of factors, including historical and current trading prices for our common stock,
general business conditions, our need for capital, alternatives available to us for raising capital, potential market conditions,
and our desire to provide an opportunity to our shareholders to participate in the rights offering on a pro rata basis. In conjunction
with its review of these factors, the Special Committee also reviewed our history and prospects, including our past and present
earnings, our prospects for future earnings, and the outlook for our industry, and our current financial condition.
The
subscription price is not necessarily related to our book value, net worth or any other established criteria of value and may
or may not be considered the fair value of the common stock to be offered in the rights offering, nor is the subscription price
necessarily a reflection of the market price at which our common stock currently sells or may sell in the future. You should not
assume or expect that, after the rights offering, our common stock will trade at or above the subscription price. We can give
no assurance that our common stock will trade at or above the subscription price in any given time period.
Your
percentage ownership in the Company may be diluted as a result of this rights offering.
If
you do not exercise your subscription rights or you exercise fewer than all of your rights, and other shareholders fully exercise
their rights or exercise a greater proportion of their rights than you exercise, you will suffer dilution of your percentage ownership
of our common stock relative to such other shareholders. As of June 19, 2015, there were 1,246,473 shares of common stock outstanding.
If all of our shareholders exercise their subscription rights in full, we will issue [●] shares of common stock in the rights
offering, which represents approximately [●]% of the [●] shares of common stock potentially outstanding upon the completion
of the rights offering.
You
may not revoke your exercise of rights.
Once
you exercise your subscription rights, you may not revoke or change the exercise unless we are required by law to permit revocation.
Accordingly, if you exercise your subscription rights and the market price of our common stock falls below the $[●] per
share subscription price or you later learn information about us or the rights offering that you consider unfavorable to the exercise
of your subscription rights, you will be committed to buying shares and may not revoke or change your exercise. The market price
of our common stock may decline prior to the expiration of this offering, and a subscribing rights holder may not be able to sell
the common stock purchased in this rights offering at a price equal to or greater than the subscription price. Until shares of
common stock are delivered upon expiration of this rights offering, you will not be able to sell or transfer the common stock
that you purchase in this rights offering.
We
may cancel the rights offering at any time and for any reason prior to its expiration.
We
may cancel the rights offering at any time and for any reason prior to its expiration. If we cancel the rights offering, neither
the Company nor the subscription agent will have any obligation to you with respect to the rights except to return any payment
received by the subscription agent, without interest or penalty.
The
subscription rights are non-transferable and thus there will be no market for them.
You
may not sell, transfer or assign your subscription rights to anyone else. We do not intend to list the subscription rights on
any securities exchange or any other trading market. Because the subscription rights are non-transferable, there is no market
or other means for you to directly realize any value associated with them.
If
you do not act on a timely basis and follow the subscription instructions, your exercise of subscription rights will be rejected.
Shareholders
who desire to purchase shares in the rights offering must act on a timely basis to ensure that all required forms and payments
are actually received by the subscription agent, and all payments clear, prior to the expiration of the rights offering. If you
are a beneficial owner of shares, you must act promptly to ensure that your broker, dealer, custodian bank or other nominee acts
for you and that all required forms and payments are actually received by the subscription agent prior to the expiration of the
rights offering. We are not responsible if your broker, dealer, custodian bank or nominee fails to ensure that all required forms
and payments are actually received by the subscription agent, and all payments clear, prior to the expiration of the rights offering.
If
you fail to complete and sign the required subscription forms, send an incorrect payment amount or otherwise fail to follow the
subscription procedures that apply to your exercise in the rights offering or your payment does not clear prior to the expiration
of the rights offering period, the subscription agent may, depending on the circumstances, reject your subscription or accept
it only to the extent of any payment that was timely received and cleared. Neither we, nor the subscription agent, undertakes
to contact you concerning, or attempt to correct, an incomplete or incorrect subscription form or payment, nor are we under any
obligation to correct such forms or payments. We have the sole discretion to determine whether the exercise of your subscription
rights properly and timely follows the subscription procedures.
You
may not be able to fully subscribe or over-subscribe because of the limitations in our NOL Protection Mechanics.
We
have NOL Protection Mechanics in place to preserve our ability to utilize our NOLs, including the ability to limit the amount
of shares that certain shareholders may subscribe for. Shareholders who currently own, directly or indirectly, 62,199 shares or
more, or who would increase their direct or indirect holdings from fewer than 62,199 shares to 62,199 shares or more, of our common
stock by virtue of the exercise of their basic subscription rights and/or over-subscription privileges in this rights offering,
may not be able to subscribe to the extent otherwise allowable without approval of the Board. Any shareholder that wishes to acquire
beneficial ownership of 62,199 shares or more of our common stock may request that the Board approve such transaction in accordance
with the terms of our NOL Protection Mechanics. However, we will only permit such shareholders to participate in this offering
up to such amounts as will not jeopardize our NOLs. We will reduce the amount of a subscription or an over-subscription exercise
by the amount necessary in our sole discretion to preserve our ability to utilize our NOLs. See “The Rights Offering
— NOL Protection Mechanics.”
By
participating in this rights offering and executing a rights certificate, you are making binding and enforceable representations
to the Company.
We
have NOL Protection Mechanics in place to preserve our ability to utilize our NOLs against future taxable income, if any, which
could be substantially reduced if we were to undergo an “ownership change” within the meaning of Section 382. Each
shareholder who exercises their rights is required to agree to the application of the NOL Protection Mechanics solely relating
to their exercise of rights in the rights offering. By signing the rights certificate and exercising their rights, each shareholder
agrees, solely with respect to their exercise of rights in the rights offering, that:
|
● |
the
NOL Protection Mechanics are valid, binding and enforceable against such shareholder and each shareholder will either make
the representation set forth in the first bullet point below or, in the alternative, follow the procedures set forth in the
second, third and fourth bullet points below: |
|
● |
by
purchasing shares of common stock, each subscriber will represent to us that it will not be, after giving effect to its basic
subscription rights and/or over-subscription privileges, an owner, either direct or indirect, record or beneficial, or by
application of Section 382 attribution provisions summarized above, of 62,199 shares or more of our common stock; |
|
|
|
|
● |
if
an exercise of basic subscription rights and/or over-subscription privileges would result in the subscriber owning, directly
or indirectly, 62,199 shares or more of our common stock, the subscriber must notify the subscription agent at the telephone
number set forth under the heading “The Rights Offering — Subscription Agent;” |
|
|
|
|
● |
if
requested, each subscriber will be required to provide us with additional information regarding the amount of common stock
that the subscriber owns; |
|
|
|
|
● |
we
have the right to instruct the subscription agent to reduce the amount of a subscription or an over-subscription exercise
by the amount necessary in our sole discretion to preserve our ability to utilize our NOLs; |
|
● |
any
purported exercise of rights in violation of the NOL Protection Mechanics will be void and of no force and effect; and |
|
|
|
|
● |
we
have the right to void and cancel (and treat as if never exercised) any exercise of rights, and shares issued pursuant to
an exercise of rights, if any of the agreements, representations or warranties of a subscriber in the subscription documents
are false. |
With
respect to our discretion to instruct the subscription agent to refuse to honor any exercise of rights by 5-percent shareholders
or a subscriber’s exercise to the extent an exercise might, in our sole and absolute discretion, result in the subscriber
owning 4.99% or more of our common stock, we will reduce the amount of a subscription or an over-subscription exercise by the
amount necessary in our sole discretion to preserve our ability to utilize our NOLs.
If
you make payment of the subscription price by uncertified check, your check may not clear in sufficient time to enable you to
purchase common stock in this rights offering.
Any
uncertified check used to pay for common stock to be issued in this rights offering must clear prior to expiration of the rights
offering, and the clearing process may require five or more business days. If you choose to exercise your subscription rights,
in whole or in part, and to pay the subscription price by uncertified check and your check has not cleared prior to expiration
of the rights offering, you will not have satisfied the conditions to exercise your subscription rights and will not receive the
common stock you wished to purchase.
You
may not receive all of the shares for which you subscribe.
Exercise
of the over-subscription privilege will only be honored if and to the extent that the basic subscription rights have not been
exercised in full. If sufficient shares of common stock are available, we will seek to honor your over-subscription request in
full. If, however, over-subscription requests exceed the number of shares of common stock available to be purchased pursuant to
the over-subscription privilege, we will allocate the available shares of common stock proportionately among shareholders who
exercised their over-subscription privileges based on the number of shares each shareholder subscribed for under their basic subscription
rights, subject to the NOL Protection Mechanics. As a result, you may not receive any or all of the shares of common stock for
which you exercise your over-subscription privilege.
As
soon as practicable after the expiration date, the subscription agent will determine the number of shares of common stock that
you may purchase pursuant to the over-subscription privilege. You will receive certificates representing these shares as soon
as practicable after the expiration date and after all allocations and adjustments have been effected. If you request and pay
for more shares than are allocated to you, we will refund the overpayment, without interest or deduction. In connection with the
exercise of the over-subscription privilege, banks, brokers and other nominee holders of subscription rights who act on behalf
of beneficial owners will be required to certify to us and to the subscription agent as to the aggregate number of subscription
rights exercised, and the number of shares of common stock requested through the over-subscription privilege, by each beneficial
owner on whose behalf the nominee holder is acting.
You
will not be able to sell or transfer the shares of common stock that you purchase pursuant to the exercise of subscription rights
immediately upon expiration of the rights offering.
If
you exercise your subscription rights, you will not be able to sell or transfer the common stock purchased by exercising your
subscription rights until your account has been credited with those shares. Moreover, you will have no rights as a shareholder
with respect to the shares purchased in the rights offering until we issue the shares to you. Although we will endeavor to issue
the shares as soon as practicable after expiration of the rights offering, there may be a delay between the expiration date of
the rights offering and the time that the shares are issued. Fluctuations in the market price of our common stock may occur between
expiration of the rights offering and the time that shares are issued to you.
Because
we do not have formal commitments from any of our shareholders to participate in the rights offering and because no minimum subscription
is required, we cannot assure you of the amount of proceeds, if any, that we will receive from the rights offering.
We
do not have formal commitments from any of our shareholders to participate in the rights offering and no minimum subscription
is required for consummation of the rights offering. Although LSVI, which owns 167,885 shares of our common stock, or approximately
13.5% of the shares outstanding, has indicated to us that it intends to exercise all of its basic subscription rights as well
as exercise its over-subscription privilege, subject to the limitations to comply with our NOL Protection Mechanics described
herein, LSVI has not made a formal commitment to do so. We cannot assure you that any of our shareholders will exercise all or
any part of their subscription rights, and as a result, we cannot assure you of the amount of proceeds that we will receive in
the rights offering. Therefore, if you exercise all or any portion of your subscription rights, but other shareholders do not,
we may not raise the desired amount of capital in this rights offering, the market price of our common stock could be adversely
impacted and we may find it necessary to pursue alternative means of financing, which may be dilutive to your investment.
We
have broad discretion in the use of proceeds of the rights offering.
We
are undertaking this rights offering in order to raise equity capital to repay a portion of our outstanding indebtedness and to
provide for our general working capital needs. Our management will have considerable discretion in the application of the net
proceeds from this rights offering, and it is possible that we may allocate the proceeds differently than investors in this rights
offering may desire or that we may fail to maximize the return on these proceeds. You will be relying on the judgment of our management
with regard to the use of proceeds from this rights offering, and you will not have the opportunity, as part of your investment
decision, to assess whether the proceeds are being used appropriately. For more information, see “Use of Proceeds.”
RISKS
RELATED TO OUR BUSINESS, INDUSTRY AND FINANCIAL CONDITION
We
have a history of operating losses and substantial indebtedness. Future cash flows from operations and financings may not be sufficient
to enable us to meet our obligations under our indebtedness, which likely would have a material adverse effect on our business,
financial condition, and results of operations.
We
have incurred significant operating losses in recent years and, as of March 31, 2015, we had an accumulated deficit of approximately
$72 million. There can be no assurance that we will generate sufficient revenue in the future to cover our expenses and achieve
profitability on a consistent basis or at all.
We
have issued various unsecured promissory notes to finance our acquisition of KBS and provide for our general working capital needs.
As of March 31, 2015, we had outstanding interest-bearing debt totaling approximately $16.1 million. Our debt includes approximately
$5.5 million principal amount under a promissory note issued by our wholly-owned subsidiary KBS Builders, Inc. to the former owner
of KBS as partial consideration for the acquisition (the “KBS Note”). We were unable to repay the KBS Note on its
maturity date, December 1, 2014, and it remains unpaid as of the date hereof. Our debt also includes $6.0 million principal amount
of promissory notes issued to LSVI and $4.5 million principal amount of promissory notes issued to LSV Co-Invest I. Interest on
these notes is payable semiannually and any unpaid principal and interest is due on April 1, 2019. Jeffrey E. Eberwein, our Chairman
of the Board, is the manager of LSVGP, the general partner of LSVI and LSV Co-Invest I, and sole member of LSVM, the investment
manager of LSVI.
We
are seeking to renegotiate the terms of the KBS Note and we intend to pursue new financing to replace the KBS Note and all or
a portion of the debt owing to LSVI and LSV Co-Invest I and to provide for our general working capital needs. There can be no
assurance we will be successful in obtaining any such new financing with terms favorable to us or at all. Until such time as we
obtain such new financing, we may be dependent on LSVI and LSV Co-Invest I, or other third parties, to provide for our general
working capital needs. Although not a binding commitment, LSVM has advised us of its present intention to continue to financially
support us as we pursue new financing.
As
of March 31, 2015, we had cash and cash equivalents of $0.7 million. There can be no assurance that our cash and cash equivalents,
together with funds generated by our operations and any future financings, will be sufficient to satisfy our debt payment obligations,
including but not limited to our obligation to pay all principal and interest under the KBS Note. Our inability to generate funds
or obtain financing sufficient to satisfy our debt payment obligations may result in such obligations being accelerated by our
lenders, which would likely have a material adverse effect on our business, financial condition and results of operations.
We
may need additional financing in order to execute our business plan and our ability to obtain such financing may be limited.
As
a result of the limited amount of cash and cash equivalents on hand and our debt payment obligations, as well as our lack of a
credit facility, we may need additional financing in order to effectively execute our business plan. There is no assurance that
we will be able to obtain such additional financing, or that if available, it will be available to us on acceptable terms. Due
to our history of operating losses and existing debt payment obligations, our ability to obtain such additional financing may
be limited.
There
can be no assurances as to the amount of earn-out payments we will receive from the transfer of our test handler product line
to BSA.
Since
we transferred our business of designing, manufacturing, marketing, and servicing a variety of equipment used in the handling
of integrated circuits to BSA on April 22, 2014, our ability to generate revenue from the transferred business is limited to the
earn-out payments we will receive under the terms of our agreement with BSA. Under the terms of such agreement, no earn-out payments
will be earned after December 31, 2018. There can be no assurances of BSA’s ability to generate revenue from the transferred
business or of the amount of earn-outs that we will receive under such agreement.
We
are dependent on our senior management team and other key employees.
Our
success depends, to a significant extent, on our senior management team and other key employees, including the successful integration
of KBS management into our senior management team and the ability of other personnel or new hires to effectively replace key employees
who may retire or resign. Failure to retain our leadership team and attract and retain new leadership and other important personnel
could lead to ineffective management and operations, which could materially and adversely affect our business and operating results.
The
cyclical and seasonal nature of the modular housing industry causes our revenues and operating results to fluctuate, and we expect
this cyclicality and seasonality to continue in the future.
The
modular housing industry is highly cyclical and seasonal and is influenced by many national and regional economic and demographic
factors, including the availability of financing for homebuyers and developers, consumer confidence, interest rates, demographic
and employment trends, income levels, housing demand, general economic conditions (including inflation and recessions), and the
availability of suitable home sites. As a result of the foregoing economic, demographic, and other factors, our revenues and operating
results have been volatile, and we expect this volatility to continue in the future. Unfavorable changes in any of the above factors
or other issues could have an adverse effect on our revenue and earnings.
Our
operating results could be adversely affected by changes in the cost and availability of raw materials.
Prices
and availability of raw materials used to manufacture our products can change significantly due to fluctuations in supply and
demand. Additionally, availability of the raw materials used to manufacture our products may be limited at times resulting in
higher prices and/or the need to find alternative suppliers. Furthermore, the cost of raw materials may also be influenced by
transportation costs. It is not certain that any price increases can be passed on to our customers without affecting demand or
that limited availability of materials will not impact our production capabilities. The state of the financial and housing markets
may also impact our suppliers and affect the availability or pricing of materials. Our inability to raise the price of our products
in response to increases in prices of raw materials or to maintain a proper supply of raw materials could have an adverse effect
on our revenue and earnings.
We
have material weaknesses in our internal control over financial reporting and concluded that our disclosure controls and procedures
and internal control over financial reporting are not effective.
In
April 2014 we acquired the assets and assumed certain liabilities related to the operations of KBS and transferred our test handler
product line to BSA. As a result, the KBS business currently represents our primary business activity. Prior to the acquisition,
the KBS operations were a privately-owned business with very limited administrative and accounting resources, outdated accounting
software and generally weak accounting processes and internal control procedures. Due to the lack of adequate processes, procedures
and controls at KBS, management concluded that we have material weaknesses in our internal control over financial reporting and
that our disclosure controls and procedures and our internal control over financial reporting were not effective as of December
31, 2014. Specifically, material weaknesses were found in our financial reporting process with respect to (a) poor control over
accounts payable cut-offs and (b) inadequate segregation of duties in certain accounting processes, including the cash receipts
and disbursements processes and management of user access rights in our accounting system, partly as a result of our limited size
and accounting staff. Our failure to successfully remediate these material weaknesses could cause us to fail to meet our reporting
obligations and to produce timely and reliable financial information. Additionally, such failure could cause investors to lose
confidence in our public disclosures, which could have a negative impact on our stock price. For a discussion of these material
weaknesses and our remediation efforts, please see Part I, Item 4 “Controls and Procedures” of our Quarterly Report
on Form 10-Q for the quarter ended March 31, 2015.
We
have a few customers that account for a significant portion of our revenues, and the loss of these customers, or decrease in their
demand for our products, could have a material adverse effect on our results.
We
rely on a limited number of customers for a substantial percentage of our net sales and accounts receivable. For the year ended
December 31, 2014, our top three customers accounted for 22%, 17%, and 11% of our net sales, respectively, and our top four customers
accounted for 27%, 12%, 10% and 10% of our accounts receivable, respectively. A reduction, delay, or cancellation of orders from
one or more of these significant customers, or the loss of one or more of these customers, would likely have an adverse impact
on our operating results.
If
we are unable to maintain or establish relationships with independent dealers and contractors who sell our homes, our revenue
could decline.
During
the year ended December 31, 2014, approximately 45% of our sales were made through our network of independent dealers and contractors.
As is common in the industry, our independent dealers may also sell homes produced by competing manufacturers and can cancel their
relationships with us on short notice. In addition, these dealers may not remain financially solvent, as they are subject to industry,
economic, demographic and seasonal trends similar to those faced by us. If we are not able to maintain good relationships with
our dealers and contractors or establish relationships with new solvent dealers or contractors, our revenue could decline.
Due
to the nature of our business, many of our expenses are fixed costs and if there are decreases in demand for our products, it
may adversely affect our operating results.
Many
of our expenses, particularly those relating to properties, capital equipment, and certain manufacturing overhead items, are fixed
in the short term. Reduced demand for our products causes our fixed production costs to be allocated across reduced production
volumes, which adversely affects our gross margins and profitability.
Certain
actions taken in connection with reducing operating costs may have a negative impact on our business.
In
the event of a housing downturn and a decline in our revenues, we may implement cost reduction actions such as temporary factory
shutdowns, workforce reductions, pay freezes and reductions, and reductions in other expenditures. In doing so, we will attempt
to maintain the necessary infrastructures to allow us to take full advantage of subsequent improvements in market conditions.
However, there can be no assurance that reductions we may make in personnel and expenditure levels and the loss of the capabilities
of personnel we have terminated or may terminate will not inhibit us in the timely ramp up of production in response to improving
market conditions.
Due
to the nature of the work we perform, we may be subject to significant liability claims and disputes.
We
engage in services that can result in substantial injury or damages that may expose us to legal proceedings, investigations and
disputes. For example, in the ordinary course of our business, we may be involved in legal disputes regarding personal injury
and wrongful death claims, employee or labor disputes, professional liability claims, and general commercial disputes, as well
as other claims. An unfavorable legal ruling against us could result in substantial monetary damages. Although we have adopted
a range of insurance, risk management, safety, and risk avoidance programs designed to reduce potential liabilities, there can
be no assurance that such programs will protect us fully from all risks and liabilities. If we sustain liabilities that exceed
our insurance coverage or for which we are not insured, it could have a material adverse impact on our results of operations and
financial condition.
Legal
actions brought against us may adversely affect our operating results and cash flows.
As
discussed in the Legal Proceedings section of our 2014 Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March
31, 2015, we are a defendant in a lawsuit filed by UTHE Technology Corporation. We believe this lawsuit is without merit and intend
to vigorously defend ourselves against all of the allegations in the complaint. However, an unfavorable outcome and/or the costs
associated with this and/or other legal proceedings could have a material adverse effect on our operating results and cash flows.
RISKS
RELATED TO OUR SECURITIES
There
is a limited market for our common stock.
There
is a limited public market for our common stock. The average daily trading volume in our common stock during the fiscal year 2014
was approximately 17,000 shares per day. We cannot provide assurances that a more active trading market will develop or be sustained.
As a result of low trading volume in our common stock, the purchase or sale of a relatively small number of securities could result
in significant price fluctuations and it may be difficult for holders to sell their securities without depressing the market price
for such securities.
We
have received notice from The NASDAQ Stock Market LLC that we are not in compliance with certain requirements for continued listing
of our common stock on the Nasdaq Capital Market. If we are not able to regain
compliance with such requirements within the timeframe set by Nasdaq, or if we
otherwise fail to comply with continued listing requirements, our common stock may be delisted.
On
April 14, 2015, we received a letter from the NASDAQ Listing Qualifications Department stating that we did not meet the minimum
of $2,500,000 in shareholders’ equity required for continued listing of our common stock on the NASDAQ Capital Market under
NASDAQ Listing Rule 5550(b)(1), and that as of April 13, 2015, we did not meet the alternatives of market value of listed securities
or net income from continuing operations, and therefore we are not in compliance with Rule 5550(b). We submitted, and NASDAQ accepted,
a plan for us to regain compliance with NASDAQ Listing Rule 5550(b), as a result of which NASDAQ granted us an exception until
October 12, 2015 for us to evidence compliance. However, there can be no assurance that we will be able to implement the plan
and regain compliance within the required timeframe.
If
we fail to regain compliance with, or otherwise fail to comply with, all applicable continued requirements, NASDAQ may determine
to delist our common stock, which could substantially decrease trading in our common stock and adversely affect the market liquidity
of our common stock and cause the market price of our common stock to decline.
Our
ability to use our NOLs to offset future taxable income for U.S. income tax purposes may be limited.
As
of December 31, 2014, we had federal NOLs of approximately $90 million and state NOLs of approximately $35 million. Our ability
to use NOLs to offset future taxable income will depend on the amount of taxable income we generate in future periods and whether
we become subject to annual limitations on the amount of taxable income that may be offset by our NOLs.
Section
382 imposes an annual limitation on the amount of taxable income that may be offset by a corporation’s NOLs if the corporation
experiences an “ownership change” as defined in Section 382. An ownership change occurs when the corporation’s
“5-percent shareholders” (as defined in Section 382) collectively increase their ownership in the corporation by more
than 50 percentage points (by value) over a rolling three-year period. Additionally, various states have similar limitations on
the use of state NOLs following an ownership change.
Our
Charter includes provisions designed to protect the tax benefits of our NOLs by generally restricting any direct or indirect transfers
of our common stock that increase the direct or indirect ownership of our common stock by any person from less than 4.99% to 4.99%
or more, or increase the percentage of our common stock owned directly or indirectly by a person owning or deemed to own 4.99%
or more of our common stock. Further, any direct or indirect transfer attempted in violation of these transfer restrictions will
be void as of the date of the prohibited transfer as to the purported transferee. Additionally, we have adopted and our shareholders
have approved our Rights Plan that generally is designed to deter any person from acquiring shares of our common stock if the
acquisition would result in such person beneficially owning 4.99% or more of our common stock without the approval of the Board.
Although
these measures are intended to reduce the likelihood of an ownership change, we cannot assure you that they will prevent all transfers
of our common stock that could result in such an ownership change. Further, these measures could make it more difficult for a
third party to acquire, or could discourage a third party from acquiring, ATRM or a large block of our common stock, which may
adversely affect the marketability, and depress the market price, of our common stock. In addition, these provisions could delay
or frustrate the removal of incumbent directors and could make more difficult a merger, tender offer or proxy contest involving
us, or impede an attempt to acquire a significant or controlling interest in us, even if such events might be beneficial to us
and our shareholders.
USE
OF PROCEEDS
Although
we cannot determine what the actual net proceeds from the sale of the shares of common stock in the rights offering will be until
the rights offering is completed, assuming all subscription rights are exercised, we estimate that the aggregate proceeds from
the rights offering, before deducting estimated offering expenses, will be approximately $[●] million. We intend to use
the net proceeds we receive from the rights offering to repay a portion of our outstanding indebtedness and to provide for our
general working capital needs.
The
precise amount and timing of the application of such proceeds will depend upon our funding requirements and the availability and
cost of other funds. Our management will have considerable discretion in the application of the net proceeds from this rights
offering, and it is possible that we may allocate the proceeds differently than investors in this rights offering may desire or
that we may fail to maximize the return on these proceeds. You will be relying on the judgment of our management with regard to
the use of proceeds from this rights offering, and you will not have the opportunity, as part of your investment decision, to
assess whether the proceeds are being used appropriately.
CAPITALIZATION
The
following table sets forth our capitalization at March 31, 2015 and as adjusted to reflect the sale of [●] shares of our
common stock, assuming all subscription rights are exercised, at the subscription price of $[●] per share and the receipt
of the net proceeds from the rights offering after deducting estimated offering expenses in the amount of $[●]. The table
does not reflect the use of proceeds from the rights offering. The information presented in the table below should be read in
conjunction with the consolidated financial statements and notes thereto incorporated by reference into this prospectus.
| |
Actual
as of
March 31, 2015
(unaudited) | | |
As
Adjusted for
Rights Offering |
| |
$(in thousands, except per share data) |
SHAREHOLDERS’ EQUITY (DEFICIT): | |
| | | |
|
Common stock, $0.001 par value, 3,000,000 shares authorized;
1,186,473 shares issued and outstanding, actual, and approximately [●] shares outstanding, as adjusted | |
| 1 | | |
[●] |
Additional paid-in capital | |
| 66,335 | | |
[●] |
Accumulated deficit | |
| (71,796 | ) | |
[●] |
Total shareholders’ deficit | |
| (5,460 | ) | |
[●] |
Total liabilities and shareholders’ deficit | |
$ | 17,615 | | |
[●] |
PRICE
RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our
common stock is listed and traded on the NASDAQ Capital Market under the symbol “ATRM.” On [●], 2015, the most
recent practicable date before the date of this prospectus, we had [●] shares of common stock outstanding and approximately
[●] holders of record of the common stock, and the closing price of our common stock as reported on the NASDAQ Capital Market
was $[●] per share.
The
following table summarizes the high and low closing sale prices per share of our common stock for the periods indicated, as reported
on the Nasdaq Capital Market. These prices do not include adjustments for retail
mark-ups, markdowns or commissions.
| |
Price Range | |
| |
Low | | |
High | |
Year ending December 31, 2015 | |
| | | |
| | |
First Quarter | |
$ | 2.46 | | |
$ | 4.12 | |
Second Quarter (through June 19, 2015) | |
$ | 2.27 | | |
$ | 4.97 | |
Year ended December 31, 2014 | |
| | | |
| | |
First Quarter | |
$ | 4.65 | | |
$ | 7.66 | |
Second Quarter | |
$ | 4.30 | | |
$ | 6.10 | |
Third Quarter | |
$ | 4.30 | | |
$ | 5.62 | |
Fourth Quarter | |
$ | 2.61 | | |
$ | 4.32 | |
Year ended December 31, 2013 | |
| | | |
| | |
First Quarter | |
$ | 4.70 | | |
$ | 8.40 | |
Second Quarter | |
$ | 5.10 | | |
$ | 8.40 | |
Third Quarter | |
$ | 2.90 | | |
$ | 5.30 | |
Fourth Quarter | |
$ | 3.01 | | |
$ | 12.40 | |
The
foregoing table shows only historical comparisons. These comparisons may not provide meaningful information to you in determining
whether to purchase shares of common stock in this rights offering. You are urged to obtain current market quotations for our
common stock and to review carefully the other information contained in this prospectus.
We
have never paid cash dividends on our common stock. We currently intend to retain any earnings for use in our operations and do
not anticipate paying cash dividends in the foreseeable future.
THE
RIGHTS OFFERING
The
following describes the rights offering in general and assumes, unless specifically provided otherwise, that you are a record
holder of our common stock on the record date. If you hold your shares in a brokerage account or through a broker, dealer, custodian
bank or other nominee, please also refer to “—Method of Exercising Subscription Rights — Subscription by
Beneficial Owners.”
The
Subscription Rights
We
are distributing to holders of shares of our common stock as of 5:00 p.m., Eastern Time, on [●], 2015, which is the record
date for the rights offering, at no charge, non-transferable subscription rights to purchase shares of our common stock at $[●]
per share. Each holder of record of our common stock will receive one subscription right for each share of our common stock owned
by such holder as of 5:00 p.m., Eastern Time, on the record date. Each subscription right entitles the holder to a basic subscription
right and an over-subscription privilege (each, as described below). The subscription rights entitle the holders of our common
stock to purchase an aggregate of [●] shares of our common stock for an aggregate subscription price of approximately $[●]
million. The shares to be issued in the rights offering, like our existing shares of common stock, will be traded on the NASDAQ
Capital Market under the symbol “ATRM.”
Basic
Subscription Right. The basic subscription right provides the holder of the subscription right the opportunity to purchase
[●] shares of our common stock at subscription price of $[●] per share, subject to delivery of the required documents
and payment of the subscription price prior to the expiration of the rights offering. You may exercise all or a portion of your
basic subscription rights or you may choose not to exercise any subscription rights at all. However, if you exercise less than
all of your basic subscription rights, you will not be entitled to purchase shares under the over-subscription privilege.
Over-Subscription
Privilege. Subject to the allocation described below, each basic subscription right also grants the holder an over-subscription
privilege to purchase additional shares of our common stock that are not purchased by other rights holders pursuant to their basic
subscription rights. You are entitled to exercise your over-subscription privilege only if you exercise your basic subscription
right in full.
If
you wish to exercise your over-subscription privilege, you should indicate the number of additional shares that you would like
to purchase in the space provided on your rights certificate, as well as the number of shares that you beneficially own without
giving effect to any shares to be purchased in this offering. When you send in your rights certificate, you must also send the
full subscription price in cash for the number of additional shares that you have requested to purchase (in addition to the payment
in cash due for shares purchased through your basic subscription right). If an insufficient number of shares is available to fully
satisfy all over-subscription requests, the available shares will be distributed proportionately among shareholders who exercised
their over-subscription privileges based on the number of shares each shareholder subscribed for under their basic subscription
rights, subject to the NOL Protection Mechanics.
Also,
we have NOL Protection Mechanics in place to preserve our ability to utilize our NOLs, including the ability to limit the amount
of shares that certain shareholders may subscribe for. Shareholders who currently own, directly or indirectly, 62,199 shares or
more, or who would increase their direct or indirect holdings from fewer than 62,199 shares to an amount equal to or greater than
62,199 shares, of our common stock by virtue of the exercise of their basic subscription rights and/or over-subscription privileges
in this rights offering may not be able to over-subscribe to the extent otherwise allowable. We will only permit such shareholders
to participate in this offering up to such amounts as will not jeopardize our NOLs.
We
will reduce the amount of a subscription or an over-subscription exercise by the amount necessary in our sole discretion to preserve
our ability to utilize our NOLs. The subscription agent will return any excess payments by mail without interest or deduction
promptly after the expiration of the subscription period.
As
soon as practicable after the expiration date, the subscription agent will determine the number of shares of common stock that
you may purchase pursuant to the over-subscription privilege. You will receive certificates representing these shares as soon
as practicable after the expiration date and after all allocations and adjustments have been effected. If you request and pay
for more shares than are allocated to you, we will refund the overpayment, without interest or deduction. In connection with the
exercise of the over-subscription privilege, banks, brokers and other nominee holders of subscription rights who act on behalf
of beneficial owners will be required to certify to us and to the subscription agent as to the aggregate number of subscription
rights exercised, and the number of shares of common stock requested through the over-subscription privilege, by each beneficial
owner on whose behalf the nominee holder is acting.
Reasons
for the Rights Offering
We
are engaging in the rights offering to raise equity capital principally to continue to fund our efforts related to the repayment
of debt and for working capital purposes. The Board has chosen, as recommended by management, to raise capital through a rights
offering to give all our shareholders the opportunity to limit ownership dilution by buying additional shares of common stock.
The Board also considered several alternative capital raising methods prior to concluding that the rights offering was the appropriate
option under the current circumstances. The Board believes that the rights offering will strengthen the Company’s financial
condition by generating additional cash and increasing its capital position. In addition, the Board does not expect this rights
offering to adversely impact the value of the Company’s NOLs. For additional information on our NOLs, please see “Summary
— Net Operating Loss Carryforwards.”
Based
on its consideration of these factors, the information and analyses regarding the rights offering prepared by management and the
recommendation of management that the rights offering is in the best interests of the Company in light of the information available
to management, and the additional information and documentation reviewed by the Board, the Board approved the rights offering
and determined that the rights offering is in the best interests of the Company and its shareholders. However, the Board is not
making any recommendation regarding your exercise of the subscription rights. We cannot assure you that we will not need to seek
additional financing or engage in additional capital offerings in the future or that the rights offering will raise sufficient
capital to provide for our general working capital needs.
Determination
of Subscription Price
In
determining the subscription price, the Special Committee considered a number of factors, including: the price at which our shareholders
might be willing to participate in the rights offering; historical and current trading prices for, and the liquidity of, our common
stock; the likely cost of capital and the Company’s ability to access such capital; the impact of the rights offering on
the Company’s NOL position; and the desire to provide an opportunity to our shareholders to participate in the rights offering
on a pro rata basis. In conjunction with its review of these factors, the Board also reviewed our history and prospects, including
our past and present earnings and losses, our prospects for future earnings, our current financial condition, market conditions,
and subscription prices in various rights offerings for other companies. The Board did not request and has not received a fairness
opinion regarding the subscription price. The subscription price is not necessarily related to our book value, net worth or any
other established criteria of value and may or may not be considered the fair value of our common stock to be offered in the rights
offering.
We
cannot assure you that the market price of our shares of common stock will not decline during or after the rights offering. We
also cannot assure you that you will be able to sell shares of our common stock purchased during the rights offering at a price
equal to or greater than the subscription price. We urge you to obtain a current quote for our common stock before exercising
your subscription rights.
Method
of Exercising Subscription Rights
One
non-transferable subscription right is being distributed for each share of our common stock that you owned as of 5:00 p.m., Eastern
Time, on [●], 2015, the record date for the rights offering. The exercise of subscription rights is irrevocable and may
not be cancelled or modified. You may exercise your subscription rights as follows:
Subscription
by Registered Holders. If you are a registered holder of shares of our common stock, the number of subscription rights
you may exercise is indicated on the enclosed rights certificate. You may exercise your subscription rights by properly completing
and executing the rights certificate and forwarding it, together with your full payment, to the subscription agent at the address
set forth below under “—Subscription Agent,” to be received prior to 5:00 p.m., Eastern Time, on [●],
2015, the expiration date for the rights offering.
Subscription
by Beneficial Owners. If you are a beneficial owner of shares of our common stock that are registered in the name of a
custodian bank, broker, dealer or other nominee, you will not receive a rights certificate. Instead, one subscription right will
be issued to the nominee record holder for each share of our common stock that you own at the record date. If you are not contacted
by your nominee, you should promptly contact your nominee in order to subscribe for shares of our common stock in the rights offering.
If
you hold your shares of common stock in the name of a custodian bank, broker, dealer or other nominee, your nominee will exercise
the subscription rights on your behalf in accordance with your instructions. Your nominee may establish a deadline that may be
before 5:00 p.m., Eastern Time, on [●], 2015, the expiration date for the rights offering.
Payment
Method
As
described in the instructions accompanying the rights certificate, all payments submitted to the subscription agent must be made
in full United States currency by:
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check
or bank draft payable to Computershare Inc., the subscription agent, drawn upon a United States bank; or |
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wire
transfer to Computershare Inc., the subscription agent. |
Payment
will be deemed to have been received by the subscription agent only upon the subscription agent’s receipt of any certified
check, bank check or wire transfer or, in the case of an uncertified personal check, receipt and clearance of such check.
Please
note that funds paid by uncertified personal check may take at least seven business days to clear. Accordingly, if you wish to
pay by means of an uncertified personal check, we urge you to make payment sufficiently in advance of the expiration date to ensure
that the subscription agent receives cleared funds before that time. In order to ensure timely receipt of funds, we urge you to
consider payment by means of a certified check, bank check, bank draft or money order.
Your
subscription rights will not be successfully exercised unless the subscription agent actually receives from you, your custodian
bank, broker, dealer or other nominee, as the case may be, all of the required documents and your full subscription price payment
(and your payment has cleared) prior to 5:00 p.m., Eastern Time, on [●], 2015, the scheduled expiration date of the rights
offering.
You
should read and follow the instructions accompanying the rights certificate carefully. As described in the instructions accompanying
the rights certificate, in certain cases additional documentation or signature guarantees may be required.
The
method of delivery of payments of the subscription amount to the subscription agent will be at the risk of the holders of subscription
rights. If sent by mail, we recommend that you send those documents and payments by registered mail, properly insured, with return
receipt requested, and that a sufficient number of days be allowed to ensure timely delivery to the subscription agent. Do not
send or deliver these materials to us.
There
is no sales fee or commission payable by you in connection with the issuance of subscription rights or the issuance of shares
of common stock if you exercise your subscription rights (other than the subscription price). We will pay all fees charged by
the subscription agent. However, if you exercise your subscription rights through a custodian bank, broker, dealer or other nominee,
you are responsible for paying any other commissions, fees, taxes or other expenses your nominee may charge you in connection
with the exercise of the subscription rights.
Medallion
Guarantee May Be Required
Your
signature on your rights certificate must be guaranteed by an eligible institution, such as a member firm of a registered national
securities exchange or a member of the Financial Industry Regulatory Authority, or a commercial bank or trust company having an
office or correspondent in the United States, subject to standards and procedures adopted by the subscription agent, unless:
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you
provide on the rights certificate that shares are to be delivered in your name and to your address of record, as imprinted
on the face of the rights certificate; or |
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you
are an eligible institution. |
Delivery
to any address or by a method other than those set forth above does not constitute valid delivery.
Limit
on How Many Shares of Common Stock You May Purchase in the Rights Offering
In
addition to any limitation resulting from allocation of over-subscription shares, in order to protect the Company from loss of
its NOLs and ensure compliance with the NOL protective provisions of our Charter and the Rights Plan, a person or entity, together
with related persons or entities, may not exercise subscription rights (including the over-subscription privilege) to purchase
shares of our common stock in this rights offering that would result in such person or entity, together with any related persons
or entities, owning, directly or indirectly, 62,199 shares or more of our common stock upon the consummation of the rights offering,
unless otherwise determined by the Company to not have an unfavorable effect on our ability to preserve our NOLs. If you currently
own, directly or indirectly, 62,199 shares or more, or would potentially increase your direct or indirect holdings from fewer
than 62,199 shares to an amount equal to or greater than 62,199 shares, of our common stock, but would like to participate in
the rights offering, please contact the Company’s information agent, InvestorCom, Inc., to discuss your level of subscription,
by email at info@investor-com.com, by telephone at (203) 972-9300 or toll free at (877) 972-0090, or by mail at 65 Locust Avenue,
New Canaan, CT 06840. Without limiting the foregoing, we do not intend to accept any subscriptions pursuant to the basic subscription
rights or over-subscription privileges if we believe such subscriptions or over-subscriptions may have an unfavorable effect on
our ability to preserve our NOLs. See “The Rights Offering — NOL Protection Mechanics.”
Missing
or Incomplete Subscription Information
If
you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you requested
is not specified in the forms you submit, the payment received will first be applied, to the fullest extent possible based on
the amount of the payment received, to exercise your basic subscription rights and will thereafter be applied, to the fullest
extent possible based on the amount of excess payment received, to exercise your over-subscription privilege, if applicable, subject
to the availability of over-subscription shares.
Any
excess subscription payments received by the subscription agent will be returned promptly, without interest or penalty, following
the expiration of the rights offering.
If
you deliver your rights certificate and other documents or payment in a manner different from that described in this prospectus,
we may not honor the exercise of your subscription rights.
Expiration
Date
The
period during which you may exercise your subscription rights expires at 5:00 p.m., Eastern Time, on [●], 2015. If you do
not exercise your subscription rights prior to that time, your subscription rights will expire and will no longer be exercisable.
We will not be required to issue shares of our common stock to you if the subscription agent receives your rights certificate
or your subscription payment after that time. We have the option to extend the rights offering without notice to you. In no event
will the expiration date be later than [●], 2015. If we elect to extend the expiration of the rights offering, we will issue
a press release announcing such extension no later than the next business day after the Board extends the rights offering.
If
you hold your shares of common stock in the name of a custodian bank, broker, dealer or other nominee, your nominee will exercise
the subscription rights on your behalf in accordance with your instructions. Your nominee may establish a deadline that may be
before 5:00 p.m., Eastern Time, on [●], 2015, the expiration date for the rights offering.
Conditions,
Withdrawal and Termination
We
reserve the right to withdraw the rights offering at any time for any reason. In addition, we may terminate the rights offering
if at any time before completion of the rights offering there is any judgment, order, decree, injunction, statute, law or regulation
entered, enacted, amended or held to be applicable to the rights offering that in the sole judgment of the Board would or might
make the rights offering or its completion, whether in whole or in part, illegal or otherwise restrict or prohibit completion
of the rights offering. If we cancel the rights offering, all affected subscription rights will expire without value, and all
subscription payments received by the subscription agent will be returned promptly, without interest or penalty.
Subscription
Agent
We
anticipate retaining Computershare Inc. to serve as the subscription agent for the rights offering. The subscription agent will
maintain the list of subscriptions and calculate any necessary allocations of over-subscription privileges. We will pay all fees
and expenses of the subscription agent related to the rights offering and have also agreed to indemnify the subscription agent
from certain liabilities that it may incur in connection with the rights offering. If your shares are held in the name of a broker,
dealer, custodian bank or other nominee, then you should send your subscription documents and subscription payment to that record
holder. If you are the record holder, then you should send your rights certificate and other documents and subscription payment
to the address provided below. If sent by mail, we recommend that you send documents and payments by registered mail, properly
insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the subscription
agent. Do not send or deliver these materials to ATRM.
By
Registered Certified or Express Mail |
Overnight
Courier |
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Computershare
Trust Company, N.A. |
Computershare
Trust Company, N.A. |
c/o
Voluntary Corporate Actions |
c/o
Voluntary Corporate Actions |
P.O.
Box 43011 |
250
Royall Street Suite V |
Providence,
RI 02940 |
Canton,
MA 02021 |
Information
Agent
The
information agent for this rights offering is InvestorCom, Inc. We will pay all fees and expenses of the information agent related
to the rights offering and have also agreed to indemnify the information agent from certain liabilities that it may incur in connection
with the rights offering. The information agent can be contacted at the following address and telephone number:
InvestorCom,
Inc.
65
Locust Avenue
New
Canaan, CT 06840
Telephone:
(203) 972-9300
Toll
Free: (877) 972-0090
Fax:
(203) 966-6478
E-mail:
info@investor-com.com
No
Fractional Shares
We
will not issue fractional shares in connection with the rights offering. Fractional shares of our common stock resulting from
the exercise of the basic subscription rights or over-subscription privileges will be eliminated by rounding down to the nearest
whole share. Any excess subscription payments received by the subscription agent will be returned promptly, without interest,
following expiration of the rights offering.
Notice
to Nominees
If
you are a custodian bank, broker, dealer or other nominee who holds shares of our common stock for the account of others on the
record date, you should notify the beneficial owners of the shares for whom you are the nominee of the rights offering as soon
as possible to learn their intentions with respect to exercising their subscription rights. You should obtain instructions from
the beneficial owners with respect to their subscription rights, as set forth in the instructions we have provided to you for
your distribution to beneficial owners. If the beneficial holder so instructs, you should complete the rights certificate and
submit it to the subscription agent together with the form entitled “Nominee Holder Election Form” and with the proper
payment. We will provide the Nominee Holder Election Form to you with your rights offering materials. If you did not receive this
form, you should contact the information agent to request a copy. If you hold shares of our common stock for the account(s) of
more than one beneficial owner, you may exercise the number of subscription rights to which all such beneficial owners in the
aggregate otherwise would have been entitled had they been direct record holders of our common stock on the record date, provided
that you, as a nominee record holder, make a proper showing to the subscription agent by submitting the Nominee Holder Election
Form.
In
the case of subscription rights that you hold of record on behalf of others through DTC, those subscription rights may be exercised
by instructing DTC to transfer the subscription rights from your DTC account to the subscription agent’s DTC account, and
by delivering to the subscription agent the required certification as to the number of shares subscribed for pursuant to the exercise
of the subscription rights of the beneficial owners on whose behalf you are acting, together with payment of the full subscription
price.
Beneficial
Owners
If
you are a beneficial owner of shares of our common stock and will receive your subscription rights through a custodian bank, broker,
dealer or other nominee, we will ask your nominee to notify you of the rights offering. If you wish to exercise your subscription
rights, you will need to have your custodian bank, broker, dealer or other nominee act for you, as described above. To indicate
your decision with respect to your subscription rights, you should follow the instructions of your nominee. If you wish instead
to obtain a separate rights certificate, you should contact your nominee as soon as possible and request that a rights certificate
be issued to you. You should contact your nominee if you do not receive notice of the rights offering, but you believe you are
entitled to participate in the rights offering. We are not responsible if you do not receive the notice by mail or otherwise from
your nominee or if you receive notice without sufficient time to respond to your nominee by the deadline established by your nominee,
which may be before 5:00 p.m., Eastern Time, on [●], 2015, the expiration date.
Non-Transferability
of Subscription Rights
The
subscription rights granted to you are non-transferable and, therefore, you may not sell, transfer or assign your subscription
rights to anyone. The subscription rights will not be listed for trading on the NASDAQ Capital Market or any other stock exchange
or market. The shares of our common stock issuable upon exercise of the subscription rights will be listed on the NASDAQ Capital
Market under the ticker symbol “ATRM.”
Validity
of Subscriptions
We
will resolve, in our sole discretion, all questions regarding the validity and form of the exercise of your subscription rights,
including time of receipt and eligibility to participate in the rights offering. Our determination will be final and binding.
Once made, subscriptions and directions are irrevocable, and we will not accept any alternative, conditional or contingent subscriptions
or directions. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance
of which would be unlawful. You must resolve any irregularities in connection with your subscriptions before the subscription
period expires, unless waived by us in our sole discretion. Neither ATRM nor the subscription agent shall be under any duty to
notify you or your representative of defects in your subscriptions. A subscription will be considered accepted, subject to our
right to withdraw or terminate the rights offering, only when a properly completed and duly executed rights certificate and any
other required documents and the full subscription payment have been received by the subscription agent. Our interpretations of
the terms and conditions of the rights offering will be final and binding.
Escrow
Arrangements; Return of Funds
Computershare
Inc., the subscription agent, will hold funds received in payment for shares of our common stock in a segregated account pending
completion of the rights offering. The subscription agent will hold this money in escrow until the rights offering is completed
or is withdrawn or terminated. If the rights offering is canceled for any reason, all subscription payments received by the subscription
agent will be returned to subscribers, without interest or penalty, as soon as practicable.
Uncertificated
Shares of Common Stock
All
shares of our common stock that you purchase in the rights offering will be issued in book-entry, or uncertificated, form. When
issued, the shares will be registered in the name of the subscription rights holder of record. As soon as practicable after the
expiration of the rights offering, the subscription agent will arrange for issuance to each subscription rights holder of record
that has validly exercised its subscription rights the shares of common stock purchased in the rights offering. Subject to state
securities laws and regulations, we have the discretion to delay distribution of any shares you may have elected to purchase by
exercise of your rights in order to comply with state securities laws.
Rights
of Subscribers
You
will have no rights as a shareholder with respect to the shares of our common stock purchased in the rights offering until your
account, or your account at your broker, dealer, custodian bank or other nominee, is credited with such shares.
Foreign
Shareholders
We
will not mail this prospectus or rights certificates to shareholders with addresses that are outside the United States or that
have an army post office or foreign post office address. The subscription agent will hold these rights certificates for their
account. To exercise subscription rights, our foreign shareholders must notify the subscription agent prior to 5:00 p.m., Eastern
Time, at least three business days prior to the expiration of the rights offering (or, if the rights offering is extended, on
or before three business days prior to the extended expiration date) and demonstrate to the satisfaction of the subscription agent
that the exercise of such subscription rights does not violate the laws of the jurisdiction of such shareholder.
No
Revocation or Change
All
exercises of subscription rights are irrevocable. Once you submit the rights certificate or have instructed your nominee of your
subscription request, you are not allowed to revoke or change the exercise or request a refund of monies paid, unless we are required
by law to grant revocation rights, even if the market price of our common stock falls below the $[●] per share subscription
price or you learn information about us or the rights offering that you consider to be unfavorable. You should not exercise your
subscription rights unless you are certain that you wish to purchase the shares of our common stock offered pursuant to the rights
offering.
Material
U.S. Federal Income Tax Treatment of Rights Distribution
The
receipt and exercise of subscription rights by common shareholders should generally not be taxable for U.S. federal income tax
purposes. You should seek specific tax advice from your tax advisor in light of your particular circumstances and as to the applicability
and effect of any other tax laws. See “Material U.S. Federal Income Tax Consequences.”
No
Recommendation to Rights Holders
The
Board is not making any recommendation regarding your exercise of the subscription rights. Shareholders who exercise subscription
rights risk investment loss on new money invested. We cannot predict the price at which our shares of common stock will trade
and, therefore, we cannot assure you that the market price for our common stock will be above the subscription price or that anyone
purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price.
You are urged to make your decision based on your own assessment of our business and the rights offering. Please see “Risk
Factors” for a discussion of the risks related to the rights offering and the risks involved in investing in our common
stock.
NOL
Protection Mechanics
Our
ability to utilize our NOLs against future taxable income, if any, could be substantially reduced if we were to undergo an “ownership
change” within the meaning of Section 382. Section 382 imposes an annual limitation on the amount of taxable income that
may be offset by a corporation’s NOLs if the corporation experiences an “ownership change” to an annual amount
equal to the value of the company (generally measured by the value of its outstanding stock) multiplied by the long-term tax-exempt
rate. An ownership change occurs when the corporation’s “5-percent shareholders” (as defined in Section 382)
collectively increase their ownership in the corporation by more than 50 percentage points (by value) over a rolling three-year
period. In determining ownership, certain attribution provisions and constructive ownership provisions apply, including the following:
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Any
family group consisting of an individual, spouse, children, grandchildren and parents are treated as one person. Note that
an individual can be treated as a member of several different family groups. For example, your family group would include
your spouse, children, father and mother, but your mother’s family group would include her spouse, all her children
and her grandchildren. |
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Any
common stock owned by any entity will generally be attributed proportionately to the ultimate owners of that entity. Attribution
will also occur through tiered entity structures. |
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Any
persons or entities acting in concert or having a formal or informal understanding among themselves to make a coordinated
purchase of common stock will be treated as one shareholder. |
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Ownership
may not be structured with an abusive principal purpose of avoiding these rules. |
We
have the right, in our sole and absolute discretion, to limit the exercise of subscription rights or over-subscription privileges,
including instructing the subscription agent to reduce the amount of a subscription or an over-subscription exercise by the amount
necessary in our sole discretion to preserve our ability to utilize our NOLs.
In
order to protect against an unexpected “ownership change” for federal income tax purposes, we have implemented the
following NOL Protection Mechanics whereby each shareholder will either make the representation set forth in the first bullet
point below or, in the alternative, follow the procedures set forth in the second, third and fourth bullet points below:
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by
purchasing shares of common stock, each subscriber will represent to us that it will not be, after giving effect to its basic
subscription rights and/or over-subscription privileges, an owner, either direct or indirect, record or beneficial, or by
application of Section 382 attribution provisions summarized above, of 62,199 shares or more of our common stock; |
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if
an exercise of basic subscription rights and/or over-subscription privileges would result in the subscriber owning, directly
or indirectly, 62,199 shares or more of our common stock, the subscriber must notify the subscription agent at the telephone
number set forth under the heading “The Rights Offering — Subscription Agent;” |
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if
requested, each subscriber will be required to provide us with additional information regarding the amount of common stock
that the subscriber owns; |
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we
have the right to instruct the subscription agent to reduce the amount of a subscription or an over-subscription exercise
by the amount necessary in our sole discretion to preserve our ability to utilize our NOLs. |
The
foregoing NOL Protection Mechanics and following representations are binding and enforceable solely against shareholders who properly
execute the rights certificate and relate solely to the exercise of rights in this rights offering. All shareholders who have
not properly executed the rights certificate and agreed to the representations contained therein prior to the expiration date
will not be able to participate in the rights offering and their rights will expire unexercised.
By
signing the rights certificate and exercising rights in the rights offering, you agree that:
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the
NOL Protection Mechanics are valid, binding and enforceable against you; |
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any
purported exercise of rights in violation of the NOL Protection Mechanics will be void and of no force and effect; and |
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we
have the right to void and cancel (and treat as if never exercised) any exercise of rights, and shares issued pursuant to
an exercise of rights, if any of the agreements, representations or warranties of a subscriber in the subscription documents
are false. |
Shareholders
that currently hold, directly or indirectly, 4.99% or more of our outstanding common stock (i.e., 62,199 shares or more) may be
permitted to participate in the rights offering up to such amounts as will not jeopardize our NOLs.
If
you attempt to exercise your subscription rights or over-subscription privileges and as a result of the limitations set forth
herein, we are unable to issue you the full amount of shares of common stock requested, we will return to you any additional funds
submitted promptly, without interest or deduction, and will allocate the additional shares to all other shareholders who are not
so limited and who have properly exercised their subscription rights or over-subscription privileges. Such other shareholders
shall receive the additional shares in proportion to the number of shares each such other shareholder purchased through their
basic subscription rights compared to the shares purchased by the remaining other shareholders purchased through their basic subscription
rights, subject to the NOL Protection Mechanics.
Illustration
of Protection Mechanics
Upon
receipt by the shareholders of record as of the prospectus and subscription materials relating to the rights offering, each shareholder
will decide whether he, she or it will elect to exercise their basic subscription rights and any over-subscription privileges
that may be available.
Shareholders
who seek to exercise their basic subscription rights and/or over-subscription privileges and (a) currently own, directly or indirectly,
fewer than 62,199 shares and (b) know that they will not own, directly or indirectly, 62,199 shares or more as a result of exercise
of basic subscription rights and over-subscription privileges, will sign the subscription rights certificate and thereby represent
to the Company, among other things, that they will not be, after giving effect to the purchase of our common stock, an owner,
either direct or indirect, record or beneficial, or by application of Section 382 attribution provisions, of 62,199 shares or
more of our common stock.
Shareholders
who seek to exercise their basic subscription rights and/or over-subscription privileges and either (a) currently own, directly
or indirectly, 62,199 shares or more prior to the rights offering, or (b) as a result of exercising their basic subscription rights
and/or over-subscription privileges will own, directly or indirectly, 62,199 shares or more (collectively, the “Protection
Shareholders”), will need to comply with the following NOL Protection Mechanics:
|
● |
the
Protection Shareholder must notify the subscription agent at the telephone number set forth under the heading “Subscription
Agent;” and |
|
|
|
|
● |
the
Protection Shareholder will be required to provide the Company with (a) his, her or its history of share ownership of the
past three years, (b) the date of their first purchase of Company stock, and (c) such other information as may be requested. |
In
the event that a shareholder does not verify that he, she or it currently owns, directly or indirectly, fewer than 62,199 shares
of our common stock and will not own, directly or indirectly, an amount equal to or exceeding that number of shares as a result
of exercise of his, her or its basic subscription rights and over-subscription privileges, or, in the case of a Protection Shareholder,
does not furnish the requested information, we may, in our sole discretion, refuse to permit the exercise of that shareholder’s
subscription rights or over-subscription privileges. Furthermore, we have the right to reduce the amount of a subscription or
an over-subscription exercise by the amount necessary in our sole discretion to preserve our ability to utilize our NOLs.
Upon
the receipt of such information, the Company will then allocate shares of common stock issuable upon the exercise of the basic
subscription rights to all shareholders, including Protection Shareholders, who have properly subscribed for their basic subscription
rights. Following the allocation of shares pursuant to the exercise of basic subscription rights, the Company will then allocate
the over-subscription privileges as if the limits in place to protect the Company’s NOLs were not in place. This will be
done by reducing the total number of shares available by the number of shares subscribed by shareholders through their basic subscription
rights. The shares remaining after this allocation to the basic subscription exercises will then be made available to all shareholders
who exercise their over-subscription privileges in proportion to the number of shares subscribed by each shareholder under his,
her or its basic subscription right to the total shares acquired through the exercise of the basic subscription rights. The Company
will then compare this list of tentative over-subscriptions with the list of Protection Shareholders to ensure that all Protection
Shareholders have been identified.
How
the Section 382 Testing Rules Operate
Section
382 generally provides that following the occurrence of an “ownership change”, certain tax attributes of a loss corporation
will have limited ability to offset taxable income in the post change period. An ownership change occurs when the corporation’s
“5-percent shareholders” (as defined in Section 382) collectively increase their ownership in the corporation by more
than 50 percentage points (by value) over a rolling three-year period. This testing is done at various points in time by comparing
the percentage of the loss company stock at a particular point in time (a “Testing Date”) with the lowest percentage
held by that shareholder in the three year period preceding that Testing Date. The issuance of shares pursuant to the exercise
of the Company’s subscription rights will be a Testing Date for purposes of Section 382.
For
these purposes, a “5-percent shareholder” includes not only an individual or entity that has a direct 5% or more interest
in the stock of the loss corporation but also certain aggregated groups of shareholders who each own less than 5% of the loss
corporation’s stock. An aggregated group of small shareholders is generally determined by the method by which those shareholders
acquire the loss company stock. Loss corporations frequently have more than one aggregated group of shareholders. As a rule of
administrative convenience, the Treasury regulations do not require that the loss corporation identify which specific individuals
or entities are included within each group. It is also unnecessary to track whether an individual within a particular aggregated
groups sells his shares or buys additional shares, unless the purchase results in that individual shareholder owning 5% or more
of the loss corporation stock (in which case, the shareholder ceases to be a member of an aggregated group and becomes a separate
“5-percent shareholder”). The significance of this is that on any Testing Date, the loss corporation will generally
be concerned primarily with changes in the stock ownership of specifically identified shareholders who directly own 5% or more
of its stock and certain aggregated groups treated as “5-percent shareholders”.
Over-Subscriptions
by Shareholders Other than Protection Shareholders
As
noted above, Section 382 does not generally require that the Company calculate the percentage ownership increase of those shareholders
who do not, as of the Testing Date or any date during the three year period ending on the Testing Date, own 5% or more of the
Company’s stock. Accordingly, the Company need not determine whether a shareholder other than a Protection Shareholder has
actually increased his, her or its percentage interest in the Company as long as that particular shareholder does not become a
direct 5% or more shareholder. An over-subscription by a shareholder other than a Protection Shareholder, on its own, will not
cause an increase in the percentage interest held by such shareholder, on its own, for Section 382 purposes and will not therefore
be taken into account, on its own, in determining the Section 382 ownership change threshold. Since those shareholders do not
need to be separately tracked, the Company need only know that none of these shareholders has pierced the 5% threshold.
Subscriptions
by Protection Shareholders
It
is necessary for Section 382 purposes to track the stock ownership of all direct 5% or more shareholders in the Company, and special
procedures have been adopted to accomplish that objective. To calculate the amount of shares a Protection Shareholder will be
able to acquire in the rights offering as will not jeopardize the Company’s NOLs, the Company will first take into account
the basic subscriptions by all shareholders and the over-subscriptions that are actually subscribed by non-Protection Shareholders.
In order to determine the number of shares that any Protection Shareholder may acquire, it will also be necessary to determine
if any of the Protection Shareholders will not own 5% or more of the Company’s stock after all the shares are issued pursuant
to the rights offering. If a Protection Shareholder (i.e. a shareholder who prior to the rights offering owned, directly or indirectly,
at least 62,199 shares or would own, directly or indirectly, 62,199 shares or more after its tentative subscription) does not
own 5% or more of the Company’s stock after the share issuance pursuant to the rights offering, then that shareholder will
not be a “5-percent shareholder” for Section 382 purposes and the shares issued to him, her or it will not be counted
in determining whether the shareholders of the Company have increased their percentage interest by more than 50 percentage points.
If
a Protection Shareholder does own 5% or more of the Company’s stock after his, her or its tentative exercise of the subscription
rights, it will be necessary to compare that shareholder’s percentage interest in the Company after his, her or its tentative
exercise of the subscription rights to that shareholder’s lowest percentage interest in the Company within the three year
period ending with the Testing Date (i.e. the date that the shares are granted pursuant to the rights offering). The percentage
increase by that shareholder, as well as the percentage increase by every other shareholder that owns more than 5% of the stock
of the Company after the rights offering shares are issued, will be aggregated. If the aggregate increase by each of these 5-percent
shareholders over the three-year testing period is 50% or less, then the issuance of the shares to such shareholders will not
jeopardize the Company’s NOLs. If the aggregate increase by these 5-percent shareholders is greater than 50% after the tentative
exercise of those shareholders’ subscription rights, then the tentative subscriptions of those 5-percent shareholders will
be proportionately reduced to a level that will not violate the 50% threshold. The Company reserves the right, in its absolute
discretion, to reduce the tentative subscriptions to a level that does not jeopardize the Company’s NOLs.
Shares
of Our Common Stock Outstanding After the Rights Offering
As
of June 19, 2015, we had 1,246,473 shares of our common stock issued and outstanding. Assuming no additional shares of common
stock are issued by the Company prior to consummation of the rights offering and assuming all shares are sold in the rights offering,
we expect approximately [●] shares of our common stock will be outstanding immediately after completion of the rights offering.
Other
Matters
We
are not making the rights offering in any state or other jurisdiction in which it is unlawful to do so, nor are we distributing
or accepting any offers to purchase any shares of our common stock from subscription rights holders who are residents of those
states or other jurisdictions or who are otherwise prohibited by federal or state laws or regulations to accept or exercise the
subscription rights. We may delay the commencement of the rights offering in those states or other jurisdictions, or change the
terms of the rights offering, in whole or in part, in order to comply with the securities laws or other legal requirements of
those states or other jurisdictions. Subject to state securities laws and regulations, we also have the discretion to delay allocation
and distribution of any shares you may elect to purchase by exercise of your subscription rights in order to comply with state
securities laws. We may decline to make modifications to the terms of the rights offering requested by those states or other jurisdictions,
in which case, if you are a resident in those states or jurisdictions or if you are otherwise prohibited by federal or state laws
or regulations from accepting or exercising the subscription rights, you will not be eligible to participate in the rights offering.
However, we are not currently aware of any states or jurisdictions that would preclude participation in the rights offering.
DESCRIPTION
OF CAPITAL STOCK
General
Our
Charter authorizes us to issue up to 3,200,000 shares, par value $0.001 per share, including (i) 3,000,000 shares of common stock,
par value $0.001 per share, and (ii) 200,000 shares of undesignated stock, of which 3,000 shares have been designated as shares
of Series A Junior Participating Preferred Stock. As of June 19, 2015, there were 1,246,473 shares of common stock issued and
outstanding and no shares of Series A Junior Participating Preferred Stock issued and outstanding.
The
following descriptions are summaries of the material provisions and terms of our capital stock and are qualified by reference
to our Charter and our Bylaws, each as amended to date.
Common
Stock
Holders
of our common stock are entitled to one vote per share on matters on which our shareholders vote. There are no cumulative voting
rights. Subject to any preferential dividend rights of any outstanding shares of preferred stock, holders of our common stock
are entitled to receive dividends, if declared by the Board, out of funds that we may legally use to pay dividends. If we liquidate
or dissolve, holders of our common stock are entitled to share ratably in our assets once our debts and any liquidation preference
owed on any then-outstanding shares of preferred stock are paid. Our Charter, as amended, does not provide holders of our common
stock with any redemption, conversion or preemptive rights.
Series
A Junior Participating Preferred Stock
The
material terms of the Series A Junior Participating Preferred Stock are described in the section “Tax Benefit Preservation
Plan (Rights Plan)” below.
Undesignated
Stock
Our
undesignated stock is what is known as “blank check” preferred. This means that the Board is authorized to issue undesignated
stock in such classes or series and with such voting rights and preferences or restrictions, including without limitation, rights,
preferences and restrictions as to redemption, distributions and conversion, as the Board may establish.
Tax
Benefit Preservation Plan (Rights Plan)
The
following is a summary of the terms of our Rights Plan. The summary does not purport to be complete and is qualified in its entirety
by reference to the Rights Plan, the complete text of which has been filed with the Securities and Exchange Commission (the “SEC”)
and is incorporated herein by reference.
Distribution
and Transfer of Rights; Rights Certificates. On February 13, 2014, our Board authorized and declared a dividend distribution
of one right (a “Right”) for each outstanding share of Common Stock (each, a “Common Share”) to shareholders
of record as of the close of business on February 24, 2014 (the “Rights Plan Record Date”). Each Right entitles the
registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $0.001 per share (the “Preferred Shares”), of the Company at an exercise price of $30.00 per one one-thousandth
of a Preferred Share, subject to adjustment (the “Exercise Price”).
Prior
to the Distribution Date referred to below: (i) the Rights will be evidenced by and trade with the certificates for the Common
Shares (or, with respect to any uncertificated Common Shares registered in book entry form, by notation in book entry), together
with a summary of rights, and no separate rights certificates will be distributed; (ii) new Common Shares certificates issued
after the Rights Plan Record Date will contain a legend incorporating the Rights Plan by reference (for uncertificated Common
Shares registered in book entry form, this legend will be contained in a notation in book entry); and (iii) the surrender for
transfer of any certificates for Common Shares (or the surrender for transfer of any uncertificated Common Shares registered in
book entry form) will also constitute the transfer of the Rights associated with such Common Shares.
Rights
will accompany any new Common Shares that are issued after the Rights Plan Record Date.
Distribution
Date. The date on which the Rights separate from the Common Shares and become exercisable is referred to as the “Distribution
Date.” Subject to certain exceptions specified in the Rights Plan, the Rights will separate from the Common Shares and become
exercisable following (i) the 10th business day (or such later date as may be determined by the Board) after the public
announcement that an Acquiring Person (as defined below) has acquired beneficial ownership of 4.99% or more of the Common Shares
or (ii) the 10th business day (or such later date as may be determined by the Board) after a person or group announces
a tender or exchange offer that would result in ownership by a person or group of 4.99% or more of the Common Shares. After the
Distribution Date, we will mail Rights certificates to our shareholders as of the close of business on the Distribution Date and
the Rights will become transferable apart from the Common Shares. Thereafter, such Rights certificates alone will represent the
Rights.
Preferred
Shares Purchasable Upon Exercise of Rights. After the Distribution Date, each Right will entitle the holder to purchase for
the Exercise Price one one-thousandth of a Preferred Share having economic and other terms similar to that of one Common Share.
This portion of a Preferred Share is intended to give the shareholder approximately the same dividend, voting and liquidation
rights as would one Common Share, and should approximate the value of one Common Share.
More
specifically, each one one-thousandth of a Preferred Share, if issued, will: (i) not be redeemable; (ii) entitle holders to quarterly
dividend payments of $0.001 per share, or an amount equal to the dividend paid on one Common Share, whichever is greater; (iii)
entitle holders upon liquidation either to receive $1.00 per share or an amount equal to the payment made on one Common Share,
whichever is greater; (iv) have the same voting power as one Common Share; and (v) entitle holders to a per share payment equal
to the payment made on one Common Share, if the Common Shares are exchanged via merger, consolidation or a similar transaction.
Flip-In
Trigger. If a person or group of affiliated or associated persons (an “Acquiring Person”) obtains beneficial ownership
of 4.99% or more of the Common Shares, except pursuant to an offer for all outstanding Common Shares that the independent members
of the Board determine to be fair and not inadequate and to otherwise be in the best interests of the Company and our shareholders
after receiving advice from one or more investment banking firms, then each Right will entitle the holder thereof to purchase,
for the Exercise Price, a number of Common Shares (or, in certain circumstances, cash, property or other securities of the Company)
having a then-current market value of twice the Exercise Price. However, the Rights are not exercisable following the occurrence
of the foregoing event until such time as the Rights are no longer redeemable by the Company, as further described below.
Following
the occurrence of an event set forth in preceding paragraph, all Rights that are or, under certain circumstances specified in
the Rights Plan, were beneficially owned by an Acquiring Person or certain of its transferees will be null and void.
Any
person who, together with its affiliates and associates, beneficially owns 4.99% or more of the outstanding Common Shares as of
the time of the first public announcement of the Rights Plan (an “Exempt Person”) shall not be deemed an Acquiring
Person, but only for so long as such person, together with its affiliates and associates, does not become the beneficial owner
of any additional Common Shares while such person is an Exempt Person. A person will cease to be an Exempt Person if such person,
together with such person’s affiliates and associates, becomes the beneficial owner of less than 4.99% of the outstanding
Common Shares.
Flip-Over
Trigger. If, after an Acquiring Person obtains 4.99% or more of the Common Shares, (i) we merge into another entity, (ii)
an acquiring entity merges into the Company or (iii) we sell or transfer more than 50% of our assets, cash flow or earning power,
then each Right (except for Rights that have previously been voided as set forth above) will entitle the holder thereof to purchase,
for the Exercise Price, a number of Common Shares of the person engaging in the transaction having a then-current market value
of twice the Exercise Price.
Redemption
of the Rights. The Rights will be redeemable at our option for $0.001 per Right (payable in cash, Common Shares or other consideration
deemed appropriate by the Board) at any time on or prior to the 10th business day (or such later date as may be determined
by the Board) after the public announcement that an Acquiring Person has acquired beneficial ownership of 4.99% or more of the
Common Shares. Immediately upon the action of the Board ordering redemption, the Rights will terminate and the only right of the
holders of the Rights will be to receive the $0.001 redemption price. The redemption price will be adjusted if we undertake a
stock dividend or a stock split.
Exchange
Provision. At any time after the date on which an Acquiring Person beneficially owns 4.99% or more of the Common Shares and
prior to the acquisition by the Acquiring Person of 50% of the Common Shares, the Board may exchange the Rights (except for Rights
that have previously been voided as set forth above), in whole or in part, for Common Shares at an exchange ratio of one Common
Share per Right (subject to adjustment). In certain circumstances, we may elect to exchange the Rights for cash or other securities
of the Company having a value approximately equal to one Common Share.
Expiration
of the Rights. The Rights expire on the earliest of (i) 5:00 p.m., Eastern time, on February 13, 2017; (ii) the time at which
the Rights are redeemed or exchanged under the Rights Plan; (iii) the repeal of Section 382 or any successor status and the Board’s
determination that the Rights Plan is no longer necessary for preservation of our NOLs; or (iv) the beginning of a taxable year
to which the Board determines that no NOLs may be carried forward.
Amendment
of Terms of Rights Plan and Rights. The terms of the Rights and the Rights Plan may be amended in any respect without the
consent of the holders of the Rights on or prior to the Distribution Date. Thereafter, the terms of the Rights and the Rights
Plan may be amended without the consent of the holders of Rights in order to (i) cure any ambiguities, (ii) shorten or lengthen
any time period pursuant to the Rights Plan or (iii) make changes that do not adversely affect the interests of holders of the
Rights.
Voting
Rights; Other Shareholder Rights. The Rights will not have any voting rights. Until a Right is exercised, the holder thereof,
as such, will have no separate rights as a shareholder of the Company.
Anti-Dilution
Provisions. The Board may adjust the Exercise Price, the number of Preferred Shares issuable and the number of outstanding
Rights to prevent dilution that may occur from a stock dividend, a stock split or a reclassification of the Preferred Shares or
Common Shares. With certain exceptions, no adjustments to the Exercise Price will be made until the cumulative adjustments amount
to at least 1% of the Exercise Price. No fractional Preferred Shares will be issued and, in lieu thereof, an adjustment in cash
will be made based on the current market price of the Preferred Shares.
Taxes.
The distribution of Rights should not be taxable for federal income tax purposes. However, following an event that renders the
Rights exercisable or upon redemption of the Rights, shareholders may recognize taxable income.
Registration
Rights
On
May 9, 2014, we entered into a Registration Rights Agreement, dated as of May 9, 2014, with LSVI, which provides LSVI with certain
demand and piggyback registration rights with respect to the shares of our common stock issuable upon the conversion of an unsecured
convertible promissory note made by the Company in the principal amount of $0.5 million. The convertible promissory note was converted
into 107,297 shares of our common stock in October 2014.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Computershare Inc. Computershare’s address is 250 Royall Street Suite
V, Canton, MA 02021.
Listing
Our
common stock is listed on the NASDAQ Capital Market under the symbol “ATRM.”
Anti-Takeover
Provisions
Provisions
in our Charter and our Bylaws, as well as provisions of the Minnesota Business Corporation Act, may discourage, delay or prevent
a merger, acquisition or other change in control of the Company, even if such a change in control would be beneficial to shareholders.
These provisions include provisions of our Charter restricting any direct or indirect transfers of our common stock that increase
the direct or indirect ownership of our common stock by any person from less than 4.99% to 4.99% or more in order to protect the
tax benefits of our NOLs.
PLAN
OF DISTRIBUTION
We
are distributing rights certificates and copies of this prospectus to those persons who were holders of our common stock on [●],
2015, the record date for the rights offering, promptly following the effective date of the registration statement of which this
prospectus forms a part. We are offering the rights and the shares of common stock underlying the rights directly to you. We have
not employed any brokers, dealers or underwriters in connection with the solicitation or exercise of subscription rights in this
offering and no commissions, fees or discounts will be paid in connection with this offering. Those directors and officers of
the Company who may assist in the rights offering will not register with the SEC as brokers in reliance on certain safe harbor
provisions contained in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Computershare
Inc. is acting as our subscription agent to effect the exercise of the rights and the issuance of the underlying common stock.
Therefore, while certain of our directors and officers may solicit responses from you, those directors and officers will not receive
any commissions or compensation for those services.
We
are distributing and delivering this prospectus by hand or by mail only, and not by electronic delivery. Also, we intend to use
printed prospectuses only, and not any other forms of prospectus.
Delivery
of Shares
As
soon as practicable after the record date for the rights offering, we will distribute the subscription rights and rights certificates
to individuals who owned shares of our common stock at 5:00 p.m., Eastern Time, on [●], 2015.
If
your shares are held in the name of a broker, dealer, custodian bank or other nominee, then you should send your subscription
documents and subscription payment to that record holder. If you are the record holder, then you should send your rights certificate
and other documents, and subscription payment to the address provided below. If sent by mail, we recommend that you send documents
and payments by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed
to ensure delivery to the subscription agent. Do not send or deliver these materials to ATRM.
By
Registered Certified or Express Mail |
Overnight
Courier |
|
|
Computershare
Trust Company, N.A. |
Computershare
Trust Company, N.A. |
c/o
Voluntary Corporate Actions |
c/o
Voluntary Corporate Actions |
P.O.
Box 43011 |
250
Royall Street Suite V |
Providence,
RI 02940 |
Canton,
MA 02021 |
See
“The Rights Offering — Method of Exercising Subscription Rights.” If you have any questions regarding
ATRM or the rights offering, or you have any questions regarding completing a rights certificate or submitting payment in the
rights offering, please contact our information agent, InvestorCom, Inc., by email at info@investor-com.com, by telephone at (203)
972-9300 or toll free at (877) 972-0090, or by mail at 65 Locust Avenue, New Canaan, CT 06840.
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
The
following discussion is a summary of material U.S. federal income tax consequences to U.S. holders (as defined below) of our common
stock of the receipt and ownership of the subscription rights acquired through the rights offering and the ownership and disposition
of shares of common stock received upon exercise of the subscription rights.
This
summary deals only with U.S. holders that acquire subscription rights in the rights offering and assumes that the subscription
rights or shares of common stock issued upon exercise of the subscription rights will be held as capital assets within the meaning
of Section 1221 of the Code. This discussion does not address all aspects of U.S. federal income taxation that may be relevant
to U.S. holders in light of their personal circumstances. This discussion also does not address tax consequences to U.S. holders
that may be subject to special tax rules, including, without limitation, insurance companies, real estate investment trusts, regulated
investment companies, grantor trusts, tax-exempt organizations, employee stock purchase plans, partnerships and other pass-through
entities, persons holding shares of common stock as part of a hedging, integrated, conversion or constructive sale transaction
or a straddle, financial institutions, brokers, dealers in securities or currencies, traders that elect to mark-to-market their
securities, persons that acquired shares of common stock in connection with employment or other performance of services, U.S.
holders that have a functional currency other than the U.S. dollar, U.S. expatriates and foreign holders. In addition, the discussion
does not describe any tax consequences arising out of the tax laws of any state, local or foreign jurisdiction, or any U.S. federal
tax considerations other than income taxation (such as Medicare contribution taxation or estate or gift taxation).
Furthermore,
the discussion below is based upon the provisions of the Code, and regulations, administrative pronouncements and judicial decisions
thereunder, as of the date hereof, and such authorities may be repealed, revoked or modified, perhaps retroactively. We have not
sought, and will not seek, any rulings from the Internal Revenue Service (the “IRS”) regarding the matters discussed
below. There can be no assurance that the IRS or a court will not take positions concerning the tax consequences of the receipt
and ownership of the subscription rights acquired through the rights offering and the ownership of shares of common stock received
upon exercise of the subscription rights that are different from those discussed below.
As
used herein, a “U.S. holder” means a beneficial owner of subscription rights or shares of common stock that is for
U.S. federal income tax purposes:
|
● |
an
individual who is a citizen or resident of the United States; |
|
|
|
|
● |
a
corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under
the laws of the United States or any state thereof or the District of Columbia; |
|
|
|
|
● |
an
estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
|
|
|
|
● |
a
trust (a) the administration of which is subject to the primary supervision of a court within the United States and one or
more U.S. persons as described in the Code have authority to control all substantial decisions of the trust, or (b) that has
a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
If
any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes is a beneficial owner of subscription
rights or shares of common stock, the U.S. federal income tax treatment of a partner will generally depend upon the status of
the partner and the activities of the partnership. U.S. holders that are partnerships (and partners in such partnerships) are
urged to consult their own tax advisors.
U.S.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR
SITUATIONS AND THE CONSEQUENCES UNDER FEDERAL ESTATE AND GIFT TAX LAWS, FOREIGN, STATE, AND LOCAL LAWS AND TAX TREATIES OF RECEIVING,
OWNING AND EXERCISING SUBSCRIPTION RIGHTS AND ACQUIRING, HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.
Taxation
of Subscription Rights
Receipt
of Subscription Rights. Although the authorities governing the rights offering are complex and do not speak directly to the
consequences of certain aspects of the rights offering, we believe your receipt of subscription rights pursuant to the rights
offering with respect to your shares of our common stock should be treated as a nontaxable distribution with respect to such shares
of our common stock for U.S. federal income tax purposes. Under Section 305(a) of the Code, a corporation’s distribution
of stock rights to shareholders is generally tax-free. Section 305(b) of the Code, however, provides certain instances where a
distribution of stock rights is taxable to shareholders. One such instance is a “disproportionate distribution” in
which a distribution or a series of distributions, including deemed distributions, has the result of (1) the receipt of cash or
non-stock property by some shareholders or holders of debt instruments convertible into stock, and (2) an increase in the proportionate
interest of other shareholders in the assets or earnings and profits of the corporation. During the last 36 months, we have not
made any distributions of cash or non-stock property with respect to our common stock. Within the last 36 months, we did, however,
make payment in cash of the accrued interest on certain previously outstanding convertible notes. Currently we do not have any
convertible debt outstanding, nor do we currently intend to issue any convertible debt or pay any dividends on our common stock
(other than the issuance of the subscription rights in connection with this offering), but there is no guarantee that we will
not do so. While the application of this rule is very complex and subject to uncertainty, we believe that the distribution of
the subscription rights hereunder does not result in an increase to any shareholder’s proportionate interest in our earnings
and profits or assets. Accordingly, we believe that pursuant to Section 305 of the Code and the Treasury regulations promulgated
thereunder, the receipt of subscription rights with respect to shares of our common stock should generally not be taxable to our
common shareholders.
Our
position regarding the tax-free treatment of the subscription rights distribution is not binding on the IRS, or the courts. If
this position is finally determined by the IRS or a court to be incorrect, whether on the basis that the issuance of the subscription
rights is a “disproportionate distribution” or otherwise, the fair market value of the subscription rights would be
taxable to holders of our common stock as a dividend to the extent of the holder’s pro rata share of our current and accumulated
earnings and profits, if any. Any excess would be treated first as a tax-free return of capital to the extent of your adjusted
basis in your shares of our common stock and then as capital gain from the sale or exchange of your shares of our common stock.
Although no assurance can be given, it is anticipated that we will not have current or accumulated earnings and profits through
the end of 2015.
The
discussion below assumes that the receipt of subscription rights with respect to your shares of our common stock will be treated
as a nontaxable distribution.
Tax
Basis and Holding Period of Subscription Rights. Your tax basis of the subscription rights you receive with respect to your
shares of commons stock for U.S. federal income tax purposes will depend on the fair market value of the subscription rights you
receive and the fair market value of your existing shares of common stock on the date you receive the subscription rights.
If
the fair market value of the subscription rights you receive is less than 15% of the fair market value of your existing shares
of common stock on the date you receive the subscription rights, the subscription rights will be allocated a zero basis for U.S.
federal income tax purposes, unless you elect to allocate your basis in your existing shares of common stock between your existing
shares of common stock and the subscription rights in proportion to the relative fair market values of the existing shares of
common stock and the subscription rights determined on the date of receipt of the subscription rights. If you choose to allocate
basis between your existing shares of common stock and the subscription rights, you must make this election on a statement included
with your timely filed tax return (including extensions) for the taxable year in which you receive the subscription rights. Such
an election is irrevocable.
However,
if the fair market value of the subscription rights you receive is 15% or more of the fair market value of your existing shares
of common stock on the date you receive the subscription rights, then you must allocate your basis in your existing shares of
common stock between your existing shares of common stock and the subscription rights you receive in proportion to their fair
market values determined on the date you receive the subscription rights.
The
fair market value of the subscription rights on the date that the subscription rights are distributed is uncertain, and we have
not obtained, and do not intend to obtain, an appraisal of the fair market value of the subscription rights on that date. In determining
the fair market value of the subscription rights, you should consider all relevant facts and circumstances, including any difference
between the subscription price of the subscription rights and the trading price of our shares of common stock on the date that
the subscription rights are distributed, the length of the period during which the subscription rights may be exercised and the
fact that the subscription rights are non-transferable.
Your
holding period of the subscription rights will include your holding period of the shares of common stock with respect to which
the subscription rights were distributed.
Exercise
of Subscription Rights. You generally will not recognize gain or loss on the exercise of a subscription right received with
respect to your shares of common stock.
Your
tax basis in a share of common stock acquired through exercise of a subscription right will equal the sum of (1) the subscription
price and (2) your tax basis, if any, in the subscription right as determined above.
The
holding period of a share of common stock acquired through exercise of a subscription right will begin on the date the subscription
right is exercised.
If
you exercise a subscription right received in the rights offering after disposing of the common stock with respect to which such
subscription right is received, then certain aspects of the tax treatment of the exercise of the subscription right are unclear,
including (1) the allocation of tax basis between the common stock previously sold and the subscription right, (2) the impact
of such allocation on the amount and timing of gain or loss recognized with respect to the common stock previously sold, and (3)
the impact of such allocation on the tax basis of common stock acquired through exercise of the subscription right. If you exercise
a subscription right received in the rights offering after disposing of the common stock with respect to which the subscription
right is received, you should consult with your tax advisor.
Expiration
of Subscription Rights. If you allow subscription rights received in the rights offering with respect to your shares of common
stock to expire, you should not recognize any gain or loss for U.S. federal income tax purposes and any portion of the tax basis
in your existing shares of common stock previously allocated to the subscription rights that have expired will be reallocated
to the existing shares of common stock.
Taxation
of Shares of Common Stock
Distributions.
Distributions with respect to shares of common stock acquired upon exercise of subscription rights will be taxable as dividend
income when actually or constructively received to the extent of our current or accumulated earnings and profits as determined
for U.S. federal income tax purposes. To the extent that the amount of a distribution exceeds our current and accumulated earnings
and profits, such distribution will be treated first as a tax-free return of capital to the extent of your adjusted tax basis
in such shares of common stock and thereafter as capital gain.
Dispositions.
If you sell or otherwise dispose of shares of common stock acquired upon exercise of subscription rights, you will generally recognize
capital gain or loss equal to the difference between the amount realized and your adjusted tax basis in the shares of common stock.
Such capital gain or loss will be long-term capital gain or loss if your holding period for the shares of common stock is more
than one year. Long-term capital gain of an individual, estate or trust is generally taxed at favorable rates. The deductibility
of capital losses is subject to limitations.
Additional
Withholding Tax. Sections 1471 through 1474 of the Code (provisions commonly referred to as “FATCA”) generally
impose an additional withholding tax on certain types of payments made to “foreign financial institutions” and certain
other non-U.S. entities. Specifically, a 30% withholding tax will be imposed on dividends on, or gross proceeds from the sale
or other disposition of, shares of common stock paid to a foreign financial institution or to a non-financial foreign entity,
unless (i) the foreign financial institution undertakes certain diligence and reporting obligations, (ii) the non-financial foreign
entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial
U.S. owner, or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from
these rules. If the payee is a foreign financial institution, and is subject to the diligence and reporting requirements in clause
(i) above, it must enter into an agreement with the U.S. Treasury requiring, among other things, that it undertake to identify
accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts,
and withhold 30% on payments to account holders whose actions prevent it from complying with these reporting and other requirements.
Current IRS guidance delays the implementation of withholding under FATCA with respect to payments of gross proceeds from a sale
or other disposition of shares of common stock until after December 31, 2016.
Information
Reporting and Backup Withholding
You
may be subject to information reporting and/or backup withholding with respect to dividend payments on or the gross proceeds from
the disposition of our shares of common stock acquired through the exercise of subscription rights. Backup withholding may apply
under certain circumstances if you (i) fail to furnish your social security or other taxpayer identification number (“TIN”),
(ii) furnish an incorrect TIN, (iii) fail to report interest or dividends properly, or (iv) fail to provide a certified statement,
signed under penalty of perjury, that the TIN provided is correct, that you are not subject to backup withholding and that you
are a U.S. person. Any amount withheld from a payment under the backup withholding rules is allowable as a credit against (and
may entitle you to a refund with respect to) your U.S. federal income tax liability, provided that the required information is
timely furnished to the IRS. Certain persons are exempt from backup withholding, including corporations and financial institutions.
You are urged to consult your own tax advisor as to your qualification for exemption from backup withholding and the procedure
for obtaining such exemption.
THE
PRECEDING DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS NOT TAX ADVICE. EACH U.S. HOLDER SHOULD CONSULT ITS OWN
TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF RECEIVING, OWNING AND EXERCISING
SUBSCRIPTION RIGHTS AND ACQUIRING, HOLDING AND DISPOSING OF SHARES OF COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED
CHANGE IN APPLICABLE LAWS.
LEGAL
MATTERS
The
validity of the shares of common stock issuable upon exercise of the rights and offered by this prospectus will be passed upon
for us by Stinson Leonard Street LLP.
EXPERTS
Our
consolidated financial statements as of December 31, 2014 and for the year then ended, included in our 2014 Form 10-K incorporated
by reference in this prospectus and elsewhere in the registration statement, have been so incorporated by reference in reliance
on the report of Boulay PLLP, independent registered public accounting firm, given on the authority of said firm as experts in
accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
are subject to the information requirements of the Exchange Act, which means that we are required to file annual, quarterly and
current reports, proxy statements and other information with the SEC, all of which are available at the Public Reference Room
of the SEC at 100 F Street, NE, Washington, D.C. 20549. You may also obtain copies of the reports, proxy statements and other
information from the Public Reference Room of the SEC, at prescribed rates, by calling 1-800-SEC-0330. The SEC maintains an Internet
website at www.sec.gov where you can access reports, proxy information and registration statements, and other information regarding
us that we file electronically with the SEC. In addition, we make available, without charge, through our website, www.atrmholdings.com,
electronic copies of our filings with the SEC, including copies of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and amendments to these filings, if any. Information on our website should not be considered a part
of this prospectus, and we do not intend to incorporate into this prospectus any information contained in our website.
INFORMATION
INCORPORATED BY REFERENCE
The
following documents filed by ATRM Holdings, Inc. with the SEC are incorporated by reference in this prospectus:
|
1. |
our
Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on May 12, 2015; |
|
|
|
|
2. |
our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed with SEC on May 20, 2015; and |
|
|
|
|
3. |
our
Current Reports on Form 8-K filed with the SEC on February 27, 2015, April 9, 2015 (amendment to report filed April 4, 2014),
April 10, 2015, April 17, 2015, May 26, 2015, and June 5, 2015. |
Any
statement contained in a document that is incorporated by reference will be modified or superseded for all purposes to the extent
that a statement contained in this prospectus modifies or is contrary to that previous statement. Any statement so modified or
superseded will not be deemed a part of this prospectus except as so modified or superseded.
You
may request a copy of any of these filings at no cost, by writing or telephoning us at the following address or telephone number:
ATRM
Holdings, Inc.
3050 Echo Lake Ave., Suite 300
Mahtomedi, Minnesota 55115
(651) 704-1800
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth the fees and expenses payable by us in connection with the sale of the securities being registered
hereunder, all of which will be borne by us. With the exception of the SEC registration fee, all amounts shown are estimates.
SEC registration fee | |
$ | 581 | |
Subscription agent fees and expenses | |
$ | * | |
Information agent fees and expenses | |
$ | * | |
Legal fees and expenses | |
$ | * | |
Accounting fees and expenses | |
$ | * | |
Printing expenses | |
$ | * | |
Miscellaneous | |
$ | * | |
Total | |
$ | * | |
* To be provided by amendment. | |
| | |
Item
14. Indemnification of Directors and Officers.
Article
10 of our Charter provides:
The
Corporation shall indemnify to the fullest extent authorized or permitted by law (as now or hereafter in effect) any person made
or threatened to be made a party to or witness in any threatened, pending, or completed civil, criminal, administrative, arbitration,
or investigative proceeding, including a proceeding by or in the right of the Corporation, by reason of the fact that he, his
testator or intestate is or was a director, officer or employee of the Corporation, or by reason of the fact that such director,
officer or employee, while a director, officer or employee of the Corporation, is or was serving at the request of the Corporation,
or whose duties as a director, officer or employee involve or involved service, as a director, officer, partner, trustee or agent
of another organization or employee benefit plan, against all judgments, penalties, fines, including, without limitation, excise
taxes assessed against the person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorneys’
fees and disbursements. The Corporation may but shall not be required to indemnify agents of the Corporation other than directors,
officers and employees to the fullest extent permitted by law as determined by the Board of Directors from time to time. Any repeal
or modification of this Article 10 shall be prospective only, and shall not adversely affect any right to indemnification or protection
of a director, officer or employee of the Corporation existing at the time of such repeal or modification.
Article
11 of our Charter provides:
No
director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for breach
of fiduciary duty by such director as a director; provided however, that this Article 11 shall not eliminate or limit the liability
of a director to the extent provided by applicable law (i) for any breach of the director’s duty of loyalty to the Corporation
or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation
of law, (iii) based upon the payment of an improper dividend or an improper acquisition of the Corporation’s share under
Section 302A.559 of the Act or upon violations of the state securities laws under Section 80A.23 of the Minnesota Statues, or
(iv) for any transaction from which the director derived an improper personal benefit. If the Act is amended after approval by
the shareholders of this Article to authorize corporate action further eliminating or limiting the personal liability of directors,
then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall
be eliminated or limited to the fullest extent permitted by the Act, as so amended. Any repeal or modification of this Article
by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
The
directors and officers of the Company are covered by insurance policies indemnifying them against certain liabilities arising
under the Securities Act of 1933, as amended (the “Securities Act”), that might be incurred by them in such capacities.
Item
15. Recent Sales of Unregistered Securities.
During
the three years preceding the filing of this registration statement, we have issued the following securities that were not registered
under the Securities Act:
On
April 1, 2014, we entered into a securities purchase agreement with LSVI pursuant to which LSVI purchased for $6.5 million in
cash an unsecured promissory note made by us in the principal amount of $6.0 million (the “April 2014 LSVI Promissory Note”)
and an unsecured convertible promissory note made by us in the principal amount of $0.5 million (the “LSVI Convertible Promissory
Note”), convertible into shares of our common stock at a conversion price of $4.66 per share. The April 2014 LSVI Promissory
Note bears interest at 10.0% per annum, with interest payable semiannually and any unpaid principal and interest due on April
1, 2019. We may prepay the April 2014 LSVI Promissory Note at any time after a specified amount of advance notice to LSVI. On
October 7, 2014, the LSVI Convertible Promissory Note was converted into 107,297 shares of our common stock. On December 30, 2014,
we repaid $1.0 million principal amount under the April 2014 LSVI Promissory Note.
On
July 21, 2014, we entered into entered into a securities purchase agreement with LSV Co-Invest I pursuant to which it purchased
for $2.5 million in cash an unsecured promissory note made by us in the principal amount of $2.5 million. Except for the principal
amount, the terms of this promissory note are identical to the terms of the April 2014 LSVI Promissory Note.
On
September 19, 2014, we entered into entered into a securities purchase agreement with LSV Co-Invest I pursuant to which it purchased
for $2.0 million in cash an unsecured promissory note made by us in the principal amount of $2.0 million. Except for the principal
amount, the term of this promissory note are identical to the terms of the April 2014 LSVI Promissory Note.
On
February 25, 2015, we entered into a securities purchase agreement with LSVI pursuant to which it purchased for $1.0 million in
cash an unsecured promissory note made by us in the principal amount of $1.0 million. Except for the principal amount, the term
of this promissory note are identical to the terms of the April 2014 LSVI Promissory Note.
The
offers and sales of securities described above were made in reliance upon an exemption from registration requirements pursuant
to Section 4(a)(2) under the Securities Act, based upon representations made to us by the purchasers thereof.
Item
16. Exhibits.
The
exhibits listed in the accompanying Exhibit Index are filed (except where otherwise indicated) as part of this registration statement.
Item
17. Undertakings.
The
undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or
other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned
registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(c)
The undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period, to
set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount
of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public
offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective
amendment will be filed to set forth the terms of such offering.
(h)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
(i)
The undersigned hereby undertakes that:
(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement
as of the time it was declared effective.
(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City of Mahtomedi, on June 22, 2015.
|
ATRM
HOLDINGS, INC. |
|
|
|
|
By: |
/s/
Daniel M. Koch |
|
|
Daniel
M. Koch |
|
|
President
and Chief Executive Officer |
|
|
(Principal
Executive Officer) |
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Jeffrey E. Eberwein
and Daniel M. Koch, or each of them individually, his or her true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his or her name, place and stead, in any and all capacities, to sign any and all amendments
to this registration statement, and any additional related registration statement filed pursuant to Rule 462(b) under the Securities
Act of 1933, as amended (including post-effective amendments to the registration statement and any such related registration statements),
and to file the same, with all exhibits thereto, and any other documents in connection therewith, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Daniel M. Koch |
|
President,
Chief Executive Officer and Director |
|
June
22, 2015 |
Daniel M. Koch |
|
(Principal
Executive Officer) |
|
|
|
|
|
|
|
/s/
Paul H. Askegaard |
|
Chief
Financial Officer, Treasurer, Secretary and Director |
|
June
22, 2015 |
Paul H. Askegaard |
|
(Principal
Financial Officer) |
|
|
|
|
|
|
|
/s/
Jeffrey E. Eberwein |
|
Chairman
of the Board |
|
June
22, 2015 |
Jeffrey E. Eberwein |
|
|
|
|
|
|
|
|
|
/s/
Morgan P. Hanlon |
|
Director |
|
June
22, 2015 |
Morgan P. Hanlon |
|
|
|
|
|
|
|
|
|
/s/
Alfred John Knapp, Jr. |
|
Director |
|
June
22, 2015 |
Alfred John Knapp,
Jr. |
|
|
|
|
|
|
|
|
|
/s/
Galen Vetter |
|
Director |
|
June
22, 2015 |
Galen Vetter |
|
|
|
|
EXHIBIT
INDEX
Exhibit
No. |
|
Description |
|
|
|
2.1 |
|
Asset
Purchase Agreement, dated as of December 28, 2006, by and between WEB Technology, Inc. and ATRM Holdings, Inc. (f/k/a Aetrium
Incorporated) (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on January 5,
2007). |
|
|
|
2.2 |
|
Asset
Purchase Agreement, dated as of July 31, 2013, by and among ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) and Cascade Microtech,
Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on August 1, 2013). |
|
|
|
2.3 |
|
Asset
Purchase Agreement, dated as of April 2, 2014, by and among ATRM Holdings, Inc. (f/k/a Aetrium Incorporated), KBS Builders,
Inc., KBS Building Systems, Inc., Maine Modular Haulers, LLC, All-Set, LLC (d/b/a KBS Homes), Paris Holdings, LLC, and Robert
H. Farnham, Jr. (incorporated by reference to Exhibit 2.1 to our Quarterly Report on Form 10-Q filed with the SEC on May 14,
2014). |
|
|
|
2.4+ |
|
Agreement,
dated as of April 22, 2014, among ATRM Holdings, Inc. (f/k/a Aetrium Incorporated), Boston Semi Automation LLC and Boston
Semi Equipment LLC (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on April
25, 2014). |
|
|
|
3.1 |
|
Amended
and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with
the SEC on December 8, 2014). |
|
|
|
3.2 |
|
Bylaws,
as amended (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on October 22, 2009). |
|
|
|
3.3 |
|
Bylaw
amendments effective November 20, 2012 (incorporated by reference to Exhibit 3.4 to our Annual Report on Form 10-K filed with
the SEC on March 26, 2013). |
|
|
|
3.4 |
|
Bylaw
amendment effective January 31, 2013 (incorporated by reference to Exhibit 3.5 to our Annual Report on Form 10-K filed with
the SEC on March 26, 2013). |
|
|
|
3.5 |
|
Certificate
of Designation of Series A Junior Participating Preferred Stock of ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) (incorporated
by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on February 14, 2014). |
|
|
|
4.1 |
|
Specimen
Form of our Common Stock Certificate (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form SB-2). |
|
|
|
4.2 |
|
Tax
Benefit Preservation Plan, dated as of February 13, 2014, by and between ATRM Holdings, Inc. (f/k/a Aetrium Incorporated)
and Computershare Trust Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 to our Current Report on
Form 8-K filed with the SEC on February 14, 2014). |
|
|
|
4.3 |
|
Promissory
Note, dated April 1, 2014 (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed with the SEC
on May 14, 2014). |
4.4 |
|
Promissory
Note, dated July 21, 2014 (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on
July 25, 2014). |
|
|
|
4.5 |
|
Promissory
Note, dated September 19, 2014 (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the
SEC on September 22, 2014). |
|
|
|
4.6 |
|
Promissory
Note, dated February 25, 2015 (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC
on February 27, 2015). |
|
|
|
4.7* |
|
Form
of Subscription Rights Certificate. |
|
|
|
5.1** |
|
Opinion
of Stinson Leonard Street LLP. |
|
|
|
10.1† |
|
2003
Stock Incentive Plan (incorporated by reference to Exhibit 10.18 to our Annual Report on Form 10-K filed with the SEC on March
28, 2003). |
|
|
|
10.2† |
|
2014
Incentive Plan (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-8 filed with the SEC on June
3, 2015). |
|
|
|
10.3† |
|
Form
of Non-Statutory Stock Option Agreement (incorporated by reference to Exhibit 10.3 to our Annual Report on Form 10-K filed
with the SEC on March 30, 2011). |
|
|
|
10.4† |
|
Form
of Change of Control Agreement (incorporated by reference to Exhibit 10.19 to our Annual Report on Form 10-K filed with the
SEC on March 30, 2004). |
|
|
|
10.5† |
|
Form
of Amendments to Change of Control Agreement (incorporated by reference to Exhibit 10.18 to our Annual Report on Form 10-K
filed with the SEC on March 31, 2008). |
|
|
|
10.6† |
|
Executive
Officer Profit Sharing Program (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the
SEC on January 23, 2007). |
|
|
|
10.7† |
|
Letter
Agreement with Joseph C. Levesque, dated November 30, 2011 (incorporated by reference to Exhibit 10.1 to our Current Report
on Form 8-K filed with the SEC on December 2, 2011). |
|
|
|
10.8† |
|
Letter
Agreement with Joseph C. Levesque, dated August 27, 2012, amending the Letter Agreement, dated November 30, 2011 (incorporated
by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on August 28, 2012). |
|
|
|
10.9† |
|
Letter
Agreement with Douglas L. Hemer, dated November 17, 2010 (incorporated by reference to Exhibit 10.2 to our Current Report
on Form 8-K filed with the SEC on November 19, 2010). |
|
|
|
10.10† |
|
Letter
Agreement with Douglas L. Hemer, dated August 27, 2012, amending the Letter Agreement dated November 17, 2010 (incorporated
by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on August 28, 2012). |
|
|
|
10.11† |
|
Form
of Amendment to Change of Control Agreement (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed
with the SEC on February 6, 2013). |
10.12 |
|
Commercial
Lease, dated August 20, 2010, by and between Triple Shot, LLC and ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) (incorporated
by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the SEC on November 5, 2010). |
|
|
|
10.13 |
|
Settlement
Agreement and Mutual Release, effective as of January 31, 2013, by and among Concerned Aetrium Shareholders, the Incumbent
Directors and ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) (incorporated by reference to Exhibit 10.1 to our Current Report
on Form 8-K filed with the SEC on February 6, 2013). |
|
|
|
10.14 |
|
First
Amendment to The Settlement Agreement and Mutual Release, effective as of March 13, 2013, by and among Concerned Aetrium Shareholders,
the Incumbent Directors and ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) (incorporated by reference to Exhibit 10.1 to
our Current Report on Form 8-K filed with the SEC on March 18, 2013). |
|
|
|
10.15 |
|
Registration
Rights Agreement, dated as of May 9, 2014, by and between ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) and Lone Star Value
Investors, LP (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on May 15, 2014). |
|
|
|
10.16 |
|
Securities
Purchase Agreement, dated as of April 1, 2014, by and between ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) and Lone Star
Value Investors, LP (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the SEC on
May 14, 2014). |
|
|
|
10.17 |
|
Securities
Purchase Agreement, dated as of July 21, 2014, by and between ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) and Lone Star
Value Co-Invest I, LP (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July
25, 2014). |
|
|
|
10.18 |
|
Securities
Purchase Agreement, dated as of September 19, 2014, by and between ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) and Lone
Star Value Co-Invest I, LP (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC
on September 22, 2014). |
|
|
|
10.19 |
|
Securities
Purchase Agreement, dated as of February 25, 2015, by and between ATRM Holdings, Inc. (f/k/a Aetrium Incorporated) and Lone
Star Value Investors, LP (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on
February 27, 2015). |
|
|
|
21.1 |
|
Subsidiaries
of the Company (incorporated by reference to Exhibit 21.1 to our Annual Report on Form 10-K filed with the SEC on May 12,
2015). |
|
|
|
23.1* |
|
Consent
of Boulay PLLP. |
|
|
|
23.2** |
|
Consent
of Stinson Leonard Street LLP (contained in Exhibit 5.1). |
|
|
|
24.1* |
|
Power
of Attorney (included on the signature page hereof). |
|
|
|
99.1* |
|
Form
of Instructions for Use of Subscription Rights Certificates. |
99.2* |
|
Form
of Letter to Shareholders. |
|
|
|
99.3* |
|
Form
of Letter to Beneficial Holders. |
|
|
|
99.4* |
|
Form
of Letter to Clients. |
|
|
|
99.5* |
|
Form
of Nominee Holder Certification Form. |
|
|
|
99.6* |
|
Beneficial
Holder Election Form. |
|
|
|
99.7* |
|
Form
of Notice of Guaranteed Delivery. |
|
|
|
99.8* |
|
Form
of Notice of Important Tax Information. |
* |
Filed
herewith. |
** |
To
be filed by amendment. |
† |
Management
contract or a compensatory plan or arrangement. |
+ |
Filed
with confidential portions omitted pursuant to a request for confidential treatment. The omitted portions have been separately
filed with the SEC. |
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in this Registration Statement on Form S-1 of our report dated May 12, 2015 relating
to the consolidated financial statements of ATRM Holdings, Inc. that appears in the Annual Report on Form 10-K as of and for the
years ended December 31, 2014 and 2013.
We
also consent to the reference to us under the caption “Experts” in the registration statement.
/s/ Boulay PLLP |
|
|
|
Minneapolis, Minnesota |
|
June 22, 2015 |
|
Exhibit
99.1
FORM
OF INSTRUCTIONS FOR USE OF
SUBSCRIPTION RIGHTS CERTIFICATE
ATRM
HOLDINGS, INC.
PLEASE
DIRECT ANY QUESTIONS OR REQUESTS FOR ASSISTANCE TO
INVESTORCOM, INC., THE COMPANY’S INFORMATION AGENT,
BY EMAIL AT info@investor-com.com, BY
TELEPHONE AT (877) 972-0090 OR
BY MAIL AT INVESTORCOM, INC., 65 LOCUST AVENUE, NEW CANAAN, CT 06840
The
following instructions relate to the distribution by ATRM Holdings, Inc. (the “Company”), to all holders of
record (the “Record Holders”) of common stock, par value $0.001 per share (the “Common Stock”)
of the Company, as of 5:00 p.m., Eastern Time, on [●], 2015 (the “Record Date”), in a rights offering
(the “Rights Offering”), at no charge, of non-transferable subscription rights (the “Rights”)
to subscribe for and purchase shares of Common Stock at a subscription price of $[●] per share (the “Subscription
Price”), as described in the Company’s Prospectus, dated [●], 2015 (the “Prospectus”).
In the Rights Offering, up to an aggregate of [●] shares of Common Stock are being offered pursuant to the Prospectus. Each
Record Holder will receive one Right for each share of Common Stock owned of record as of 5:00 p.m., Eastern Time, on the Record
Date.
The
Rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [●], 2015, unless extended by the Company (the
“Expiration Date”). Any Rights that are not exercised prior to 5:00 p.m., Eastern Time, on the Expiration Date
expire, have no value and cease to be exercisable for shares of Common Stock. The Company will not be obligated to honor any
purported exercise of Rights received by Computershare Inc., the subscription agent for the Rights Offering (the “Subscription
Agent”), after 5:00 p.m., Eastern Time, on the Expiration Date.
The
Rights held by each Record Holder are evidenced by subscription rights certificates (the “Subscription Rights Certificates”).
The Rights are non-transferable, meaning that they may not be sold, transferred, or assigned to anyone else.
Each
Right gives the holder thereof the right to purchase from the Company [●] shares of Common Stock (the “Basic Subscription
Right”) at the Subscription Price of $[●] per share, subject to the NOL Protection Mechanics (as defined in the
Prospectus). The Company will not issue fractional shares or cash in lieu of fractional shares in the Rights Offering. Instead,
fractional shares resulting from the exercise of Basic Subscription Rights will be eliminated by rounding down to the nearest
whole share.
In
addition, holders of Rights who purchase all of the shares of Common Stock available to them pursuant to their Basic Subscription
Right may also choose to subscribe (the “Over-Subscription Privilege”), at the same Subscription Price of $[●]
per share, for a portion of any shares of Common Stock that other holders of Rights do not purchase through the exercise of their
Basic Subscription Rights (the “Over-Subscription Shares”). If a sufficient number of Over-Subscription Shares
are available, the Company will seek to honor all over-subscription requests in full, subject to the NOL Protection Mechanics.
If, however, an insufficient number of Over-Subscription Shares are available to fully satisfy all Over-Subscription Privilege
requests, the available shares will be distributed proportionately among the holders of Rights who exercise their Over-Subscription
Privilege based on the number of shares each Rights holder subscribed for under their Basic Subscription Right. The Company will
not issue fractional shares through the exercise of the Over-Subscription Privilege. Instead, fractional shares resulting from
the exercise of the Over-Subscription Privilege will be eliminated by rounding down to the nearest whole share.
Also,
the Company has NOL Protection Mechanics in place to preserve its ability to utilize its net operating loss carryforwards (“NOLs”),
including the ability to limit the amount of shares that certain shareholders may over-subscribe for. Shareholders who currently
own, directly or indirectly, 62,199 shares or more of Common Stock or would potentially increase their direct or indirect holdings
of Common Stock from fewer than 62,199 shares to an amount equal to or greater than 62,199 shares by virtue of the exercise of
their Basic Subscription Right and/or Over-Subscription Privilege in the Rights Offering, may not be able to subscribe or over-subscribe
to the extent otherwise allowable. If you currently own, directly or indirectly, 62,199 shares or more of Common Stock, or would
potentially increase your direct or indirect holdings of Common Stock from fewer than 62,199 shares to an amount equal to or greater
than 62,199 shares but would like to participate in the Rights Offering, please contact the Company’s information agent,
InvestorCom, Inc., to discuss your level of subscription, by email at info@investor-com.com, by telephone at (877) 972-0090 (toll
free) or by mail at InvestorCom, Inc., 65 Locust Avenue, New Canaan, CT 06840. The Company will only permit such shareholders
to participate in this Rights Offering up to such amounts as will not jeopardize its NOLs. The Company will reduce the amount
of a subscription or an over-subscription exercise by the amount necessary to preserve its ability to utilize its NOLs. See “The
Rights Offering — NOL Protection Mechanics” in the Prospectus.
Do
not send the Subscription Rights Certificate or payment to the Company. If you wish to participate in the Rights Offering,
the Subscription Agent must receive your properly completed and duly executed Subscription Rights Certificate, with full payment
of the aggregate Subscription Price for all of the shares for which you have subscribed, before 5:00 p.m., Eastern Time, on the
Expiration Date. Once you submit the Subscription Rights Certificate, you are not allowed to revoke or change your exercise or
request a refund of monies paid. If you do not exercise your Rights before the Expiration Date, then they will expire, have no
value and cease to be exercisable for shares of Common Stock.
The
number of shares of Common Stock you may purchase pursuant to your Basic Subscription Right is indicated on the Subscription Rights
Certificate. You should indicate your wishes with regard to the exercise of your Rights by completing the appropriate portions
of your Subscription Rights Certificate and returning it, in the envelope provided, together with full payment of the aggregate
Subscription Price, to the Subscription Agent pursuant to the procedures described in the Prospectus.
THE
COMPLETED AND EXECUTED SUBSCRIPTION RIGHTS CERTIFICATE AND FULL PAYMENT OF THE AGGREGATE SUBSCRIPTION PRICE FOR ALL OF THE SHARES
FOR WHICH YOU HAVE SUBSCRIBED PURSUANT TO THE BASIC SUBSCRIPTION RIGHT AND THE OVER-SUBSCRIPTION PRIVILEGE, INCLUDING FINAL CLEARANCE
OF ANY UNCERTIFIED PERSONAL CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 P.M., EASTERN TIME, ON [●], 2015,
THE EXPIRATION DATE. ONCE A RECORD HOLDER HAS EXERCISED ANY RIGHTS, SUCH EXERCISE MAY NOT BE REVOKED. RIGHTS THAT ARE NOT EXERCISED
PRIOR TO 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE WILL EXPIRE, HAVE NO VALUE AND CEASE TO BE EXERCISABLE FOR SHARES OF
COMMON STOCK.
1.
Method of Subscription—Exercise of Rights.
To
exercise your Rights, you must properly complete and duly execute your Subscription Rights Certificate and forward it, together
with payment in full of the aggregate Subscription Price for all of the shares for which you have subscribed pursuant to the Basic
Subscription Right and the Over-Subscription Privilege, to the Subscription Agent, to be received before 5:00 p.m., Eastern Time,
on the Expiration Date. The Subscription Agent will hold funds received in payment for shares of Common Stock in escrow in a segregated
bank account pending completion of the Rights Offering.
Your
payment of the aggregate Subscription Price must be made in U.S. dollars for all of the shares of Common Stock for which you have
subscribed in the Rights Offering by cashier’s or certified check drawn upon a United States Bank, or a personal check,
payable to the Subscription Agent at the address set forth below, or a wire transfer directly to the Subscription Agent as set
forth below. In order for your Rights to be properly and timely exercised, payment in full for the aggregate Subscription Price
for all of the shares for which you have subscribed in the Rights Offering, including final clearance of any uncertified personal
checks, must be received by the Subscription Agent before 5:00 p.m., Eastern Time, on the Expiration Date. If you intend to pay
by uncertified personal check, please be aware that funds paid in this manner may take at least five (5) business days to clear.
We urge you to consider using a cashier’s or certified check as we will not be responsible for any delays in processing
personal checks, even if such delays result in your Rights not being exercised prior to 5:00 p.m., Eastern Time, on the Expiration
Date.
Payments
received after 5:00 p.m., Eastern Time, on the Expiration Date will not be honored, and the Subscription Agent will return such
payments to you, without interest or penalty, as soon as practicable. If you elect to exercise your Rights, you should ensure
that the Subscription Agent receives your funds by the Expiration Date. The risk of delivery of all documents and payments is
borne by you, not by the Subscription Agent or the Company.
The
completed Subscription Rights Certificate and full payment of the aggregate Subscription Price, by cashier’s, certified
or personal check or wire transfer, must be delivered to the Subscription Agent by one of the methods described below:
By
Registered Certified or Express Mail |
|
By
Overnight Courier |
|
|
|
Computershare
Trust Company, N.A.
c/o
Voluntary Corporate Actions
P.O.
Box 43011
Providence,
RI 02940 |
|
Computershare
Trust Company, N.A.
c/o
Voluntary Corporate Actions
250
Royall Street Suite V
Canton,
MA 02021 |
|
|
|
|
|
By
Wire Transfer |
|
|
|
|
|
[●] |
The
Company may not honor the exercise of your Rights if you deliver the Subscription Rights Certificates, subscription documents
or payment of the aggregate Subscription Price in a manner or method different than those set forth above.
You
should direct any questions or requests for assistance concerning the subscription documents, the exercise of Rights or the method
of subscribing for shares of Common Stock and any requests for additional copies of the Prospectus to the Company’s information
agent, InvestorCom, Inc., by email at info@investor-com.com, by telephone at (877) 972-0090 (toll free) or by mail at InvestorCom,
Inc., 65 Locust Avenue, New Canaan, CT 06840.
If
you hold your shares of Common Stock in the name of a custodian bank, broker, dealer or other nominee, the nominee will exercise
the Rights on your behalf in accordance with your instructions.
Banks,
brokers, and other nominee holders of Rights who exercise the Basic Subscription Right and the Over-Subscription Privilege on
behalf of beneficial owners of Rights will be required to certify to the Subscription Agent and the Company, with respect to each
such beneficial owner, as to (i) the number of Rights held, (ii) the aggregate number of Rights that have been exercised, (iii)
the number of shares of Common Stock that are being subscribed for pursuant to the Basic Subscription Right, (iv) whether the
Basic Subscription Rights of such beneficial owner have been exercised in full, and (v) the number of shares of Common Stock,
if any, being subscribed for pursuant to the Over-Subscription Privilege by such beneficial owner.
If
you or your nominee submit a subscription payment that is insufficient to purchase the total number of shares of Common Stock
for which you subscribed, or if the number of shares you requested is not specified in the subscription documents, the payment
received will be applied to exercise your Rights to the fullest extent possible based on the amount of the payment received, subject
to the availability of shares under the Over-Subscription Privilege, if applicable, the elimination of fractional shares and the
NOL Protection Mechanics.
If
you submit a subscription payment that exceeds the amount necessary to purchase the number of shares of Common Stock for which
you subscribed, then the excess amount will be returned to you by the Subscription Agent, without interest or penalty, as soon
as practicable following the Expiration Date.
2.
Issuance of Common Stock.
As
soon as practicable following the Expiration Date and your valid exercise of Rights pursuant to the Basic Subscription Right and
Over-Subscription Privilege, and after all allocations and adjustments contemplated by the terms of the Rights Offering have been
effected, the Subscription Agent will (i) credit your account or the account of your Record Holder with the number of shares of
Common Stock that you purchased pursuant to the Basic Subscription Right and the Over-Subscription Privilege, and (ii) mail to
each holder of Rights who exercises Rights any excess amount, without interest or penalty, received in payment of the Subscription
Price for shares subscribed for by, but not allocated to, such holder.
3.
Commissions, Fees, and Expenses.
The
Company is not charging any fee or sales commission to issue the Rights to you or to issue shares of Common Stock to you if you
exercise your Rights (other than payment of the Subscription Price). If you exercise your Rights through the Record Holder of
your shares, you are responsible for paying any commissions, fees, taxes or other expenses your Record Holder may charge you.
The Company will pay all reasonable fees charged by Computershare Inc., as the subscription agent.
4.
Execution.
If
you are a holder of Rights, the signature on the Subscription Rights Certificate must correspond with the name of the holder of
Rights exactly as it appears on the face of the Subscription Rights Certificate without any alteration, enlargement or change
whatsoever. Persons who sign the Subscription Rights Certificate in a representative or other fiduciary capacity on behalf of
a holder of Rights must indicate their capacity when signing and, unless waived by the Subscription Agent in its sole and absolute
discretion, must present to the Subscription Agent satisfactory evidence of their authority so to act.
5.
Method of Delivery to Subscription Agent.
The
method of delivery of Subscription Rights Certificates and payment of the aggregate Subscription Price to the Subscription Agent
will be at the election and risk of the holder of Rights.
6.
Special Provisions Relating to the Delivery of Rights through the Depository Trust Company.
In
the case of Rights that are held of record through The Depository Trust Company (“DTC”), those Rights may be
exercised by instructing DTC to transfer the Rights from the DTC account of such holder to the DTC account of the Subscription
Agent and by delivering to the Subscription Agent, by no later than 5:00 p.m., Eastern Time, on the Expiration Date, the required
certification as to the number of shares of Common Stock subscribed for under the Basic Subscription Right and the Over-Subscription
Privilege, if applicable, by each beneficial owner of Rights on whose behalf such nominee is acting, together with payment in
full of the aggregate Subscription Price for all of the shares of Common Stock subscribed for under the Basic Subscription Right
and the Over-Subscription Privilege on behalf of all such beneficial owners.
7.
Determinations Regarding the Exercise of Your Rights.
The
Company will resolve, in its sole discretion, all questions regarding the validity and form of the exercise of your Rights, including
time of receipt and eligibility to participate in the Rights Offering. Such determinations will be final and binding. Once made,
subscriptions are irrevocable, and the Company will not accept any alternative, conditional or contingent subscriptions or directions.
The Company reserves the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of
which would be unlawful. You must resolve any irregularities in connection with your subscriptions before the 5:00 p.m., Eastern
Time, on the Expiration Date, unless the Company waives them in its sole discretion. Neither the Company nor the Subscription
Agent is under any duty to notify you or your representative of defects in your subscriptions. A subscription will be considered
accepted, subject to the Company’s right to withdraw or terminate the Rights Offering, only when the Subscription Agent
receives a properly completed and duly executed Subscription Rights Certificate and any other required documents and payment in
full of the aggregate Subscription Price for all of the shares for which you have subscribed. The Company’s interpretations
of the terms and conditions of the Rights Offering will be final and binding.
Exhibit
99.2
FORM
OF LETTER TO SHAREHOLDERS WHO ARE RECORD HOLDERS
ATRM HOLDINGS, INC.
Up To [●] Shares of Common Stock
Issuable Upon the Exercise of Subscription Rights
[●],
2015
Dear Shareholder:
This
notice is being distributed by ATRM Holdings, Inc. (the “Company”) to all holders of record (the “Record
Holders”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), as
of 5:00 p.m., Eastern Time, on [●], 2015 (the “Record Date”), in connection with the distribution in
a rights offering (the “Rights Offering”), at no charge, of non-transferable subscription rights (the “Rights”)
to subscribe for and purchase shares of Common Stock at a subscription price of $[●] per share (the “Subscription
Price”). The Rights are described in the accompanying Prospectus, dated [●], 2015 (the “Prospectus”).
In
the Rights Offering, up to an aggregate of [●] shares of Common Stock are being offered pursuant to the Prospectus. The
Rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [●], 2015 (the “Expiration Date”).
Any Rights that are not exercised prior to 5:00 p.m., Eastern Time, on the Expiration Date will expire, have no value and cease
to be exercisable for shares of Common Stock.
As
described in the Prospectus, each Record Holder will receive one Right for each share of Common Stock owned of record as of 5:00
p.m., Eastern Time, on the Record Date. Each Right gives the holder thereof the right to purchase from the Company [●] shares
of Common Stock (the “Basic Subscription Right”) at the Subscription Price of $[●] per share, subject
to the NOL Protection Mechanics (as defined in the Prospectus). The Company will not issue fractional shares or cash in lieu of
fractional shares in the Rights Offering. Instead, fractional shares resulting from the exercise of Basic Subscription Rights
will be eliminated by rounding down to the nearest whole share. As an example, if you owned 100 shares of Common Stock, you would
receive 100 Rights that would entitle you to purchase [●] shares of Common Stock for $[●] per share.
In
addition, holders of Rights who purchase all of the shares of Common Stock available to them pursuant to their Basic Subscription
Right may also choose to subscribe (the “Over-Subscription Privilege”), at the same Subscription Price of $[●]
per share, for a portion of any shares of Common Stock that other holders of Rights do not purchase through the exercise of their
Basic Subscription Rights (the “Over-Subscription Shares”). If a sufficient number of Over-Subscription Shares
are available, the Company will seek to honor all over-subscription requests in full, subject to the NOL Protection Mechanics.
If, however, an insufficient number of Over-Subscription Shares are available to fully satisfy all Over-Subscription Privilege
requests, the available shares will be distributed proportionately among the holders of Rights who exercise their Over-Subscription
Privilege based on the number of shares each Rights holder subscribed for under their Basic Subscription Right. The Company will
not issue fractional shares through the exercise of the Over-Subscription Privilege. Instead, fractional shares resulting from
the exercise of the Over-Subscription Privilege will be eliminated by rounding down to the nearest whole share.
Also,
the Company has NOL Protection Mechanics in place to preserve its ability to utilize its net operating loss carryforwards (“NOLs”),
including the ability to limit the amount of shares that certain shareholders may over-subscribe for. Shareholders who currently
own, directly or indirectly, 62,199 shares or more of Common Stock or would potentially increase their direct or indirect holdings
of Common Stock from fewer than 62,199 shares to an amount equal to or greater than 62,199 shares by virtue of the exercise of
their Basic Subscription Right and/or Over-Subscription Privilege in the Rights Offering, may not be able to subscribe or over-subscribe
to the extent otherwise allowable. If you currently own, directly or indirectly, 62,199 shares or more of Common Stock, or would
potentially increase your direct or indirect holdings of Common Stock from fewer than 62,199 shares to an amount equal to or greater
than 62,199 shares but would like to participate in the Rights Offering, please contact the Company’s information agent,
InvestorCom, Inc., to discuss your level of subscription, by email at info@investor-com.com, by telephone at (877) 972-0090 (toll
free) or by mail at InvestorCom, Inc., 65 Locust Avenue, New Canaan, CT 06840. The Company will only permit such shareholders
to participate in the Rights Offering up to such amounts as will not jeopardize its NOLs. The Company will reduce the amount of
a subscription or an over-subscription exercise by the amount necessary to preserve its ability to utilize its NOLs. See “The
Rights Offering — NOL Protection Mechanics” in the Prospectus.
You
will be required to submit payment in full of the aggregate Subscription Price for all of the shares of Common Stock for which
you have subscribed pursuant to the exercise of the Basic Subscription Right and the Over-Subscription Privilege to Computershare
Inc., the subscription agent for the Rights Offering (the “Subscription Agent”), by no later than 5:00 p.m.,
Eastern Time, on the Expiration Date. Your payment of the aggregate Subscription Price must be made in U.S. dollars for the full
number of shares of Common Stock for which you have subscribed in the Rights Offering by cashier’s or certified check drawn
upon a United States Bank, or a personal check, payable to the Subscription Agent at the address set forth below, or a wire transfer
directly to the Subscription Agent as set forth below. In order for your Rights to be properly and timely exercised, payment in
full for the aggregate Subscription Price for all of the shares for which you have subscribed in the Rights Offering, including
final clearance of any uncertified personal checks, must be received by the Subscription Agent before 5:00 p.m., Eastern Time,
on the Expiration Date. If you intend to pay by uncertified personal check, please be aware that funds paid in this manner may
take at least five (5) business days to clear. We urge you to consider using a cashier’s or certified check as we will not
be responsible for any delays in processing personal checks, even if such delays result in your Rights not being exercised prior
to 5:00 p.m., Eastern Time, on the Expiration Date.
If
you submit a subscription payment that is insufficient to purchase the total number of shares of Common Stock for which you subscribed,
or if the number of shares you requested is not specified in the subscription documents, the payment received will be applied
to exercise your Rights to the fullest extent possible based on the amount of the payment received, subject to the availability
of shares under the Over-Subscription Privilege, if applicable, the elimination of fractional shares, and the NOL Protection Mechanics.
If
you submit a subscription payment that exceeds the amount necessary to purchase the number of shares of Common Stock for which
you subscribed, then the excess amount will be returned to you by the Subscription Agent, without interest or penalty, as soon
as practicable following the Expiration Date.
The
Rights are evidenced by subscription rights certificates (the “Subscription Rights Certificates”). Your Rights
are non-transferable, meaning that you may not sell, transfer or assign your Subscription Rights Certificate to anyone else.
Enclosed
are copies of the following documents:
|
1. |
Prospectus; |
|
|
|
|
2. |
Subscription
Rights Certificate; |
|
|
|
|
3. |
Instructions
for Use of Subscription Rights Certificate; |
|
|
|
|
4. |
Form
of Notice of Guaranteed Delivery; |
|
|
|
|
5. |
Form
of Notice of Important Tax Information; and |
|
|
|
|
6. |
Return
envelope addressed to the Subscription Agent. |
Your
prompt action is requested if you intend to participate in the Rights Offering. As described in the Prospectus, to exercise
your Rights, you must properly complete and duly execute your Subscription Rights Certificate and forward it, together with payment
in full of the aggregate Subscription Price for all of the shares for which you have subscribed pursuant to the Basic Subscription
Right and the Over-Subscription Privilege, to the Subscription Agent. Do not send the Subscription Rights Certificate or payment
to the Company.
Your
properly completed and duly executed Subscription Rights Certificate, accompanied by full payment of the aggregate Subscription
Price, must be received by the Subscription Agent before 5:00 p.m., Eastern Time, on the Expiration Date. Once you have exercised
your Rights, you may not cancel, revoke or otherwise amend the exercise of your Rights. Any Rights that are not exercised prior
to 5:00 p.m., Eastern Time, on the Expiration Date will expire, have no value and cease to be exercisable for shares of Common
Stock, and you will have no further rights under them.
Additional
copies of the enclosed materials may be obtained from the Company’s information agent, InvestorCom, Inc., by email at info@investor-com.com,
by telephone at (877) 972-0090 (toll free) or by mail at InvestorCom, Inc., 65 Locust Avenue, New Canaan, CT 06840.
|
Very
truly yours, |
|
|
|
Daniel M. Koch |
|
President and
Chief Executive Officer |
Exhibit
99.3
FORM
OF LETTER TO NOMINEE HOLDERS
WHOSE CLIENTS ARE BENEFICIAL HOLDERS
ATRM
HOLDINGS, INC.
Up
To [●] Shares of Common Stock
Issuable Upon the Exercise of Subscription Rights
[●],
2015
To
Securities Dealers, Commercial Banks, Trust Companies and Other Nominees:
This
letter is being distributed to securities dealers, commercial banks, trust companies and other nominees in connection with the
distribution by ATRM Holdings, Inc. (the “Company”) to the holders of record (the “Record Holders”)
of the Company’s common stock, par value $0.001 per share (the “Common Stock”) as of 5:00 p.m., Eastern
Time, on [●], 2015 (the “Record Date”), in connection with the distribution in a rights offering (the
“Rights Offering”) at no charge, of non-transferable subscription rights (the “Rights”)
to subscribe for and purchase shares of Common Stock at a subscription price of $[●] per share (the “Subscription
Price”) as described in the accompanying Prospectus, dated [●], 2015 (the “Prospectus”).
In
the Rights Offering, up to an aggregate of [●] shares of Common Stock are being offered pursuant to the Prospectus. The
Rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [●], 2015 (the “Expiration Date”).
Any Rights that are not exercised prior to 5:00 p.m., Eastern Time, on the Expiration Date will expire, have no value and cease
to be exercisable for shares of Common Stock.
As
described in the Prospectus, each Record Holder will receive one Right for each share of Common Stock owned of record as of 5:00
p.m., Eastern Time, on the Record Date. Each Right gives the holder thereof the right to purchase from the Company [●] shares
of Common Stock (the “Basic Subscription Right”) at the Subscription Price of $[●] per share, subject
to the NOL Protection Mechanics (as defined in the Prospectus). The Company will not issue fractional shares or cash in lieu of
fractional shares in the Rights Offering. Instead, fractional shares resulting from the exercise of Basic Subscription Rights
will be eliminated by rounding down to the nearest whole share. As an example, if you owned 100 shares of Common Stock as of the
Record Date, you would receive 100 Rights that would entitle you to purchase [●] shares of Common Stock for $[●] per
share.
In
addition, holders of Rights who purchase all of the shares of Common Stock available to them pursuant to their Basic Subscription
Right may also choose to subscribe (the “Over-Subscription Privilege”), at the same Subscription Price of $[●]
per share, for a portion of any shares of Common Stock that other holders of Rights do not purchase through the exercise of their
Basic Subscription Rights (the “Over-Subscription Shares”). If a sufficient number of Over-Subscription Shares
are available, the Company will seek to honor all over-subscription requests in full, subject to the NOL Protection Mechanics.
If, however, an insufficient number of Over-Subscription Shares are available to fully satisfy all Over-Subscription Privilege
requests, the available shares will be distributed proportionately among the holders of Rights who exercise their Over-Subscription
Privilege based on the number of shares each Rights holder subscribed for under their Basic Subscription Right. The Company will
not issue fractional shares through the exercise of the Over-Subscription Privilege. Instead, fractional shares resulting from
the exercise of the Over-Subscription Privilege will be eliminated by rounding down to the nearest whole share.
Also,
the Company has NOL Protection Mechanics in place to preserve its ability to utilize its net operating loss carryforwards (“NOLs”),
including the ability to limit the amount of shares that certain shareholders may over-subscribe for. Shareholders who currently
own, directly or indirectly, 62,199 shares or more of Common Stock or would potentially increase their direct or indirect holdings
of Common Stock from fewer than 62,199 shares to an amount equal to or greater than 62,199 shares by virtue of the exercise of
their Basic Subscription Right and/or Over-Subscription Privilege in the Rights Offering, may not be able to subscribe or over-subscribe
to the extent otherwise allowable. If you currently own, directly or indirectly, 62,199 shares or more of Common Stock, or would
potentially increase your direct or indirect holdings of Common Stock from fewer than 62,199 shares to an amount equal to or greater
than 62,199 shares but would like to participate in the Rights Offering, please contact the Company’s information agent,
InvestorCom, Inc., to discuss your level of subscription, by email at info@investor-com.com, by telephone at (877) 972-0090 (toll
free) or by mail at InvestorCom, Inc., 65 Locust Avenue, New Canaan, CT 06840. The Company will only permit such shareholders
to participate in the Rights Offering up to such amounts as will not jeopardize its NOLs. The Company will reduce the amount of
a subscription or an over-subscription exercise by the amount necessary to preserve its ability to utilize its NOLs. See “The
Rights Offering — NOL Protection Mechanics” in the Prospectus.
You
will not receive certificates evidencing the Rights for which you are the Nominee Holder. Rather, your Rights will be credited
to your account electronically through the Depository Trust Company (“DTC”). All Rights are non-transferable,
meaning that you may not sell, transfer or assign your Rights to anyone else.
We
are asking (i) persons who beneficially own shares of Common Stock and have received the Rights distributable with respect to
those shares through a broker, dealer, commercial bank, trust company or other nominee and (ii) Record Holders who prefer to have
such institutions effect transactions relating to the Rights on their behalf, to contact the appropriate institution or nominee
and request it to effect the transactions for them. In addition, we are asking beneficial owners who hold their Rights through
a broker, dealer, commercial bank, trust company or other nominee who wish to obtain a separate Subscription Rights Certificate
to contact the appropriate nominee as soon as possible and request that a separate Subscription Rights Certificate be issued.
Please
notify, as soon as possible, any beneficial owners of Common Stock of the Rights Offering and the procedures and deadlines that
must be followed to exercise their Rights. If you exercise the Over-Subscription Privilege on behalf of beneficial owners of Rights,
you will be required to certify to Computershare Inc., the subscription agent for the Rights Offering (the “Subscription
Agent”), and the Company, with respect to each such beneficial owner, as to (i) the number of Rights held, (ii) the
aggregate number of Rights that have been exercised, (iii) the number of shares of Common Stock that are being subscribed for
pursuant to the Basic Subscription Rights, (iv) whether the Basic Subscription Rights of such beneficial owner have been exercised
in full and (v) the number of shares of Common Stock, if any, being subscribed for pursuant to the Over-Subscription Privilege
by such beneficial owner.
Any
commissions, fees, taxes or other expenses will be for the account of the holder of the Rights, and none of such commissions,
fees, taxes or expenses will be paid by the Company or the Subscription Agent. The Company will pay all reasonable fees charged
by the Subscription Agent.
Enclosed
are copies of the following documents:
|
1. |
Prospectus; |
|
|
|
|
2. |
Instructions
for Use of Subscription Rights Certificates; |
|
|
|
|
3. |
Form
of Letter to Clients of Nominee Holders (which may be sent to your clients for whose accounts you hold shares of Common Stock); |
|
|
|
|
4. |
Form
of Beneficial Owner Election Form; |
|
|
|
|
5. |
Form
of Nominee Holder Election Form; and |
|
|
|
|
6. |
Return
envelope addressed to the Subscription Agent. |
Your
prompt action is requested. As described further in the Prospectus, to exercise the Rights, you must deliver the properly completed
and duly executed Nominee Holder Election Form and payment in full of the aggregate Subscription Price that is required for all
of the shares subscribed for pursuant to the Basic Subscription Right and the Over-Subscription Privilege, to the Subscription
Agent. Do not send the Nominee Holder Election Form or payment to the Company.
The
properly completed and duly executed Nominee Holder Election Form, accompanied by full payment of the aggregate Subscription Price,
must be received by the Subscription Agent before 5:00 p.m., Eastern Time, on the Expiration Date. Failure to return the properly
completed Nominee Holder Election Form with the correct and complete payment will result in your not being able to exercise the
Rights held in your name on behalf of yourself or other beneficial owners. All exercises of subscription rights are irrevocable.
Rights not exercised before 5:00 p.m., Eastern Time, on the Expiration Date will expire, have no value and cease to be exercisable
for shares of Common Stock.
Additional
copies of the enclosed materials may be obtained from the Company’s information agent, InvestorCom, Inc., by email at info@investor-com.com,
by telephone at (877) 972-0090 (toll free) or by mail at InvestorCom, Inc., 65 Locust Avenue, New Canaan, CT 06840.
|
Very
truly yours, |
|
|
|
Daniel M. Koch |
|
President and
Chief Executive Officer |
NOTHING
IN THE PROSPECTUS OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF ATRM HOLDINGS, INC., THE SUBSCRIPTION
AGENT, THE INFORMATION AGENT OR ANY OTHER PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF THE SECURITIES ISSUABLE UPON VALID EXERCISE
OF THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE RIGHTS
OFFERING EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS.
Exhibit
99.4
FORM
OF LETTER TO CLIENTS OF NOMINEE HOLDERS
ATRM
HOLDINGS, INC.
Up
To [●] Shares of Common Stock
Issuable Upon the Exercise of Subscription Rights
[●],
2015
To
Our Clients:
Enclosed
for your consideration are the Prospectus, dated [●], 2015 (the “Prospectus”), and the Instructions for
Use of Subscription Rights Certificates and Election Form relating to the distribution by ATRM Holdings, Inc. (the “Company”)
to all holders of record (the “Record Holders”) of the Company’s common stock, par value $0.001 per share
(the “Common Stock”), as of 5:00 p.m., Eastern Time, on [●], 2015 (the “Record Date”),
in a rights offering (the “Rights Offering”), at no charge, of non-transferable subscription rights (the “Rights”)
to subscribe for and purchase shares of Common Stock at a subscription price of $[●] per share (the “Subscription
Price”). The Rights are described in the accompanying Prospectus.
In
the Rights Offering, up to an aggregate of [●] shares of Common Stock are being offered pursuant to the Prospectus. The
Rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on [●], 2015 (the “Expiration Date”).
Any Rights that are not exercised prior to 5:00 pm, Eastern Time, on the Expiration Date will expire, have no value and cease
to be exercisable for shares of Common Stock.
As
described in the Prospectus, you will receive one Right for each share of Common Stock carried by us in your account as of the
Record Date. Each Right gives the holder thereof the right to purchase from the Company [●] shares of Common Stock (the
“Basic Subscription Right”) at the Subscription Price of $[●] per share, subject to the NOL Protection
Mechanics (as defined in the Prospectus). The Company will not issue fractional shares or cash in lieu of fractional shares in
the Rights Offering. Instead, fractional shares resulting from the exercise of Basic Subscription Rights will be eliminated by
rounding down to the nearest whole share. As an example, if you owned 100 shares of Common Stock as of the Record Date, you would
receive 100 Rights that would entitle you to purchase [●] shares of Common Stock for $[●] per share.
In
addition, Record Holders who purchase all of the shares of Common Stock available to them pursuant to their Basic Subscription
Right may also choose to subscribe (the “Over-Subscription Privilege”), at the same Subscription Price of $[●]
per share, for a portion of any shares of Common Stock that other Record Holders do not purchase through the exercise of their
Basic Subscription Right (the “Over-Subscription Shares”). If a sufficient number of Over-Subscription Shares
are available, the Company will seek to honor all over-subscription requests in full, subject to the NOL Protection Mechanics.
If, however, an insufficient number of Over-Subscription Shares are available to fully satisfy all Over-Subscription Privilege
requests, the available shares will be distributed proportionately among the holders of Rights who exercise their Over-Subscription
Privilege based on the number of shares each Rights holder subscribed for under their Basic Subscription Right. The Company will
not issue fractional shares through the exercise of the Over-Subscription Privilege. Instead, fractional shares resulting from
the exercise of the Over-Subscription Privilege will be eliminated by rounding down to the nearest whole share.
Also,
the Company has NOL Protection Mechanics in place to preserve its ability to utilize its net operating loss carryforwards (“NOLs”),
including the ability to limit the amount of shares that certain shareholders may over-subscribe for. Shareholders who currently
own, directly or indirectly, 62,199 shares or more of Common Stock or would potentially increase their direct or indirect holdings
of Common Stock from fewer than 62,199 shares to an amount equal to or greater than 62,199 shares by virtue of the exercise of
their Basic Subscription Right and/or Over-Subscription Privilege in the Rights Offering, may not be able to subscribe or over-subscribe
to the extent otherwise allowable. If you currently own, directly or indirectly, 62,199 shares or more of Common Stock, or would
potentially increase your direct or indirect holdings of Common Stock from fewer than 62,199 shares to an amount equal to or greater
than 62,199 shares but would like to participate in the Rights Offering, please contact the Company’s information agent,
InvestorCom, Inc., to discuss your level of subscription, by email at info@investor-com.com, by telephone at (877) 972-0090 (toll
free) or by mail at InvestorCom, Inc., 65 Locust Avenue, New Canaan, CT 06840. The Company will only permit such shareholders
to participate in the Rights Offering up to such amounts as will not jeopardize its NOLs. The Company will reduce the amount of
a subscription or an over-subscription exercise by the amount necessary to preserve its ability to utilize its NOLs. See “The
Rights Offering — NOL Protection Mechanics” in the Prospectus.
The
Rights are evidenced by subscription rights certificates (the “Subscription Rights Certificates”) registered
in the names of the Record Holders of the shares of Common Stock for which the Rights are being distributed. Rights are non-transferable,
meaning that they may not be sold, transferred, or assigned by the holder of the Rights to any other party.
THE
MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF COMMON STOCK CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED
IN YOUR NAME. EXERCISES OF RIGHTS MAY BE MADE ONLY BY US AS THE RECORD HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly,
we request instructions as to whether you wish us to elect to subscribe for any shares of Common Stock to which you are entitled
pursuant to the terms of the Rights Offering and subject to the conditions set forth in the accompanying Prospectus. However,
we urge you to read the Prospectus and other enclosed materials carefully before instructing us to exercise your Rights.
Your
Beneficial Owner Election Form and full payment for the aggregate Subscription Price for all of the shares of Common Stock that
you have subscribed to purchase pursuant to the Basic Subscription Right and the Over-Subscription Privilege should be forwarded
as promptly as possible in order to permit us to exercise Rights on your behalf in accordance with the terms of the Rights Offering.
The
Rights Offering will expire at 5:00 p.m., Eastern Time, on the Expiration Date. Because we must submit your subscription and payment
in advance of 5:00 p.m., Eastern Time, on the Expiration Date, we must receive your Beneficial Owner Election Form and full payment
for the aggregate Subscription Price for all of the shares of Common Stock that you have subscribed to purchase pursuant to the
Basic Subscription Right and the Over-Subscription Privilege, no later than [●], 2015. Once you have exercised your
Rights pursuant to the Basic Subscription Right and the Over-Subscription Privilege, such exercise may not be revoked.
If
you wish to have us, on your behalf, exercise the Rights for any shares of Common Stock to which you are entitled, please so instruct
us by timely completing, executing and returning to us the Beneficial Owner Election Form attached to this letter.
ANY
QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE RIGHTS OFFERING SHOULD BE DIRECTED TO THE COMPANY’S INFORMATION AGENT,
INVESTORCOM, INC., BY EMAIL AT INFO@INVESTOR-COM.COM, BY TELEPHONE AT (877) 972-0090 (TOLL FREE) OR BY MAIL AT INVESTORCOM, INC.,
65 LOCUST AVENUE, NEW CANAAN, CT 06840.
Exhibit
99.5
FORM
OF BENEFICIAL OWNER ELECTION FORM
The
undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the distribution
in a rights offering (the “Rights Offering”) by ATRM Holdings, Inc. (the “Company”) to the
holders of record of its common stock, par value $0.001 (the “Common Stock”), as of 5:00 p.m., Eastern Time,
on [●], 2015, at no charge, of non-transferable subscription rights (the “Rights”) to subscribe for and
purchase shares of Common Stock at a subscription price of $[●] per share (the “Subscription Price”).
Each Right gives the holder thereof the right to purchase from the Company [●] shares of Common Stock (the “Basic
Subscription Right”) at the Subscription Price of $[●] per share, subject to the NOL Protection Mechanics (as
defined in the Company’s Prospectus, dated [●], 2015 (the “Prospectus”)). In addition, holders
of Rights who purchase all of the shares of Common Stock available to them pursuant to their Basic Subscription Right may also
choose to subscribe (the “Over-Subscription Privilege”), at the same Subscription Price of $[●] per share,
for a portion of any shares of Common Stock that other holders of Rights do not purchase through the exercise of their Basic Subscription
Rights (the “Over-Subscription Shares”). The Company will not issue fractional shares or cash in lieu of fractional
shares in the Rights Offering. Instead, fractional shares resulting from the exercise of Basic Subscription Rights or the Over-Subscription
Privilege will be eliminated by rounding down to the nearest whole share.
With
respect to any instructions to exercise (or not to exercise) Rights, the undersigned acknowledges that this form must be completed
and returned such that it will actually be received by you by 5:00 p.m., Eastern Time, on [●], 2015, the [●]
business day prior to [●], 2015, the scheduled expiration date of the Rights Offering.
This
will instruct you, as nominee, whether to exercise Rights held by you to purchase shares of Common Stock for the account of the
undersigned pursuant to the terms of the Rights Offering and subject to the conditions set forth in the Prospectus, and the related
“Instructions for Use of Subscription Rights Certificate.”
Box
1. [ ] Please DO NOT EXERCISE RIGHTS for shares of Common Stock.
Box
2. [ ] Please EXERCISE RIGHTS for shares of Common Stock as set forth below.
Basic
Subscription Rights
The undersigned elect(s)
to exercise: |
|
|
x |
[●] |
= |
|
|
|
(Number of Rights) |
|
(Subscription
Ratio) |
|
(Number of Shares,
|
|
|
|
|
|
|
Rounded Down
to |
|
|
|
|
|
|
Nearest Whole
Share) |
Therefore,
I apply for: |
|
|
x |
$[●] |
= |
|
|
|
(Number of Shares) |
|
(Subscription Price) |
|
(Payment Enclosed) |
Over-Subscription
Privilege
If
you fully exercise your Basic Subscription Rights, you may subscribe for a portion of any Over-Subscription Shares, subject to
the NOL Protection Mechanics.
Therefore, I apply for: |
|
|
x |
$[●] |
= |
|
|
|
(Number of Over - |
|
(Subscription Price) |
|
(Payment |
|
|
Subscription Shares) |
|
|
|
Enclosed) |
Total
Payment Required
|
+ |
|
= |
|
(Payment Enclosed for |
|
(Payment Enclosed
for Over- |
|
(Total Payment
|
Basic Subscription Rights) |
|
Subscription Privilege) |
|
Enclosed) |
Box
3a. [ ] The purchase of shares pursuant to the Rights (whether the Basic Subscription Right or the Over-Subscription
Privilege) would result in my (our) owning, either directly or indirectly, of record or beneficially, 62,199 shares or more of
Common Stock, and I have indicated below the number of shares of Common Stock I (we) would so own in the space below.
_________
shares of Common Stock
OR
Box
3b. [ ] I (we) certify that the purchase of shares of Common Stock pursuant to the Rights (whether the Basic Subscription
Right or the Over-Subscription Privilege) will not result in my (our) owning, either directly or indirectly, of record or beneficially,
62,199 shares or more of Common Stock.
Box
4. [ ] Payment in the following amount is enclosed $____________.
Box
5. [ ] Please deduct payment from the following account maintained by you as follows:
Type of Account: |
|
|
|
|
|
|
|
Account No.: |
|
|
|
|
|
|
|
Amount to be Deducted: |
|
|
|
The
total of the amounts reflected in Box 4 and 5 must equal the “Total Payment Enclosed” specified under Box 2 above.
______________________________________________________________________________
I
(we) on my (our) behalf, or on behalf of any person(s) on whose behalf, or under whose direction, I am (we are) signing this form:
|
[ ] |
represent
and warrant that I am a (we are) resident(s) of the United States of America or, if I am (we are) not, I (we) have provided
evidence satisfactory to ATRM Holdings, Inc. that the exercise of my (our) Rights does not violate the laws of my (our) jurisdiction; |
|
[ ] |
irrevocably
elect to purchase the number of shares of Common Stock indicated above on the terms and subject to the conditions set forth
in the Prospectus; |
|
|
|
|
[ ] |
agree
that if I (we) fail to pay for the shares I (we) have elected to purchase, you may exercise any remedies available under law. |
Name(s): |
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Signature(s): |
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Address(es): |
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Telephone
Numbers(s): |
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Date: |
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If
you are signing in your capacity as a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation
or otherwise acting in a fiduciary or representative capacity, your signature must be Medallion Signature Guaranteed. Please also
provide the following information:
Name: |
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Capacity: |
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|
Address (including
Zip Code): |
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Exhibit
99.6
FORM
OF NOMINEE HOLDER ELECTION FORM
The
undersigned, a bank, broker, trustee, depositary or other nominee of non-transferable subscription rights (the “Rights”)
to purchase shares of common stock, par value $0.001 per share (the “Common Stock”), of ATRM Holdings, Inc.
(the “Company”) pursuant to the rights offering (the “Rights Offering”) described and provided
for in the Company’s Prospectus dated [●], 2015 (the “Prospectus”), hereby certifies to the Company
and to Computershare Inc., as subscription agent for the Rights Offering (the “Subscription Agent”), that (1)
the undersigned has exercised, on behalf of the beneficial owners thereof (which may include the undersigned), on the terms and
subject to the conditions set forth in the Prospectus, including the NOL Protection Mechanics, the number of Rights specified
below to purchase the number of shares of Common Stock specified below pursuant to the Basic Subscription Right (as defined in
the Prospectus) and, on behalf of beneficial owners of Rights who have subscribed for the purchase of additional shares of Common
Stock pursuant to the Over-Subscription Privilege (as defined in the Prospectus), the number of shares specified below pursuant
to the Over-Subscription Privilege, listing separately below each such exercised Basic Subscription Right and the corresponding
Over-Subscription Privilege (without identifying any such beneficial owner by name), (2) to the extent a beneficial owner has
elected to subscribe for shares pursuant to the Over-Subscription Privilege, each such beneficial owner’s Basic Subscription
Right has been timely exercised in full, and (3) except as specifically identified below, the exercise by such holder of the Rights
specified below would not result in such holder owning, either directly or indirectly, of record or beneficially, 62,199 shares
or more of Common Stock.
|
Number
of Rights Held |
|
Number
of
Rights Exercised |
|
Number
of Shares
Subscribed for
Pursuant to Basic
Subscription Right* |
|
Number
of Shares
Subscribed for
Pursuant to Over-
Subscription Privilege* |
1. |
|
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2. |
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3. |
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4. |
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5. |
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6. |
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7. |
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8. |
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9. |
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10. |
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*
Please indicate if the exercise by such holder of the Rights specified herein would result in such holder owning, either directly
or indirectly, of record or beneficially, 62,199 shares or more of Common Stock.
[Certification
continues on the following page]
Provide
the following information, if applicable:
|
|
|
Name of Nominee Holder |
|
DTC Participant Number |
|
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By: |
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DTC Subscription Confirmation Numbers |
Name: |
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Title: |
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Phone Number: |
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Fax Number: |
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Dated |
Exhibit
99.7
FORM
OF NOTICE OF GUARANTEED DELIVERY
FOR SUBSCRIPTION RIGHTS CERTIFICATES ISSUED BY
ATRM
HOLDINGS, INC.
This
form must be used to exercise the non-transferable subscription rights (the “Rights”) to subscribe for and
purchase shares of common stock, par value $0.001 per share (the “Common Stock”), of ATRM Holdings, Inc. (the
“Company”), pursuant to the rights offering (the “Rights Offering”) described and provided
for in the Company’s prospectus dated [●], 2015 (a copy of which accompanies this form) (the “Prospectus”),
if a holder of Rights cannot deliver the subscription rights certificate(s) evidencing the Rights (the “Rights Certificate(s)”),
to Computershare Inc., the subscription agent for the Rights Offering (the “Subscription Agent”), prior to
5:00 p.m., Eastern Time, on [●], 2015, unless extended by the Company (the “Expiration Date”). This form
must be delivered by facsimile transmission, registered certified or express mail or overnight courier to the Subscription Agent,
and must be received by the Subscription Agent prior to 5:00 p.m., Eastern Time, on the Expiration Date.
Payment
of the subscription price of $[●] per share (the “Subscription Price”) for each share of Common Stock
subscribed for upon exercise of such Rights must be received by the Subscription Agent in the manner specified in the Prospectus
prior to 5:00 p.m., Eastern Time, on the Expiration Date, even if the Rights Certificate(s) evidencing such Rights is being delivered
pursuant to the Guaranteed Delivery Procedures hereof. See “The Rights Offering — Method of Exercising Subscription
Rights” in the Prospectus.
All
deliveries must be addressed to the Subscription Agent, as follows:
By
Registered Certified or Express Mail |
|
By
Overnight Courier |
|
|
|
Computershare
Trust Company, N.A.
c/o
Voluntary Corporate Actions
P.O.
Box 43011
Providence,
RI 02940 |
|
Computershare
Trust Company, N.A.
c/o
Voluntary Corporate Actions
250
Royall Street Suite V
Canton,
MA 02021 |
|
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By
Facsimile Transmission
(for
Eligible Institutions Only)
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By
Wire Transfer |
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(617)
360-6810 |
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[●] |
Delivery
of this instrument to an address other than as set forth above
does not constitute valid delivery.
You
may obtain additional information regarding the Rights Offering by contacting the Company’s information agent, InvestorCom,
Inc., by telephone at (877) 972-0090 (toll free), by e-mail at info@investor-com.com or by mail at InvestorCom, Inc., 65 Locust
Avenue, New Canaan, CT 06840.
Ladies and
Gentlemen:
The
undersigned represents that the undersigned is the holder of Rights Certificate(s) representing ___________ Right(s) and that
the Rights Certificate(s) cannot be delivered to the Subscription Agent prior to 5:00 p.m., Eastern Time, on the Expiration Date.
Upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is acknowledged by execution of this
form, the undersigned elects to exercise (i) the Basic Subscription Right to subscribe for ___________ shares of Common Stock
and (ii) the Over-Subscription Privilege, if applicable, to subscribe for ___________ shares of Common Stock, subject to adjustment
for fractional shares (which will be eliminated by rounding down to the nearest whole share), availability, the NOL Protection
Mechanics (as defined in the Prospectus) and any other limitations and conditions described in the Prospectus.
The
undersigned understands that payment of the Subscription Price of $[●] for each share of Common Stock subscribed for pursuant
to the Basic Subscription Right and the Over-Subscription Privilege must be received by the Subscription Agent prior to 5:00 p.m.,
Eastern Time, on the Expiration Date, and represents that such payment, in the aggregate amount of $__________ either (check appropriate
box):
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is
being delivered to the Subscription Agent herewith; |
OR
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has
been delivered separately to the Subscription Agent in the manner set forth below (check appropriate box and complete information
relating thereto): |
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certified
or personal check or bank draft drawn on a U.S. bank payable to “Computershare Inc.” (Payment by uncertified check
will not be deemed to have been received by the Subscription Agent until such check has cleared. Holders paying by such means
are urged to make payment sufficiently in advance of the Expiration Date to ensure that such payment clears by 5:00 p.m.,
Eastern Time, on the Expiration Date. Payment will be deemed to have been received by the Subscription Agent upon receipt
by the Subscription Agent of any certified check or bank draft drawn upon a U.S. bank.); or |
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wire
transfer of immediately available funds directly to the account maintained by “Computershare Inc.”; at Bank: [●];
Address: [●]; ABA #: [●]; Account #: [●]. Any wire transfer should clearly indicate the identity of the
subscriber who is paying the subscription price by wire transfer. |
See
“The Rights Offering — Payment Method” in the Prospectus and “Method of Subscription — Exercise
of Rights” in the Instructions for Use of Subscription Rights Certificate for further information on the method of payment.
Date
of check, draft or money order: |
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Check, draft or
money order number: |
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Bank on which
check is drawn: |
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Federal reference
number for wire transfer: |
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Signature(s): |
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Address: |
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Name(s): |
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(Area
Code and Telephone Number(s)) |
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Rights
Certificate No(s). (if available): |
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GUARANTEE
OF DELIVERY
(Not To Be Used For Rights Certificate Signature Guarantee)
The
undersigned, a member firm of a registered national securities exchange or of the Financial Industry Regulatory Authority, or
a commercial bank or trust company having an office or correspondent in the United States, or a bank, stockbroker, savings and
loan association or credit union with membership in an approved signature guarantee medallion program, pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended, guarantees that the undersigned will deliver to the Subscription Agent the
Rights Certificate representing the Rights being exercised hereby, with any required signature guarantee and any other required
documents, all within three (3) business days after the date hereof.
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(Authorized Signature) |
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(Date) |
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(Name of Firm) |
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(Address) |
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(Area Code and
Tel. No.) |
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The
institution which completes this form must communicate the guarantee to the Subscription Agent and must deliver the Rights Certificate(s)
to the Subscription Agent within the time period specified above and in the Prospectus. Failure to do so could result in a financial
loss to such institution.
Exhibit 99.8
FORM
OF NOTICE OF IMPORTANT TAX INFORMATION
The
tax information below is provided in connection with the prospectus of ATRM Holdings, Inc. (the “Company”),
dated [●], 2015 (the “Prospectus”).
Backup
Withholding
Under
the United States federal income tax laws, dividend payments that may be made by the Company on shares of its common stock, par
value $0.001 per share (the “Common Stock”), issued upon the exercise of non-transferable subscription rights
(the “Rights”) may be subject to backup withholding. Generally, such payments will be subject to backup withholding
unless the holder (i) is exempt from backup withholding or (ii) furnishes the payer with its correct taxpayer identification number
(“TIN”) and certifies, under penalties of perjury, that the number provided is correct and provides certain
other certifications. Each holder that exercises Rights and wants to avoid backup withholding must, unless an exemption applies,
provide Computershare Inc., as the Company’s subscription agent in respect of the exercised Rights (the “Subscription
Agent”), with such holder’s correct TIN (or with a certification that such holder is awaiting a TIN) and certain
other certifications by properly completing the enclosed Form W-9.
Certain
holders (including, among others, corporations and certain foreign individuals) are exempt from these backup withholding and reporting
requirements. In general, in order for a foreign holder to qualify as an exempt recipient, that holder must properly complete
and submit the appropriate Form W-8 (instead of Form W-9), signed under penalties of perjury, attesting to such holder’s
foreign status. Such Form W-8 may be obtained from the Subscription Agent. Although a foreign holder may be exempt from backup
withholding, payments of dividends may be subject to withholding tax, currently at a 30% rate (or, if certain tax treaties apply,
such applicable lower rate). Exempt U.S. holders must indicate their exempt status on Form W-9 to avoid possible erroneous backup
withholding. See the enclosed instructions to Form W-9 for additional information. Holders are urged to consult their tax advisors
to determine whether they are exempt from withholding and reporting requirements.
If
backup withholding applies, the Company or the Subscription Agent, as the case may be, will be required to withhold (currently
at a 28% rate) on any dividend payments made to a holder that exercises Rights. Backup withholding is not an additional tax. Rather,
the amount of backup withholding can be credited against the U.S. federal income tax liability of the holder subject to the backup
withholding, provided that the required information is provided to the Internal Revenue Service (“IRS”). If
backup withholding results in an overpayment of taxes, a refund may be obtained.
A
holder that exercises Rights is required to give the Subscription Agent the TIN of the record owner of the Rights. If such record
owner is an individual, the TIN is generally the taxpayer’s social security number. For most other entities, the TIN is
the employer identification number. If the Rights are in more than one name or are not in the name of the actual owner, consult
the enclosed instructions to Form W-9 for additional guidelines on which number to report. If the Subscription Agent is not provided
with the correct TIN in connection with such payments, the holder may be subject to a penalty imposed by the IRS.
If
you do not have a TIN, consult the enclosed instructions to Form W-9 for information on applying for a TIN, write “Applied
For” in the space for the TIN in Part 1 of the Form W-9 and, under penalties of perjury, sign and date the Form W-9. If
you do not provide your TIN to the Subscription Agent within sixty (60) days, backup withholding will begin and continue until
you furnish your TIN to the Subscription Agent. Please note that writing “Applied For” on the form means that you
have already applied for a TIN or that you intend to apply for one in the near future.
FATCA
Withholding
Under
Sections 1471 through 1474 of the Code (“FATCA”), a 30% withholding tax may be imposed on payments to a foreign
financial institution and certain other non-U.S. entities (including in some instances, where such foreign financial institution
or non-U.S. entity is acting as an intermediary for another party), unless in the case of a foreign financial institution, (i)
the entity enters into (or is otherwise subject to) and complies with an agreement with the United States government, or a FATCA
Agreement, or (ii) complies with applicable foreign law enacted in connection with an intergovernmental agreement between the
United States and a foreign jurisdiction, or an IGA, in either case to, among other things, collect and provide to the United
States or other relevant tax authorities certain information regarding United States account holders of such institution. In the
case of payments made to a foreign entity that is not a foreign financial institution (as a beneficial owner), the tax generally
will be imposed, subject to certain exceptions, unless such foreign entity provides the withholding agent with a certification
that it does not have any “substantial U.S. owner” (generally, any specified U.S. person that directly or indirectly
owns more than a specified percentage of such entity) or that identifies its substantial U.S. owners.
In
order for a holder who is a “U.S. person” for federal income tax purposes to avoid withholding under FATCA with respect
to any payments made to such holder, such holder must timely provide the Subscription Agent with a properly completed Form W-9
attesting to such holder’s status as a U.S. person. Such holder may submit one Form W-9 for purposes of avoiding withholding
under FATCA and for purposes of avoiding backup withholding (described above). In order for a holder who is not a “U.S.
person” for federal income tax purposes to avoid withholding under FATCA with respect to any payments made to such holder,
such holder must properly complete and timely provide the Subscription Agent with the applicable Form W-8 (instead of Form W-9)
generally attesting to such holder’s compliance with or exemption from FATCA. Such holder may submit one Form W-8 for purposes
of avoiding withholding under FATCA and for purposes of avoiding backup withholding (described above). Such Form W-8 may be obtained
from the Subscription Agent.
Holders
are urged to consult their own tax advisor to determine whether they are exempt from these backup withholding tax and reporting
requirements and to determine the applicability of FATCA to their particular circumstances.