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 Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. The selling stockholderWe may not sell these securities or accept an offer to buy these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where such offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 30, 2013
PROSPECTUS
THE LGL GROUP, INC.
DEBT SECURITIES
COMMON STOCKAND1,754,510 WARRANTS TO
STOCK PURCHASE COMMON STOCK
WARRANTS
RIGHTS
UNITS
We may offer and sell, from time to time following the date hereof, of up toin one or more offerings, any combination of:
| · | debt securities (which may be senior or subordinated), |
| · | common stock, |
| · | stock purchase contracts, |
| · | warrants, |
| · | rights, or |
| · | any combination thereof, separately or as units, |
having an aggregate initial offering price not exceeding $90,000,000, or the equivalent thereof in one or more foreign currencies, foreign currency units or composite currencies. We may offer these securities on terms and at prices to be determined at the time of (i) 421,083 shares of common stock, par value $0.01 per share, which includes 350,902 shares of common stock and 70,181 shares of common stock issuable upon exercise of 1,754,510 warrants to purchase common stock, and (ii) 1,754,510 warrants to purchase common stock, of The LGL Group, Inc. by the selling stockholder, Venator Merchant Fund, L.P. Venator Merchant Fund, L.P. is an investment limited partnership controlled by our Chairmansale.
This prospectus provides a general description of the Board, Marc Gabelli. Mr. Gabelli issecurities we may offer. Each time we sell securities we will provide specific terms of the President and Sole Member of Venator Global, LLC, which is the sole general partner of Venator Merchant Fund, L.P.
This prospectus may not be used to offer or sell our securities unless accompanied by a prospectus supplement relating to the offered securities.
These securities may be sold directly by us, through dealers or agents designated from time to time, to or through publicunderwriters or private transactions at prevailing market prices, at prices related to prevailing market pricesdealers or at privately negotiated prices. The selling stockholder will bear all commissions and discounts, if any, attributable to the salesthrough a combination of these securities.methods on a continuous or delayed basis. See "Plan“Plan of Distribution" beginning on page 14Distribution” in this prospectus. We may also describe the plan of distribution for more information about how the selling stockholder may sellany particular offering of our securities in a prospectus supplement. If any agents, underwriters or dispose of its securities.
AN INVESTMENT IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS"“RISK FACTORS” ON PAGE 31 OF THIS PROSPECTUS AND THE RISK FACTORS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS AS DESCRIBED IN THAT SECTION BEFORE INVESTING IN OUR SECURITIES.
_________________
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 ___________ __, 2013.December 31, 2019.
TABLE OF CONTENTS
Page
| 1 | |
| FORWARD-LOOKING STATEMENTS | 10 |
| USE OF PROCEEDS | |
| DESCRIPTION OF CAPITAL STOCK | 26 |
| DESCRIPTION OF STOCK PURCHASE CONTRACTS | 27 |
| DESCRIPTION OF WARRANTS | 28 |
| DESCRIPTION OF UNITS | 29 |
| DESCRIPTION OF RIGHTS | 29 |
| LEGAL MATTERS | 30 |
| EXPERTS | 30 |
| INCORPORATION BY REFERENCE | |
| WHERE YOU CAN FIND MORE INFORMATION |
i
About this Prospectus
This prospectus is part of a registration statementRegistration Statement on Form S-3 that we filed with the Securities and Exchange Commission (the "SEC"“SEC”) using a "shelf"“shelf” registration process or continuous offering process. Under this shelf registration process, the selling stockholder or its permitted transferees and successorswe may from time to time sell any combination of the securities described in this prospectus in one or more offerings.
This prospectus does not contain all the information provided in the registration statement we filed with the SEC. You should read both this prospectus, including the section titled “Risk Factors,” and the accompanying prospectus supplement, together with the additional information described under the heading “Where You Can Find More Information.”
You should rely only on the information provided in this prospectus, including the information incorporated by reference. We have not authorized anyone to provide you with different information. You should not assume that the information contained or incorporated by reference in this prospectus is accurate as ofor a prospectus supplement. We have not authorized any date other than as of the date of this prospectus, as the case may be,person to provide you with different information. If anyone provides you with different or in the case of the documents incorporated by reference, the date of such documents regardless of the time of delivery of this prospectus or any sale of our securities.
Unless the context otherwise requires, references to "we," "our"“we,” “our”, "us,"“us,” or the "Company"“Company” in this prospectus refer to The LGL Group, Inc., and references to the "selling stockholder" refer to Venator Merchant Fund, L.P.
This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus. This summary may not contain all the information that you should consider before determining whether to invest in our securities. You should read the entire prospectus carefully, including the information included in the "Risk Factors"“Risk Factors” section, as well as our consolidated financial statements, notes to the consolidated financial statements and the other information incorporated by reference into this prospectus, as well as the exhibits to the registration statement of which this prospectus is a part, before making an investment decision.
The Company
Overview
We are a globally-positioned producer of industrial and commercial products and services. We operate in two identified segments. Our electronic components segment is currently focused on the design and manufacture of highly-engineered, high reliability frequency and spectrum control products. These electronic components ensure reliability and security in aerospace and defense communications, low noise and base accuracy for laboratory instruments, and synchronous data transfers throughout the wireless and Internet infrastructure. Our electronic instruments segment is focused on the design and manufacture of high-performance Frequency and Time reference standards that form the basis for timing and synchronization in various applications.
The LGL Group, Inc.,Company was incorporated in 1928 under the laws of the State of Indiana, and in 2007, the Company was reincorporated under the laws of the State of Delaware in 2007, is a globally-positioned producer of industrial and commercial products and services that is currently focused on the design and manufacture of highly-engineered electronic components and subsystems.as The Company and its subsidiariesLGL Group, Inc. We maintain theirour executive offices at 2525 Shader Road, Orlando, Florida, 32804. The Company'sOur telephone number is (407) 298-2000. Our Internet address is www.lglgroup.com. The Company'sinformation contained on our website is not part of this prospectus. Our common stock and warrants areis traded on the NYSE MKTAmerican under the symbols "LGL" and "LGL WS", respectively.
We operate through a number of operatingour two principal subsidiaries, including M-tron Industries, Inc. ("Mtron"), and Piezo Technology, Inc. ("PTI"(together with its subsidiaries, "MtronPTI"), which has design and manufacturing facilities in Orlando, Florida, Yankton, South Dakota and Noida, India, and Precise Time and Frequency, LLC ("PTF") which has a design and manufacturing facility in Wakefield, Massachusetts. We also have local sales and customer support offices in Sacramento, California, Austin, Texas and Hong Kong.
RISK FACTORS
You should carefully consider the specific risks described below, the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, the risk factors described under the caption “Risk Factors” in any applicable prospectus supplement and any risk factors set forth in our other filings with the SEC made pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, which are collectively referredincorporated by reference herein, before making an investment decision. Each of the risks described below and in these documents could materially and adversely affect our business, financial condition, results of operations and prospects, and could result in a partial or complete loss of your investment. See “Where You Can Find More Information.”
Risks Related to herein as "MtronPTI." MtronPTI designs, manufacturesOur Business and sellsIndustry
We are dependent on a single line of business.
Prior to our September 2016 acquisition of PTF, we were engaged only in the design, manufacture and marketing of standard and custom-engineered electronic components that are used primarily to control the frequency or timing of signals in electronic circuits. Its devices, which are commonly called frequency control devices, are used extensively in infrastructure equipmentAlthough our acquisition of PTF added an additional product line of electronic instruments that includes highly engineered products for the telecommunicationsgeneration of time and network equipment industries, as well as in electronic systemsfrequency references for military applications, avionics, earth-orbiting satellites, medical devices, instrumentation, industrial devicessynchronization and global positioning systems.
Given our reliance on this single line of business, any decline in demand for this product line or failure to achieve continued market acceptance of existing and new versions of this product line may harm MtronPTI'sour business and our financial condition. Additionally, unfavorable market conditions affecting this line of business would likely have a disproportionate impact on us in comparison with certain competitors, who have more diversified operations and multiple lines of business. Should this line of business fail to generate sufficient sales to support ongoing operations, there can be no assurance that we will be able to develop alternate business lines.
Our operating results vary significantly from period to period.
We experience fluctuations in our operating results. Some of the principal factors that contribute to these fluctuations include: changes in demand for our products; our effectiveness in managing manufacturing processes, costs and inventory; our effectiveness in engineering and qualifying new product designs with our OEM customers and in managing the risks associated with bringingoffering those new products into production; changes in the cost and availability of raw materials, which often occur in the electronics manufacturing industry and which affect our margins and our ability to meet delivery schedules; macroeconomic and served industry conditions; and events that may affect our production capabilities, such as labor conditions and political instability.
For the first half of 2013, and we are uncertain as to our ability to return to profitability.
We have a large customer that accounts for a significant portion of our revenues, and the loss of this customer, or decrease in theirits demand for our products, could have a material adverse effect on our results.
In 2012, MtronPTI's2018, our largest customer, an electronics contract manufacturing company, accounted for $2,914,000,$4,436,000, or 9.8%17.8%, of the Company's total revenues, compared to $3,680,000,$3,744,000, or 10.3%16.7%, in 2011.2017. In the nine months ended September 30, 2019, our largest customer, an electronics contract manufacturing company, accounted for $4,275,000, or 18.5%, of the Company's total revenues, compared to $3,149,000, or 17.1%, in the same period in 2018. The loss of this customer, or a decrease in theirits demand for our products, could have a material adverse effect on our results.
A relatively small number of customers account for a significant portion of our accounts receivable, and the insolvency of any of these customers could have a material adverse impact on our liquidity.
As of December 31, 2018, four of our largest customers accounted for approximately $1,880,000,$1,043,000, or 42.4%30%, of accounts receivable. As of December 31, 2017, four of our largest customers accounted for approximately $1,100,000, or 32%, of accounts receivable compared to approximately $1,441,000, or 33.4%, as compared to 2011.at the end of 2017. The insolvency of any of these customers could have a material adverse impact on our liquidity.
Our order backlog may not be indicative of future revenues.
Our order backlog comprisesis comprised of orders that are subject to specific production release, orders under written contracts, oral and written orders from customers with which MtronPTI haswe have had long-standing relationships and written purchase orders from sales representatives. MtronPTI'sOur customers may order componentsproducts from multiple sources to ensure timely delivery when backlog is particularly long and may cancel or defer orders without significant penalty. They also may cancel orders when business is weak and inventories are excessive. As a result, the Companywe cannot provide assurances as to the portion of backlog orders to be filled in a given year, and MtronPTI'sour order backlog as of any particular date may not be representative of actual revenues for any subsequent period.
We are a holding company, and therefore are dependent upon the operations of our subsidiaries to meet our obligations.
We are a holding company that transacts business through our operating subsidiaries. Our primary assets are cash and cash equivalents, marketable securities, the shares of our operating subsidiaries. Oursubsidiaries and intercompany loans. Should our cash and cash equivalents be depleted, our ability to meet our operating requirements and to make other payments dependswill depend on the surplus and earnings of our subsidiaries and their ability to pay dividends or to advance or repay funds. The ability of our subsidiaries to pay dividends or make other distributions to the Company is subject to certain limitations under our existing credit facility.
Our future rate of growth and profitability are highly dependent on the development and growth of the communications, networking, military, avionics,aerospace, defense, instrumentation and industrial markets, which are cyclical.
In 20122018 and the first half of 2013,2017, the majority of MtronPTI'sour revenues were derived from sales to manufacturers of equipment for the communications, networking, military, avionics,defense, aerospace, instrumentation and industrial markets for frequency and spectrum control devices, including indirect sales through distributors and contract manufacturers. During the remainder of 2013, MtronPTI expects2019, we expect a significant portion of itsour revenues to continue to be derived from sales to these manufacturers. Often OEMs and other service providers within these markets have experienced periods of capacity shortage and periods of excess capacity, as well as periods of either high or low demand for their products. In periods of excess capacity or low demand, purchases of capital equipment may be curtailed, including equipment that incorporates MtronPTI'sour products. A slowdown, whether due to cyclical, macroeconomic or other factors,reduction in demand for the manufacture and purchase of equipment for these markets, whether due to cyclical, macroeconomic or other factors, or due to our reduced ability to compete based on cost or technical factors, could substantially reduce MtronPTI'sour net sales and operating results and adversely affect our financial condition. Moreover, if these markets fail to grow as expected, MtronPTIwe may be unable to maintain or grow its revenue.
The market share of frequency control devices with equipment manufacturersour customers in the communications, networking, military, avionics,aerospace, defense, instrumentation and industrial markets may change over time, reducing the potential value of our relationships with our existing customer base.
We have developed long-term relationships with our existing customers, including pricing contracts, custom designs and approved vendor status. If these customers lose market share to other equipment manufacturers in the communications, networking, military, avionics,aerospace, defense, instrumentation and industrial markets with whom we do not have similar relationships, our ability to maintain revenue, margin or operating performance may be adversely affected.
We may make acquisitions that are not successful, or we may fail to integrate acquired businesses into our operations properly.
We intend to explorecontinue exploring opportunities to buy other businesses or technologies that could complement, enhance, or expand our current business or product lines, or that might otherwise offer us growth opportunities. We may have difficulty finding such opportunities or, if such opportunities are identified, we may not be able to complete such transactions for reasons including a failure to secure necessary financing.
Any transactions that we are able to identify and complete may involve a number of risks, including:
| · | The diversion of our management's attention from the management of our existing business to the integration of the operations and personnel of the acquired or combined business or joint venture; |
| · |
| · | Possible adverse effects on our operating results during the integration process; |
| · | Substantial acquisition-related expenses, which would reduce our net income, if any, in future years; |
| · | The loss of key employees and customers as a result of changes in management; and |
| · | Our possible inability to achieve the intended objectives of the transaction. |
In addition, we may not be able to integrate, operate, maintain or manage, successfully or profitably, our newly acquired operations or employees. We may not be able to maintain uniform standards, controls, policies and procedures, and this may lead to operational inefficiencies.
Any of these difficulties could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If MtronPTI iswe are unable to introduce innovative products, demand for itsour products may decrease.
Our future operating results are dependent on itsour ability to develop, introduce and market innovative products continually, to modify existing products, to respond to technological change and to customize some of itsour products to meet customer requirements. There are numerous risks inherent in this process, including the risks that MtronPTIwe will be unable to anticipate the direction of technological change or that itwe will be unable to develop and market new products and applications in a timely or cost-effective manner to satisfy customer demand.
Our markets are highly competitive, and itwe may lose business to larger and better-financed competitors.
Our markets are highly competitive worldwide, with low transportation costs and few import barriers. MtronPTI competesWe compete principally on the basis of product quality and reliability, availability, customer service, technological innovation, timely delivery and price. Within the industryindustries in which MtronPTI competes,we compete, competition has become increasingly concentrated and global in recent years.
Many of MtronPTI'sour major competitors, some of which are larger, and potential competitors have substantially greater financial resources and more extensive engineering, manufacturing, marketing and customer support capabilities.
Our success depends on our ability to retain key management and technical personnel and attracting, retaining, and training new technical personnel.
Our future growth and success will depend in large part upon our ability to recruit highly-skilled technical personnel, including engineers, and to retain our existing management and technical personnel. The labor markets in which we operate are highly competitive and some of our operations are not located in highly populated areas. As a result, we may not be able to recruit and retain key personnel. Our failure to hire, retain or adequately train key personnel could have a negative impact on our performance. The Company's employment agreement with Gregory P. Anderson, its President and Chief Executive Officer, expires on November 2, 2013.
We purchase certain key components and raw materials from single or limited sources and could lose sales if these sources fail to fulfill itsour needs.
If single-source components or key raw materials were to become unavailable on satisfactory terms, and MtronPTIwe could not obtain comparable replacement components or raw materials from other sources in a timely manner, the Company'sour business, results of operations and financial condition could be harmed. On occasion, one or more of the components used in MtronPTI'sour products have become unavailable, resulting in unanticipated redesign and related delays in shipments. We cannot give assurance that similar delays will not occur in the future. Our suppliers may be impacted by compliance with environmental regulations including Restriction of Hazardous Substances ("RoHS")RoHS and Waste Electrical and Electronic Equipment ("WEEE"), which could disrupt the supply of components or raw materials or cause additional costs for MtronPTIus to implement new components or raw materials into itsour manufacturing process.
As a supplier to U.S. Government defense contractors, we are subject to a number of procurement regulations and other requirements and could be adversely affected by changes in regulations or any negative findings from a U.S. Government audit or investigation.
A number of our customers are U.S. Government contractors. As one of their suppliers, we must comply with significant procurement regulations and other requirements. We also maintain registration under the International Traffic in Arms Regulations for all of our production facilities. One of those production facilities must comply with additional requirements and regulations for its production processes and for selected personnel in order to maintain the security of classified information. These requirements, although customary within these markets, increase our performance and compliance costs. If any of these various requirements change, our costs of complying with them could increase and reduce our operating margins.
We operate in a highly regulated environment and are routinely audited and reviewed by the U.S. Government and its agencies such as the Defense Contract Audit Agency ("DCAA") and Defense Contract Management Agency ("DCMA").Agency. These agencies review our performance under our contracts, our cost structure and our compliance with applicable laws, regulations, and standards, as well as the adequacy of, and our compliance with, our internal control systems and policies. Systems that are subject to review include our purchasing systems, billing systems, property management and control systems, cost estimating systems, compensation systems and management information systems.
Any costs found to be improperly allocated to a specific contract will not be reimbursed or must be refunded if already reimbursed. If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspension, or prohibition from doing business as a supplier to contractors who sell products and services to the U.S. Government. In addition, our reputation could be adversely affected if allegations of impropriety were made against us.
From time to time, we may also be subject to U.S. Government investigations relating to our or our customers' operations and products, and are expected to perform in compliance with a vast array of federal laws, including the Truth in Negotiations Act, the False Claims Act, the International Traffic in Arms Regulations promulgated under the Arms Export Control Act, and the Foreign Corrupt Practices Act. We or our customers may be subject to reductions of the value of contracts, contract modifications or termination, and the assessment of penalties and fines, which could negatively impact our results of operations and financial condition, or result in a diminution in revenue from our customers, if we or our customers are found to have violated the law or are indicted or convicted for violations of federal laws related to government security regulations, employment practices or protection of the environment, or are found not to have acted responsibly as defined by the law. Such convictions could also result in suspension or debarment from serving as a supplier to government contractors for some period of time. Such convictions or actions could have a material adverse effect on us and our operating results. The costs of cooperating or complying with such audits or investigations may also adversely impact our financial results.
Our products are complex and may contain errors or design flaws, which could be costly to correct.
When MtronPTI releaseswe release new products, or new versions of existing products, they may contain undetected or unresolved errors or defects. The vast majority of MtronPTI'sour products are custom-designed for requirements of specific OEM systems. The expected business life of these products ranges from less than one year to more than 10 years depending on the application. Some of the customizations are modest changes to existing product designs while others are major product redesigns or new product platforms.
Despite testing, errors or defects may be found in new products or upgrades after the commencement of commercial shipments. Undetected errors and design flaws have occurred in the past and could occur in the future. These errors could result in delays, loss of market acceptance and sales, diversion of development resources, damage to the Company's reputation, product liability claims and legal action by its customers and third parties, failure to attract new customers and increased service costs.
Communications and network infrastructure equipment manufacturers increasingly rely upon contract manufacturers, thereby diminishing our ability to sell our products directly to those equipment manufacturers.
There is a continuing trend among communications and network infrastructure equipment manufacturers to outsource the manufacturing of their equipment or components. As a result, MtronPTI'sour ability to persuade these OEMs to utilize our products in customer designs could be reduced and, in the absence of a manufacturer's specification of MtronPTI'sour products, the prices that MtronPTIwe can charge for them may be subject to greater competition.
Future changes in MtronPTI'sour environmental liability and compliance obligations may increase costs and decrease profitability.
Our present and past manufacturing operations, products, and/or product packaging are subject to environmental laws and regulations governing air emissions, wastewater discharges, and the handling, disposal and remediation of hazardous substances, wastes and other chemicals. In addition, more stringent environmental regulations may be enacted in the future, and we cannot presently determine the modifications, if any, in MtronPTI'sour operations that any future regulations might require, or the cost of compliance that would be associated with these regulations.
Environmental laws and regulations may cause us to change our manufacturing processes, redesign some of our products, and change components to eliminate some substances in MtronPTI'sour products in order to be able to continue to offer them for sale.
We have significant international operations and sales to customers outside of the United States that subject us to certain business, economic and political risks.
We have office and manufacturing space in Noida, India, and Yantai, China, anda sales officesoffice in Hong Kong and Shanghai, China.Kong. Additionally, foreign revenues for 20122018, 2017 and 2011the nine months ended September 30, 2018 and 2019 (primarily to Malaysia and China)Malaysia) accounted for 49.2%24.9%, 28.2%, 24.3% and 24.9% of our 2012 consolidated revenues for 2018, 2017 and 56.2% of our 2011 consolidated revenues. For the sixnine months ended JuneSeptember 30, 2013, foreign revenues accounted for 48.8% of consolidated revenues.2019, respectively. We anticipate that sales to customers located outside of the United States will continue to be a significant part of our revenues for the foreseeable future. Our international operations and sales to customers outside of the United States subject our operating results and financial condition to certain business, economic, political, health, regulatory and other risks, including:
| · | Political and economic instability in countries in which |
| · | Expropriation or the imposition of government controls; |
| · | Responsibility to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions; |
| · | Sanctions or restrictions on trade imposed by the United States government; |
| · | Export license requirements; |
| · | Trade restrictions; |
| · | Currency controls or fluctuations in exchange rates; |
| · | High levels of inflation or deflation; |
| · | Difficulty in staffing and managing non-U.S. operations |
| · | Greater difficulty in collecting accounts receivable and longer payment cycles; |
| · | Changes in labor conditions and difficulties in staffing and managing international operations; and |
| · | Limitations on insurance coverage against geopolitical risks, natural disasters and business operations. |
Additionally, to date, very few of our international revenue and cost obligations have been denominated in foreign currencies. As a result, changes in the value of the United States dollar relative to foreign currencies may affect our competitiveness in foreign markets. We do not currently engage in foreign currency hedging activities, but may do so in the future to the extent that we incur a significant amount of foreign-currency denominated liabilities.
We rely on information technology systems to conduct our tax provisionsbusiness, and disruption, failure or exposure to additional income tax liabilities could affect our profitability.
We rely on information technology (“IT”) systems in order to achieve our products. Because therebusiness objectives. We also rely upon industry accepted security measures and technology to securely maintain confidential information maintained on our IT systems. However, our portfolio of hardware and software products, solutions and services and our enterprise IT systems may be only a limited numbervulnerable to damage or disruption caused by circumstances beyond our control such as catastrophic events, power outages, natural disasters, computer system or network failures, computer viruses, cyber-attacks or other malicious software programs. The failure or disruption of our IT systems to perform as anticipated for any reason could disrupt our business and result in decreased performance, significant remediation costs, transaction errors, loss of data, processing inefficiencies, downtime, litigation and the loss of suppliers offering "conflict free" minerals,or customers. A significant disruption or failure could have a material adverse effect on our business operations, financial performance and financial condition.
Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our tenant and investor relationships. As our reliance on technology increases, so will the risks posed to our information systems, both internal and those we cannot be sureoutsource. There is no guarantee that any processes, procedures and internal controls we have implemented or will be able to obtain necessary minerals from such suppliersimplement will prevent cyber intrusions, which could have a negative impact on our financial results, operations, business relationships or confidential information.
The Company has made a material investment in sufficient quantities or at competitive prices. In addition, our supply chain is complex and wea special purpose acquisition company that may not be ablesuccessful.
The Company has acquired membership interests in LGL Systems Acquisition Holding Company, LLC (the “Sponsor”), the sponsor of LGL Systems Acquisition Corp. (NASDAQ: DFNS), a special purpose acquisition company formed for the purpose of effecting a business combination in the aerospace, defense and communications industries (the “SPAC”). On November 6, 2019, the Company contributed $3.35 million to easily verify the origins for all minerals usedSponsor to fund the Sponsor’s purchase of private warrants in our products. We may face reputational challengesa private placement that is scheduled to close simultaneously with our customers and other stakeholders if our products contain minerals not determinedthe consummation of the SPAC’s initial public offering. Each private warrant is exercisable to purchase one share of common stock of the SPAC at an exercise price of $11.50 per share, subject to adjustment. The proceeds from the private warrants will be added to the proceeds from the SPAC’s initial public offering to be conflict freeheld in a trust account. If the SPAC does not complete a business combination within 24 months from the closing of the SPAC’s initial public offering, the proceeds from the sale of the private warrants will be used to fund the redemption of the shares sold in the SPAC’s initial public offering (subject to the requirements of applicable law), and the private warrants will expire worthless. There is no assurance that the SPAC will be successful in completing a business combination or that any business combination will be successful. The Company can lose its entire investment in the SPAC if a business combination is not completed within 24 months or if we are unable to sufficiently verify the origins of minerals contained inbusiness combination is not successful, which may adversely impact the components included in our products through the due diligence procedures that we implement.
Risks Related to Our Securities
The pricesprice of our common stock and warrants havehas fluctuated considerably and areis likely to remain volatile, in part due to the limited market for our securities.
From January 1, 2012,2019 through October 29, 2013 ,November 30, 2019, the high and low closing sales prices for our common stock were $9.14$14.40 and $4.76, respectively. From their issuance on August 6, 2013, through October 29, 2013,$6.45, respectively, and the high and low sales prices foraverage daily trading volume in our warrants were $0.22 and $0.04, respectively.common stock during that time period was approximately 16,000 shares per day. There is a limited public market for our common stock, and warrants, and we cannot provide assurances that a more active trading market will develop or be sustained. As a result of lowlimited trading volume in our common stock, and warrants, the purchase or sale of a relatively small number of securitiesshares could result in significant price fluctuations and it may be difficult for holders to sell their securitiesshares without depressing the market price for such securities.
Additionally, the market prices of our common stock and warrants may continue to fluctuate significantly in response to a number of factors, some of which are beyond our control, including the following:
| · | General economic conditions affecting the availability of long-term or short-term credit facilities, the purchasing and payment patterns of our customers, or the requirements imposed by our suppliers; |
| · | Economic conditions in our industry and in the industries of our customers and suppliers; |
| · | Changes in financial estimates or investment recommendations by securities analysts relating to our common stock; |
| · | Market reaction to our reported financial results; |
| · | Loss of a major customer; |
| · | Announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and |
| · | Changes in key personnel. |
Our officers, directors and 10% stockholders have significant voting power and may vote their shares in a manner that is not in the best interest of other stockholders.
Our officers, directors and 10% or greater stockholders control approximately 36.5%41.5% of the voting power represented by our outstanding shares of common stock as of October 29, 2013 .December 27, 2019. If these stockholders act together, they may be able to exert significant control over our management and affairs requiring stockholder approval, including approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of all of our stockholders.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of the Company, more difficult, which acquisition may be beneficial to stockholders.
Provisions in our certificate of incorporation and by-laws, as well as provisions of the General Corporation Law of the State of Delaware ("DGCL"), 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 our stockholders. These provisions include prohibiting our stockholders from fixing the number of directors, and establishing advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our Board.
Additionally, Section 203 of the DGCL prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. We have not opted out of the restrictions under Section 203, as permitted under DGCL.
FORWARD-LOOKING STATEMENTS
Information included or incorporated by reference in this prospectus may contain forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "should," "expect," "anticipate," "estimate," "believe," "intend"“may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or the negative of these words or other variations on these words or comparable terminology, as they relate to future periods.
Examples of forward-looking statements include, but are not limited to, statements we make regarding the Company'sCompany’s efforts to grow revenue, the Company'sCompany’s expectations regarding fulfillment of backlog, the results of introduction of a new product line, future benefits to operating margins and the adequacy of the Company'sCompany’s cash resources.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. As forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include national and global economic, business, competitive, market and regulatory conditions and the factors described under "Risk Factors"“Risk Factors” in this prospectus, in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.
Further, we do not undertake any obligation to publicly update any forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements.
USE OF PROCEEDS
The net proceeds of this offering will not receive anybe used for working capital and other general corporate purposes. Such purposes may include research and development expenditures and capital expenditures. As of the date of this prospectus, we cannot specify with certainty all of the particular uses of the proceeds from this offering. We will set forth in the applicable prospectus supplement our intended use for the net proceeds received from the sale of securities by the selling stockholder pursuant to this prospectus. See "Planrelated securities. Accordingly, we will retain broad discretion over the use of Distribution." A portionsuch proceeds. Pending use of the shares of common stock coverednet proceeds, we intend to invest the net proceeds in interest-bearing, investment-grade securities.
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus are issuable upon exercise of warrantsfrom time to purchase our common stock, of which 25 warrants will entitle their holder to purchasetime in one share of our common stock at the exercise price of $7.50 per share, as may be adjusted in accordance with the termsor more transactions, including without limitation:
| · | directly to one or more purchasers; |
| · | through agents; |
| · | in “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act, into an existing trading market, or a securities exchange or otherwise; |
| · | to or through underwriters, brokers or dealers; or |
| · | through a combination of any of these methods. |
A distribution of the warrants. Upon exercise of any of these warrants, which are exercisable for cash only, the selling stockholder would pay us the exercise price. We expect to use any such proceeds for general corporate purposes.
In addition, the manner in which we may sell some or all of the securities covered by this prospectus including all registration fees and filing fees, NYSE MKT listing fees and fees and expenses of counsel and our independent registered public accounting firm.
| Number of Securities Beneficially Owned Prior to Offering | Maximum Number of Securities to be Sold Pursuant to this Prospectus | Number of Securities Beneficially Owned After Offering (1) | Percentage of Class Beneficially Owned After Offering (1) | |||||
| Name | ||||||||
Venator Merchant Fund, L.P. (2) | ||||||||
| Common stock | 350,902(3) | 421,083 (4) | 0 | -- % | ||||
| Warrants | 1,754,510(5) | 1,754,510 | 0 | -- % |
| · | purchases by a broker-dealer, as principal, and resale by the broker-dealer for its account; |
| · |
| · | privately negotiated |
We may also enter into hedging transactions. For example, we may:
| · | enter into transactions with a broker-dealer or affiliate thereof in connection with which such broker-dealer or affiliate will engage in short sales of the common stock pursuant to this prospectus, in which |
| · |
| · | enter into option or other |
| · |
| default in the case of a |
In addition, the selling stockholder may transfer securities by other means not described in this prospectus. If the selling stockholder effects such transactions by selling securities to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholder or commissions from purchasers of the securities for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).
We may sell the securities in and outside the United States through underwriters or dealers, directly to purchasers, including our affiliates, through agents, or through a combination of any of these methods. The prospectus supplement will include the specific plan of distribution, which will include the following information:
| · | the terms of the offering; |
| · | the names of any underwriters, dealers or agents; |
| · | the name or names of any managing underwriter or underwriters; |
| · | the purchase price of the securities; |
| · | the net proceeds from the sale of the securities; |
| · | any delayed delivery arrangements; |
| · | any underwriting discounts, commissions and other items constituting underwriters’ compensation; |
| · | any public offering price; |
| · | any discounts or concessions allowed or reallowed or paid to dealers; |
| · | any commissions paid to agents; and |
| · | the terms of any arrangement entered into with any dealer or agent. |
Sale Through Underwriters or Dealers
If underwriters are used in the sale of any of these securities, the underwriters will acquire the securities for their secured obligations, the pledgees or secured partiesown account. The underwriters may offer and sellresell the securities from time to time pursuantin one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may offer securities to thisthe public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. Unless we inform you otherwise in any prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provisionsupplement, the obligations of the Securities Act amending, if necessary, the list of selling stockholdersunderwriters to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholder also may transfer and donatepurchase the securities in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
During and after an offering through underwriters, the underwriters may purchase and sell the securities in the open market. These transactions may include overallotment and stabilizing transactions and purchases to cover syndicate short positions created in connection with the offering. The underwriters may also impose a penalty bid, which means that selling concessions allowed to syndicate members or other broker-dealers for the offered securities sold for their account may be deemedreclaimed by the syndicate if the offered securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the offered securities, which may be higher than the price that might otherwise prevail in the open market. If commenced, the underwriters may discontinue these activities at any time.
If dealers are used in the sale of securities, we will sell the securities to be underwriting commissions or discounts underthem as principals. They may then resell those securities to the Securities Act. Atpublic at varying prices determined by the dealers at the time a particular offeringof resale. We will include in the prospectus supplement the names of the shares of common stock or warrants is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of securities being offereddealers and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholder and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
We are subject to the registration statement, of which this prospectus forms a part.
Direct Sales and Sales Through Agents
We may sell the securities directly, and not through underwriters or agents. Securities may also be sold through agents designated from time to time. In the prospectus supplement, we will name any agent involved in the offer or sale of the offered securities, and we will describe any commissions payable to the agent. Unless we inform you otherwise in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act, with respect to theany sale of those securities.
Delayed Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities from us at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described in the prospectus supplement. The prospectus supplement will describe the commission payable for solicitation of those contracts.
Institutional Purchasers
We may authorize agents, dealers or underwriters to solicit certain institutional investors to purchase offered securities on a delayed delivery basis pursuant to delayed delivery contracts providing for payment and delivery on a specified future date. The applicable prospectus supplement or other offering materials, as the case may be, will provide the details of any such arrangement, including the offering price and commissions payable on the solicitations.
We will enter into such delayed contracts only with institutional purchasers that we approve. These institutions may include commercial and savings banks, insurance companies, pension funds, investment companies and educational and charitable institutions.
Market-Making, Stabilization and Other Transactions
There is currently no market for any of the registrationoffered securities, other than our common stock which is listed on the NYSE American. If the offered securities are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities and other factors. While it is possible that an underwriter could inform us that it intends to make a market in the offered securities, such underwriter would not be obligated to do so, and any such market-making could be discontinued at any time without notice. Therefore, no assurance can be given as to whether an active trading market will develop for the offered securities. We have no current plans for listing of the debt securities on any securities exchange or quotation system; any such listing with respect to any particular debt securities will be described in the applicable prospectus supplement or other offering materials, as the case may be.
In connection with any offering of common stock, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, syndicate covering transactions and warrants pursuantstabilizing transactions. Short sales involve syndicate sales of common stock in excess of the number of shares to be purchased by the underwriters in the offering, which creates a syndicate short position. “Covered” short sales are sales of shares made in an amount up to the Registration Rights Agreement, including, without limitation, SEC filing feesnumber of shares represented by the underwriters’ over-allotment option. In determining the source of shares to close out the covered syndicate short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. Transactions to close out the covered syndicate short involve either purchases of the common stock in the open market after the distribution has been completed or the exercise of the over-allotment option. The underwriters may also make “naked” short sales of shares in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares of common stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of bids for or purchases of shares in the open market while the offering is in progress for the purpose of pegging, fixing or maintaining the price of the securities.
In connection with any offering, the underwriters may also engage in penalty bids. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering transactions and expensespenalty bids may cause the price of compliance with statethe securities or "blue sky" laws; provided, however,to be higher than it would be in the selling stockholder will pay all underwriting discounts and selling commissions,absence of these transactions. The underwriters may, if any. they commence these transactions, discontinue them at any time.
We will indemnify the selling stockholder against liabilities, including some liabilities under the Securities Act in accordancemay have agreements with the Registration Rights Agreement or the selling stockholder will be entitledagents, dealers and underwriters to contribution. We may be indemnified by the selling stockholderindemnify them against certain civil liabilities, including liabilities under the Securities Act, or to contribute with respect to payments that the agents, dealers or underwriters may arisebe required to make. Agents, dealers and underwriters may be customers of, engage in transactions with or perform services for, us in the ordinary course of their businesses.
DESCRIPTION OF DEBT SECURITIES
We may issue debt securities in one or more distinct series. This section summarizes the terms of the debt securities that are common to all series. Most of the financial terms and other specific terms of any series of debt securities that we offer will be described in a prospectus supplement to be attached to the front of this prospectus. Since the terms of specific debt securities may differ from the general information we have provided below, if any written information furnishedcontained in a prospectus supplement contradicts the information below, you should rely on information in the prospectus supplement.
As required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document called an “indenture”. An indenture is a contract between us and a financial institution acting as trustee of holders of the debt securities on behalf of the holders of the debt securities. The trustee has two main roles. First, the trustee can enforce the rights of holders of the debt securities against us if we default. There are some limitations on the extent to which the trustee acts on behalf of holders of the debt securities, described later under “—Events of Default.” Second, the trustee performs certain administrative duties for us.
The debt securities will be either senior debt securities or subordinated debt securities. We will issue the senior debt securities under a senior indenture between us byand a trustee. We will issue the selling stockholder specifically for usesubordinated debt securities under a subordinated indenture between us and the same or another trustee. The senior indenture and the subordinated indenture are collectively referred to in this prospectus as the indenture, and each of the trustee under the senior indenture and the trustee under the subordinated indenture are referred to in accordancethis prospectus as the trustee. Unless otherwise specified in a prospectus supplement the debt securities will be direct unsecured obligations of The LGL Group.
Because this section is a summary, it does not describe every aspect of the debt securities or the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of debt securities. For example, in this section, we use capitalized words to signify terms that are specifically defined in the indenture. Some of the definitions are repeated in this prospectus, but for the rest you will need to read the indenture. We have filed the form of the indenture as an exhibit to the registration statement that we have filed with the RegistrationSEC. See “Where You Can Find More Information,” below, for information on how to obtain a copy of the indenture. In addition, most of the financial terms and other specific terms of any series of debt securities that we offer will be described in the applicable prospectus supplement.
General
Each series of debt securities, unless otherwise specified in the prospectus supplement, will be unsecured obligations of The LGL Group. Any senior unsecured debt securities that we issue will rank equally with all other unsecured and unsubordinated indebtedness of us. Any subordinated debt securities that we issue will be expressly subordinated in right of payment to the prior payment in full of our senior indebtedness. In addition, unless otherwise specified in the applicable prospectus supplement, the debt securities will be structurally subordinated to all existing and future liabilities, including trade payables, of our subsidiaries, and the claims of creditors of those subsidiaries, including trade creditors, will have priority as to the assets and cash flows of those subsidiaries.
Any debt securities proposed to be sold under this prospectus and the attached prospectus supplement (“offered debt securities”) and any debt securities issuable upon conversion or exchange of other offered securities (“underlying debt securities”), may be issued under the indenture in one or more series.
You should read the prospectus supplement for the terms of the offered debt securities, including the following:
| · | the title of the debt securities and whether the debt securities will be senior debt securities or subordinated debt securities of The LGL Group; |
| · | the total principal amount of the debt securities and any limit on the total principal amount of debt securities of the series; |
| · | the price or prices at which The LGL Group will offer the debt securities; |
| · | if not the entire principal amount of the debt securities, the portion of the principal amount payable upon acceleration of the maturity of the debt securities or how this portion will be determined; |
| · | the date or dates, or how the date or dates will be determined or extended, when the principal of the debt securities will be payable; |
| · | the interest rate or rates, which may be fixed or variable, that the debt securities will bear, if any, or how the rate or rates will be determined, the date or dates from which any interest will accrue or how the date or dates will be determined, the interest payment dates, any record dates for these payments and the basis upon which interest will be calculated, if other than that of a 360-day year of twelve 30-day months; |
| · | any optional redemption provisions; |
| · | any sinking fund or other provisions that would obligate us to repurchase or otherwise redeem the debt securities; |
| · | if other than U.S. dollars, the currency or currencies of the debt securities; |
| · | whether the amount of payments of principal, premium or interest, if any, on the debt securities will be determined with reference to an index, formula or other method, which could be based on one or more currencies, commodities, equity indices or other indices, and how these amounts will be determined; |
| · | the place or places, if any, other than or in addition to The City of New York, of payment, transfer, conversion and/or exchange of the debt securities; |
| · | if the denominations in which the offered debt securities will be issued are other than denominations of $1,000 or any integral multiple of $1,000; |
| · | the applicability of defeasance provisions of the indenture and any provisions in modification of, in addition to, or in lieu of, any of these provisions; |
| · | any provisions granting special rights to the holders of the debt securities upon the occurrence of specified events; |
| · | any changes or additions to the events of default or covenants contained in the indenture; |
| · | whether the debt securities will be convertible into or exchangeable for any other securities and the applicable terms and conditions; |
| · | subordination provisions, if any, that will apply, to the extent different from those set forth below; |
| · | the form of note or other instrument representing the debt if not issued in book entry form; and |
| · | any other terms of the debt securities. |
Covenants
The supplemental indenture with respect to any particular series of debt securities may contain covenants including, without limitation, covenants restricting or limiting:
| · | the incurrence of additional debt by us and our subsidiaries; |
| · | the making of various payments, including dividends, by us and our subsidiaries; |
| · | our business activities and those of our subsidiaries; |
| · | the issuance of other securities by our subsidiaries; |
| · | asset dispositions; |
| · | sale-leaseback transactions; |
| · | transactions with affiliates; |
| · | a change of control; |
| · | the incurrence of liens; and |
| · | mergers and consolidations involving us and our subsidiaries. |
For purposes of this prospectus, any reference to the payment of principal of or premium or interest, if any, on debt securities will include additional amounts if required by the terms of the debt securities, subject to the maximum offering amount under this prospectus.
The indenture does not limit the amount of debt securities that may be issued thereunder from time to time. The indenture also provides that there may be more than one trustee thereunder, with respect to one or more different series of indenture securities. See “—Resignation of Trustee,” below. At a time when two or more trustees are acting under the indenture, each with respect to only certain series, the term “indenture securities” means the one or more series of debt securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture, the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each trustee is acting would be treated as if issued under separate indentures.
We have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities of that series unless the reopening was restricted when that series was created.
Methods of Calculating and Paying Interest on our Debt Securities
Each series of our debt securities will bear interest at a fixed or variable rate per annum shown on the front cover of the prospectus supplement under which that series is issued.
Provisions Relating Only to the Senior Debt Securities
The senior debt securities will rank equally in right of payment with all of our other senior and unsubordinated debt and senior in right of payment to any of our subordinated debt, including the subordinated debt securities. The senior debt securities will be effectively subordinated to all of our secured debt and to all debt, including trade debt, of our subsidiaries. We will disclose the amount of our secured debt in the prospectus supplement.
Provisions Relating Only to the Subordinated Debt Securities
The subordinated debt securities will rank junior in right of payment to all of our senior indebtedness. Senior indebtedness will be defined to include all notes or other evidences of debt not expressed to be subordinate or junior in right of payment to any of our other debt. The debt will be structurally subordinated to all debt, including trade debt, of our subsidiaries.
If the offered securities are subordinated debt securities, the supplemental indenture may provide that no cash payment of principal, interest and any premium on the subordinated debt securities may be made:
| · | if we fail to pay when due any amounts on any senior indebtedness; |
| · | if our property is, or we are, involved in any voluntary or involuntary liquidation or bankruptcy; and |
| · | in other instances specified in the supplemental indenture. |
Conversion or Exchange Rights Agreement
If any series of our debt securities are convertible or exchangeable, the applicable prospectus supplement will specify:
| · | the type of securities into which it may be converted or exchanged; |
| · | the conversion price or exchange ratio, or its method of calculation; and |
| · | how the conversion price or exchange ratio may be adjusted if our debt securities are redeemed. |
Events of Default
Unless otherwise specified in the applicable prospectus supplement, the following will be events of default with respect to any series of debt securities:
| · | default for 30 days in the payment when due of interest on the debt securities; |
| · | default in payment when due of the principal of or any premium on the debt securities; |
| · | default in the performance or breach of various covenants after applicable notice and/or grace period; and |
| · | various events of bankruptcy or insolvency with respect to us. |
The applicable prospectus supplement will describe any additional events of default.
If an event of default occurs with respect to debt securities of a series then outstanding and is continuing, then the trustee or the holders of not less than 25% in principal amount of the debt securities of that series then outstanding, by a notice in writing to The LGL Group (and to the trustee if given by the holders), may, and the trustee at the request of such holders shall, declare the principal amount (or, if the debt securities of that series are original issue discount securities, such portion of the principal amount as may be specified in the terms of that series) of, premium, if any, and accrued interest on all of the debt securities of that series to be due and payable immediately, and the same (or specified portion thereof) shall become immediately due and payable. A declaration of default under the indenture or under other payment obligations could give rise to cross-defaults and acceleration with respect to the debt securities or such other payment obligations.
At any time after a declaration of acceleration with respect to debt securities of any series (or of all series, as the case may be) has been made and before a judgment or decree for payment of the money due has been obtained by the trustee as provided in the indenture, the holders of a majority in principal amount of the debt securities of that series (or of all series, as the case may be) then outstanding, by written notice to The LGL Group and the trustee, may rescind such declaration and its consequences under the circumstances specified in the applicable debenture.
The indenture will provide that no such rescission shall affect any subsequent default or impair any right consequent thereon.
With respect to the debt securities of any series, the holders of not less than a majority in principal amount of the debt securities of such series then outstanding shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, provided that:
| · | such direction shall not be in conflict with any rule of law or with the indenture; |
| · | the trustee may take any other action deemed proper by the trustee which is not inconsistent with such direction; and |
| · | the trustee need not take any action which might involve it in personal liability or be unjustly prejudicial to the holders of debt securities of such series not consenting. |
No holder of any debt security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise, with respect to the indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
| · | the holder has previously given written notice to the trustee of a continuing event of default with respect to the debt securities of that series; |
| · | the holders of not less than 25% in principal amount of the debt securities of that series then outstanding shall have made written request to the trustee to institute proceedings in respect of the event of default in its own name as trustee under the indenture; |
| · | such holder or holders have offered to the trustee indemnity reasonably satisfactory to the trustee against the costs, expenses and liabilities to be incurred in compliance with such request; |
| · | the trustee for 60 days after its receipt of such notice, request and offer of indemnity, has failed to institute any such proceeding; and |
| · | no direction inconsistent with such written request has been given to the trustee during such 60-day period by the holders of a majority or more in principal amount of the debt securities of that series then outstanding. |
However, no holder of a debt security has the right under the indenture to affect, disturb or prejudice the rights of any other holders of debt securities of the same series, or to obtain or to seek to obtain priority or preference over any other of such holders or to enforce any right under the indenture, except in the manner provided in the indenture and for the equal and ratable benefit of all holders of debt securities of the same series.
Every year we will be required to deliver to the trustee a certificate as to our performance of our obligations under the indenture and as to any defaults.
Mergers, Consolidations and Certain Sale of Assets
Unless otherwise specified in the applicable prospectus supplement, the indenture will provide that we may not:
| · | consolidate with or merge into any other person or entity or permit any other person or entity to consolidate with or merge into us in a transaction in which we are not the surviving entity, or |
| · | transfer, lease or dispose of all or substantially all of our assets to any other person or entity unless: |
| o | the resulting, surviving or transferee entity shall be a corporation organized and existing under the laws of the United States or any state thereof and such resulting, surviving or transferee entity shall expressly assume, by supplemental indenture, executed and delivered in form satisfactory to the trustee, all of our obligations under the debt securities and the indenture; |
| o | immediately after giving effect to such transaction (and treating any indebtedness which becomes an obligation of the resulting, surviving or transferee entity as a result of such transaction as having been incurred by such entity at the time of such transaction), no default or event of default would occur or be continuing; and |
| o | we shall have delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the indenture. |
Modification and Waiver
Unless otherwise specified in the applicable prospectus supplement, the indenture will provide that The LGL Group and the trustee may amend or supplement the indenture or the debt securities without notice to or the consent of any holder for clarification, corrections, and legal compliance purposes, including as follows:
| · | to cure any ambiguity, defect or inconsistency; |
| · | to provide for uncertificated debt securities in addition to or in place of certificated debt securities; |
| · | to make any change that does not adversely affect the interests thereunder of any holder; |
| · | to qualify the indenture under the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act, or to comply with the requirements of the SEC in order to maintain the qualification of the indenture under the Trust Indenture Act; |
| · | to evidence the succession of another person to The LGL Group and that person’s assumption of The LGL Group’s covenants; |
| · | to add to The LGL Group’s covenants; |
| · | to add any additional events of default; |
| · | to secure the debt securities; |
| · | to establish the form or terms of debt securities; |
| · | to evidence the appointment of a successor trustee under the indenture; |
| · | to close the indenture with respect to authentication and delivery of additional series of debt securities; or |
| · | to supplement the indenture in order to permit the defeasance and discharge of any series of debt securities. |
The indenture will provide that The LGL Group and the trustee may make modifications and amendments to the indenture, and waive past defaults, with the consent of the holders of not less than a majority in aggregate principal amount at maturity of the outstanding debt securities in a series; provided, however, that no such modification or amendment may, without the consent of each holder affected thereby,
| · | change the stated maturity of the principal of, or any installment of interest on, any debt security; |
| · | reduce the principal amount of, or premium, if any, or interest on, any debt security; |
| · | reduce the amount of a debt security’s principal that would be due and payable upon a declaration of acceleration, following a default; |
| · | change the place of payment of, the currency of payment of principal of, or premium, if any, or interest on, any debt security; |
| · | impair the right to institute suit for the enforcement of any payment on or after the stated maturity (or, in the case of a redemption, on or after the redemption date) of any debt security; |
| · | adversely affect any right to convert or exchange any debt security that is convertible or exchangeable; or |
| · | reduce the stated percentage of outstanding debt securities the consent of whose holders is necessary to modify, or amend the indenture or waive a past default. |
Governing Law
Any issued debt securities and the indenture will be entitled to contribution.
Concerning the Trustee
The indenture will provide that, except during the continuance of an event of default or default, the trustee will not be liable, except for the performance of such duties as are specifically set forth in such indenture. If an event of default has occurred and is continuing, the trustee will use the same degree of care and skill in its exercise as a prudent person would exercise under the registration statement,circumstances in the conduct of such person’s own affairs.
The indenture and provisions of the Trust Indenture Act incorporated by reference in the indenture contain limitations on the rights of the trustee, should it become our creditor, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The trustee is permitted to engage in other transactions; provided, however, that if it acquires any conflicting interest, it must eliminate such conflict or resign.
Defeasance
The following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that the provisions of covenant defeasance and full defeasance will not be applicable to that series.
The indenture will provide that we will be deemed to have paid and will be discharged from any and all obligations in respect of any issued series of debt securities and the provisions of the indenture or will be released from our obligations to comply with covenants relating to those debt securities as described above or in the applicable prospectus supplement, (which may include obligations concerning subordination of our subordinated debt securities) if, among other things:
| · | we have irrevocably deposited with the trustee, in trust, money and/or U.S. Government Obligations (as defined in the indenture) that through the payment of interest and principal in respect of those monies and/or U.S. Government Obligations in accordance with their terms, will provide money in an amount sufficient to pay the principal of, premium, if any, and interest, if any, on the series of debt securities on the stated maturity of such payments and any applicable sinking fund or analogous payments in accordance with the terms of the indenture and the debt securities; |
| · | such defeasance shall not result in a breach, or constitute a default, under the indenture or any other material agreement of The LGL Group; |
| · | we have delivered to the trustee either (i) an opinion of counsel to the effect that holders will not recognize additional income, gain or loss for U.S. federal income tax purposes as a result of The LGL Group’s exercise of the defeasance or covenant defeasance, or (ii) a ruling directed to the trustee received from the Internal Revenue Service to the same effect as the aforementioned opinion of counsel; and |
| · | The LGL Group has delivered to the trustee an officer’s certificate and an opinion of counsel, each stating that all the conditions precedent to full defeasance have been complied with. |
In the event we exercise our option to omit compliance with certain covenants and provisions of the indenture with respect to a series of debt securities and the debt securities are declared due and payable because of the occurrence of an event of default that remains applicable, the amount of money and/or U.S. Government Obligations on deposit with the trustee will be sufficient to pay amounts due on the debt securities at the time of their stated maturity but may not be sufficient to pay amounts due on the debt securities at the time of the acceleration resulting from such event of default, however, we will remain liable for such payments.
We cannot defease our obligations to register the transfer or exchange of our debt securities; to replace our debt securities that have been stolen, lost or mutilated; to maintain paying agencies; or to hold funds for payment in trust. We may not defease our obligations if there is a continuing event of default on securities issued under the applicable indenture, or if depositing amounts into trust would cause the trustee to have conflicting interests with respect to other of our securities.
Resignation of Trustee
Each trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed to act with respect to these series. In the event that two or more persons are acting as trustee with respect to different series of indenture securities under one of the indentures, each of the trustees will be a trustee of a trust separate and apart from the trust administered by any other trustee.
Global Securities
We may issue debt securities as registered securities in book-entry form only. A global security represents one or any other number of individual debt securities. All debt securities represented by the same global security have the same terms.
Each debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all debt securities issued in book-entry form.
A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that has an account with the depositary. Thus, an investor whose security is represented by a global security will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security.
As an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the global security will be considered the holder of the debt securities represented by the global security.
If debt securities are issued only in the form of a global security, an investor should be aware of the following:
| · | an investor cannot cause the debt securities to be registered in his or her name, and cannot obtain certificates for his or her interest in the debt securities, except in the special situations we describe below; |
| · | an investor will be an indirect holder and must look to his or her own bank or broker for payments on the debt securities and protection of his or her legal rights relating to the debt securities; |
| · | an investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; |
| · | the depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in a global security. We and the trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in any way; |
| · | DTC requires that those who purchase and sell interests in a global security deposited in its book-entry system use immediately available funds. Your broker or bank may also require you to use immediately available funds when purchasing or selling interests in a global security; and |
| · | financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a global security, may also have their own policies affecting payments, notices and other matters relating to the debt security. There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries. |
Generally, a global security will be terminated and interests in it will be exchanged for certificates in non-global form, referred to as certificated securities only in the following instances:
| · | if the depositary notifies us and the trustee that it is unwilling or unable to continue as depositary for that global security; |
| · | if the depositary ceases to be a clearing agency and we do not appoint another institution to act as depositary within 90 days; |
| · | if we determine that we wish to terminate that global security; or |
| · | if an event of default has occurred with regard to the debt securities represented by that global security and has not been cured or waived, and the owner of beneficial interests in the global security requests that certificated securities be delivered; we discuss defaults above under “Events of Default.” |
The prospectus supplement may list situations for terminating a global security that would apply only to the particular series of debt securities covered by the prospectus supplement. If a global security is terminated, only the depositary, and not we or the applicable trustee, is responsible for deciding the names of the institutions in whose names the debt securities represented by the global security will be registered and, therefore, who will be the holders of those debt securities.
Payment and Paying Agent
Unless specified otherwise in a prospectus supplement, in the event certificated registered debt securities are issued, the holders of certificated registered debt securities will be able to receive payments of principal and of interest on their debt securities at the office of the paying agent. All payments of interest may be received at the offices of such paying agent upon presentation of certificated debt securities and all payments of principal may be received at such offices upon surrender of the debt securities. We also have the option of mailing checks or making wire transfers to the registered holders of the debt securities. Unless specified otherwise in a prospectus supplement, we will maintain a paying agent for the debt securities in The City of New York at all times that payments are to be made in respect of the debt securities and, if and so long as the debt securities remain outstanding.
General
This prospectus describes the general terms of our common stock and other securities we may issue. For a more detailed description of these securities, you should read the applicable provisions of Delaware law and our Certificate of Incorporation and by-laws, as amended (the “By-laws”). When we offer to sell a particular series of these securities, we will describe the specific terms of the series in a supplement to this prospectus. Accordingly, for a description of the terms of any series of securities, you must refer to both the prospectus supplement relating to that series and the description of the securities contained in this prospectus. To the extent the information contained in the prospectus supplement differs from this summary description, you should rely on the information in the prospectus supplement.
Under our Certificate of Incorporation, the total number of shares of all classes of stock that we have authority to issue is 10,000,000, consisting entirely of shares of our common stock. As of December 27, 2019, there were 4,918,060 shares of common stock outstanding.
The description of our capital stock is qualified by reference to our Certificate of Incorporation and our By-laws, which are incorporated by reference as exhibits into the Registration Statement of which this prospectus forms a part,is part.
Common Stock
Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of common stock are entitled to receive such dividends, if any, as may from time to time be declared by our Board of Directors out of funds legally available therefor. Under our Certificate of Incorporation, holders of common stock are entitled to one vote per share, and are entitled to vote upon such matters and in such manner as may be provided by law. Holders of common stock have no preemptive, conversion, redemption or sinking fund rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to liquidation, holders of common stock, upon the liquidation, dissolution or winding up of the Company, are entitled to share equally and ratably in the assets of the Company. The outstanding shares of common stock are, and the shares of common stock to be offered hereby when issued will be, fully paid and non-assessable. The rights, preferences and privileges of holders of common stock are subject to any series of preferred stock that the Company may authorize and issue in the future.
Anti-Takeover Effects of Certain Provisions of Delaware Law and our Charter Documents
We are subject to the provisions of Section 203 of the Delaware General Corporation Law. Under Section 203, we would generally be prohibited from engaging in any business combination with any interested stockholder for a period of three years following the time that this stockholder became an interested stockholder unless:
| · | prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
| · | at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. |
Under Section 203, a “business combination” includes:
| · | any merger or consolidation involving the corporation and the interested stockholder; |
| · | any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the corporation involving the interested stockholders; |
| · | any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder, subject to limited exceptions; |
| · | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or |
| · | any receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
In general, Section 203 defines an interested stockholder as an entity or person beneficially owning 15% or more of outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.
Our Certificate of Incorporation and By-laws include a number of provisions that 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 our stockholders. These provisions include prohibiting our stockholders from fixing the number of directors, and establishing advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to the Board of Directors.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
We may issue stock purchase contracts, including contracts obligating holders to purchase from or sell to The LGL Group, Inc. and obligating The LGL Group, Inc. to sell to or purchase from the holders of these contracts, a specified number of shares of common stock at a future date or dates or at the option of The LGL Group, Inc. The consideration per share of common stock may be fixed at the time the stock purchase contracts are issued or may be determined by reference to a specific formula set forth in the stock purchase contracts. The stock purchase contracts may be issued separately or as a part of units consisting of a stock purchase contract and debt securities or debt obligations of third parties, including U.S. Treasury securities, securing the holders’ obligations to purchase or to sell the common stock under the stock purchase contracts. The stock purchase contracts may require The LGL Group, Inc. to make periodic payments to the holders of the units or vice versa, and such payments may be unsecured or prefunded on some basis. The stock purchase contracts may require holders to secure their obligations thereunder in a specified manner.
The applicable prospectus supplement will describe the terms of any stock purchase contracts. The description in the prospectus supplement will not necessarily be complete, and reference will be made to the stock purchase contracts, and, if applicable, collateral arrangements and depositary arrangements, relating to such stock purchase contracts.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of common stock or units. We may issue warrants independently or together with any other securities offered by any prospectus supplement and the warrants may be attached to or separate from the other offered securities. Each series of warrants will be freely tradableissued under a separate warrant agreement to be entered into by us with a warrant agent. The warrant agent will act solely as our agent in connection with the series of warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of the warrants.
Further terms of the warrants and the applicable warrant agreements will be set forth in the handsapplicable prospectus supplement.
The applicable prospectus supplement will describe the terms of personsthe warrants in respect of which this prospectus is being delivered, including, where applicable, the following:
| · | the title of the warrants; |
| · | the aggregate number of the warrants; |
| · | the price or prices at which the warrants will be issued; |
| · | the terms and number of shares of common stock or units purchasable upon exercise of the warrants; |
| · | the designation and terms of the offered securities, if any, with which the warrants are issued and the number of the warrants issued with each offered security; |
| · | the date, if any, on and after which the warrants and the related common stock or units will be separately transferable; |
| · | the price at which each share of common stock or units purchasable upon exercise of the warrants may be purchased; |
| · | the date on which the right to exercise the warrants will commence and the date on which that right will expire; |
| · | the minimum or maximum amount of the warrants that may be exercised at any one time; |
| · | information with respect to book-entry procedures, if any; |
| · | a discussion of certain Federal income tax consideration; and |
| · | any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants. |
DESCRIPTION OF UNITS
We may issue units comprised of one or more of the other than our affiliates.securities described in this prospectus in any combination, from time to time. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement will describe:
| · | the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
| · | any unit agreement under which the units will be issued; |
| · | any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and |
| · | whether the units will be issued in fully registered or global form. |
The applicable prospectus supplement will describe the terms of any units that we may offer. The preceding description and any description of units in the applicable prospectus supplement does not purport to be complete and is subject to and is qualified in its entirety by reference to the applicable unit agreement and, if applicable, collateral arrangements and depositary arrangements relating to such units. For more information on how you can obtain copies of any applicable unit agreement and related documents, when available, see the section of this prospectus entitled “Where You Can Find More Information.” We urge you to read the applicable unit agreement and any applicable prospectus supplement in their entirety if we offer units.
DESCRIPTION OF RIGHTS
This section describes the general terms of the rights that we may offer and sell by this prospectus. This prospectus and any accompanying prospectus supplement will contain the material terms and conditions for each right. The accompanying prospectus supplement may add, update or change the terms and conditions of the rights as described in this prospectus.
The particular terms of each issue of rights, the rights agreement relating to the rights and the rights certificates representing rights will be described in the applicable prospectus supplement, including, as applicable:
| · | the title of the rights; |
| · | the date of determining the stockholders entitled to the rights distribution; |
| · | the title, aggregate number of shares of common stock purchasable upon exercise of the rights; |
| · | the exercise price; |
| · | the aggregate number of rights issued; |
| · | the date, if any, on and after which the rights will be separately transferable; |
| · | the date on which the right to exercise the rights will commence and the date on which the right will expire; and |
| · | any other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise of the rights. |
LEGAL MATTERS
The validity of the securities being offered by this prospectus have been passed upon for us by Olshan Frome Wolosky LLP, New York, New York.
EXPERTS
The consolidated financial statements of The LGL Group, Inc. as of December 31, 2018 and 2017 and for each of the years in the two-year period ended December 31, 2018, incorporated in this Prospectus by reference to thefrom The LGL Group, Inc.’s Annual Report on Form 10-K as of and for the yearsyear ended December 31, 2012 and 2011,2018, have been audited by McGladreyRSM US LLP, (formerly McGladrey & Pullen, LLP), an independent registered public accounting firm, as stated in their reportsreport thereon, which report expresses an unqualified opinion, incorporated herein by reference, herein, and have been so incorporated in this Prospectus and Registration Statement in reliance upon such reportsreport and upon the authority of such firm as experts in accounting and auditing.
INCORPORATION BY REFERENCE
We have filed with the Commission a registration statement on Form S-3 (including exhibits) under the Securities Act, with respect to the securities to be sold in this offering. This prospectus does not contain all the information set forth in the registration statement. For further information with respect to our Company and the securities offered in this prospectus, reference is made to the registration statement, including the exhibits filed thereto. With respect to each such document filed with the SEC as an exhibit to the registration statement, reference is made to the exhibit for a more complete description of the matter involved.
The SEC allows us to incorporate by reference information contained in documents we file with it, which means that we can disclose important information to you by referring you to those documents already on file with the SEC that contain that information. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future information filed (rather than furnished) with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), between the date of this prospectus and the termination of the offering of the securities covered by this prospectus, provided, however, that we are not incorporating any information furnished under any of Item 2.02 or Item 7.01 of any Current Report on Form 8-K (and exhibits filed on such form that are related to such items):
| · | our Annual Report on Form 10-K for the fiscal year ended December 31, |
| · | our Definitive Proxy Statement on Schedule 14A, filed with the SEC on September 30, 2019; and |
| · | our Quarterly |
| · | our Current Reports on Form 8-K, filed with the SEC on January 24, 2019, March 15, 2019, April 15, 2019, July 24, 2019, August 14, 2019, November 7, |
| · | the description of our common stock contained in our Current Report on Form 8-K filed with the SEC on October 30, 2013, |
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our SEC filings are also available to the public at the SEC'sSEC’s web site at http://www.sec.gov.
Upon written or oral request, we will provide at no cost to the requester a copy of all of the information that has been incorporated by reference in this prospectus but not delivered with this prospectus. You may obtain copies of these documents from us, without charge (other than exhibits, unless the exhibits are specifically incorporated by reference), by requesting them in writing or by telephone at the following address:
The LGL Group, Inc.
2525 Shader Road
Orlando, Florida 32804
(407) 298-2000
Attention: Corporate Secretary
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
We estimate that expenses in connection with the distribution described in this registration statement (other than brokerage commissions, discounts or other expenses relating to the sale of the securities by the selling security holder)securities) will be as set forth below. We will pay all of these expenses. The amounts shown below, with the exception of the SEC registration fee, are estimates.
| SEC registration fee | $ | 370.75 | ||
| Accounting fees and expenses | 14,500.00 | |||
| Legal fees and expenses | 18,000.00 | |||
| Miscellaneous | 1,500.00 | |||
| $ | 34,370.75 |
| SEC registration fee | $ | 11,682 | |||
| FINRA filing fee | * | ||||
| Accounting fees and expenses | * | ||||
| Legal fees and expenses | * | ||||
| Miscellaneous | * | ||||
| $ | * |
| * | These fees are calculated based on the type of securities offered and the number of issuances and accordingly, cannot be estimated at this time. |
Item 15. Indemnification of Directors and Officers.
Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys'attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent of the corporation. Section 145 of the DGCL also provides that expenses (including attorneys'attorneys’ fees) incurred by a director or officer in defending an action may be paid by a corporation in advance of the final disposition of an action if the director or officer undertakes to repay the advanced amounts if it is determined such person is not entitled to be indemnified by the corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The Company's BylawsCompany’s By-laws provide that, to the fullest extent permitted by law, the Company shall indemnify and hold harmless any person who was or is made or is threatened to be made a party or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person, or the person for whom he is the legally representative, is or was a director or officer of the Company, against all liabilities, losses, expenses (including attorney'sattorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such proceeding.
Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director'sdirector’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The Company'sCompany’s Certificate of Incorporation provides for such limitation of liability.
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The Company's BylawsCompany’s By-laws provide for the indemnification of, and advancement of expenses to, directors and officers of the Company (and, at the discretion of the Board, employees and agents of the Company to the extent that Delaware law permits the Company to provide indemnification to such persons) in excess of the indemnification and advancement otherwise permitted under Section 145 of the DGCL, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the Company, its stockholders and others. The provision does not affect directors'directors’ responsibilities under any other laws, such as the federal securities laws or state or federal environmental laws.
The Company has entered into agreements with its directors and executive officers, that require the Company to indemnify such persons to the fullest extent permitted by law, against expenses, judgments, fines, settlements and other amounts incurred (including attorneys'attorneys’ fees), and advance expenses if requested by
such person, in connection with investigating, defending, being a witness in, participating, or preparing for any threatened, pending, or completed action, suit, or proceeding or any alternative dispute resolution mechanism, or any inquiry, hearing, or investigation (collectively, a
The Company has entered into a Registration Rights Agreement, dated September 19, 2013 (the "Registration“Registration Rights Agreement"Agreement”), with Venator Merchant Fund, L.P., which is the selling stockholder pursuantunder the Company’s resale registration statement on Form S-3 originally filed with the SEC on September 19, 2013 and declared effective on November 7, 2013 (the “Selling Stockholder”). The Selling Stockholder is an investment limited partnership controlled by our Chairman of the Board, Marc Gabelli. Mr. Gabelli is the President and Sole Member of Venator Global, LLC, which is the sole general partner of the Selling Stockholder. Pursuant to whichthe Registration Rights Agreement, the Company agreed to indemnify and hold harmless the selling stockholderSelling Stockholder and each transferee thereof in accordance with the terms of the Registration Rights Agreement (each, a "Holder"“Holder”), each director, officer, partner and agent of each Holder, any underwriter (as defined in the Securities Act), and each person, if any, who controls each Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act and applicable state securities laws insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, including any preliminary prospectus or final prospectus forming a part of the registration statement or any amendments or supplements thereto, arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances, or arise out of any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company and relating to action or inaction required of the Company in connection with any such registration. The Company also agreed to reimburse each such person for any legal or other expenses reasonably incurred by him in connection with investigating or defending any such loss, claim, damage, liability or action.
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The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer or employee of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against liability under the provisions of this section. The Company currently maintains such insurance.
The right of any person to be indemnified is subject always to the right of the Company by the Board, in lieu of such indemnity, to settle any such claim, action, suit or proceeding at the expense of the Company by the payment of the amount of such settlement and the costs and expenses incurred in connection therewith.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
At present, there is no pending litigation or proceeding involving any of our directors, officers or employees as to which indemnification is sought, nor are we aware of any threatened litigation or proceeding that may result in claims for indemnification.
Item 16. Exhibits.
Exhibit No. | Description |
| Form of Underwriting Agreement. | |
| 3.1 | Certificate of Incorporation of The LGL Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 31, 2007). |
| The LGL Group, Inc. By-Laws (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on August 31, 2007). | |
| 4.1** | Form of Indenture |
| 4.2* | Form of Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-3 filed on September 23, 2010). |
| 4.3* | |
| 4.5* | Form of Warrant Agreement. |
| 4.6* | Form of Unit Agreement. |
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| 4.7* | Form of Unit Certificate. |
| 5.1** | Opinion of Olshan Frome Wolosky LLP. |
| 23.1** | Consent of Independent Registered Public Accounting Firm – |
| 23.2** | Consent of Olshan Frome Wolosky LLP (included in Exhibit 5.1). |
| Power of Attorney (included on the signature page hereto). | |
| 25.1*** | Form T-1 Statement of Eligibility of Trustee for Senior Indenture under the Trust Indenture Act of 1939 |
| 25.2*** | Form T-1 Statement of Eligibility of Trustee for Subordinated Indenture under the Trust Indenture Act of 1939 |
__
| * | To be filed by amendment or by a report filed under the Exchange Act and incorporated herein by reference. |
| ** | Filed herewith. |
| *** | To be filed by amendment pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939. |
Item 17. Undertakings.
(a)
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 |
| (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 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 |
| (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. |
Provided however
, that the undertakings set forth in paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii)II-4
(2) That, for the purpose of determining any liability under the Securities Act, (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. (5) That, for the purpose of determining liability under the Securities Act to any purchaser:
(6) That, for the purpose of determining liability of the registrant under the Securities Act 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:
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(b) (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 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 and will be governed by the final adjudication of such issue. (i) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, 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, 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. (j) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of the Trust Indenture Act. II-6 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Orlando, State of Florida, on
POWER OF ATTORNEY KNOW ALL BY THESE PERSONS PRESENT, that the persons whose signatures appear below do hereby constitute and appoint Michael J. Ferrantino, Sr. and James W. Tivy, and each of them, with full power of substitution and full power to act without the other, his true and lawful attorney-in-fact and agent to act for him in his name, place and stead, in any and all capacities, to sign a registration statement on Form S-3 and any or all amendments thereto (including without limitation any post-effective amendments thereto), and any registration statement for the same offering that is to be effective under Rule 462(b) of the Securities Act, and to file each of the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, 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 in order to effectuate the same 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 any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this registration statement has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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