Form 424B5 Monaker Group, Inc.
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Filed
Pursuant to Rule 424(b)(5)
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Registration
File No. 333-224309
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Prospectus
Supplement
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(To
prospectus dated July 2, 2018)
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3,230,000 Shares of Common Stock
Monaker
Group, Inc.
Pursuant to this
prospectus supplement and the accompanying prospectus, Monaker
Group, Inc. (the “Company”,
“Monaker”,
“we”,
“us”
and “our”) is offering
3,230,000 shares of our common stock, $0.00001 per share at a price
of $2.50 per share (the “Offering”).
Our
common stock is listed on the Nasdaq Capital Market under the
symbol “MKGI.” On May 13, 2021,
the last reported sales price of our common stock was $2.93 per
share.
The
aggregate market value of our outstanding common stock held by
non-affiliates is approximately $60,479,278, based on 19,739,703
shares of outstanding common stock and approximately 6,148,854
shares held by affiliates, at a price of $4.45 per share, which was
the last reported sales price of our common stock as quoted on the
Nasdaq Capital Market on March 17, 2021. Pursuant to General
Instruction I.B.6 of Form S-3, in no event during the period of
twelve calendar months immediately prior to, and including, the
sales under this prospectus supplement, will we sell our common
stock in a public primary offering with a value exceeding more than
one-third of the aggregate market value of the common stock held by
non-affiliates so long as our public float remains below $75
million. Including securities being offered in this prospectus
supplement, we have offered and sold $20,141,250 of securities
pursuant to General Instruction I.B.6 of Form S-3 during the twelve
calendar months prior to and including the date of this prospectus
supplement (excluding the value of the shares of common stock sold
in this offering).
Investing
in our securities involves a high degree of risk. Before deciding
whether to invest in our securities, you should consider carefully
the risks that we have described under the caption “Risk
Factors” beginning on page S-14 of this prospectus
supplement, on page 8
of the accompanying prospectus, and under the caption
“Risk Factors” in our
most recently filed Annual Report on Form 10-K and most recently
filed Quarterly Report on Form 10-Q, each as filed with the
Securities and Exchange Commission, which are incorporated herein
by reference in their entirety.
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No
Exercise of Over-Allotment
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Full Exercise of
Over-Allotment
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Per
Share
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Total
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Per
Share
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Total
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Offering
price of common stock
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$2.50
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$8,075,000
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$2.50
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$9,286,250
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Underwriting
discounts and commissions (1)
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$0.15
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$484,500
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$0.15
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$557,175
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Proceeds
to us, before expenses (2)
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$2.35
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$7,590,500
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$2.35
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$8,729,075
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(1)
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Excludes
underwriters’ out-of-pocket expenses we have agreed to
reimburse and excludes a non-accountable expense reimbursement
which we have agreed to pay to the representative of the
underwriters equal to 1% of the gross proceeds raised in this
Offering. See the section captioned “Underwriting” in this prospectus
supplement for additional information.
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(2)
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We anticipate the
total expenses associated with this offering will be approximately
$210,750.
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Delivery of the
common stock is expected to be made on or about May 18, 2021. We
have also granted the underwriters an option exercisable at any
time (but not more than once), in whole or in part, for a period of
45 days from the date of this prospectus supplement to purchase up
to an additional 484,500 shares from us, at the offering price less
the underwriting discount, to cover over-allotments, if
any.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Kingswood
Capital Markets
division of
Benchmark Investments, Inc.
The date of this
prospectus supplement is May 13, 2021
TABLE OF CONTENTS
Prospectus
Supplement
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Page
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S-1
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S-2
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S-3
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S-13
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S-14
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S-25
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S-26
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S-27
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S-29
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S-34
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S-34
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S-34
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S-37
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S-37
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S-37
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S-38
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Prospectus
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Page
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About This
Prospectus
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1
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Prospectus
Summary
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2
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Securities
Registered Hereby That We May Offer
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4
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Risk
Factors
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6
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Forward-Looking
Statements
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6
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Use of
Proceeds
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7
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Description of
Capital Stock
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7
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Description of
Preferred Stock
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11
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Description of Debt
Securities
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12
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Description of
Warrants
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22
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Description of
Units
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25
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Legal Ownership of
Securities
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26
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Plan of
Distribution
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30
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Prospectus
Supplements
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33
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Legal
Matters
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33
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Experts
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33
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Where You Can Find
More Information
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33
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Incorporation of
Certain Documents By Reference
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34
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ABOUT THIS PROSPECTUS SUPPLEMENT
AND
THE ACCOMPANYING PROSPECTUS
This prospectus
supplement and the accompanying prospectus, dated July 2, 2018, are
part of a registration statement on Form S-3 (File No. 333-224309)
that we filed with the Securities and Exchange Commission,
utilizing a “shelf” registration
process on April 17, 2018, and that was declared effective on July
2, 2018. Under this process, we may sell from time to time in one
or more offerings up to an aggregate of $100,000,000 in our
securities described in the accompanying prospectus.
You should rely
only on the information contained or incorporated by reference into
this prospectus supplement, the accompanying prospectus, and any
free writing prospectus. We have not, and the underwriters have
not, authorized anyone to provide you with different information.
If anyone provides you with different or additional information,
you should not rely on it. We are not, and the underwriters are
not, making an offer to sell these securities in any state or
jurisdiction where the offer or sale is not permitted. You should
not assume that the information contained in this prospectus
supplement, the accompanying prospectus and any free writing
prospectus is accurate on any date subsequent to the date set forth
on the front of the document or that any information we have
incorporated by reference is correct on any date subsequent to the
date of the document incorporated by reference, even though this
prospectus supplement, the accompanying prospectus and any free
writing prospectus is delivered or securities are sold on a later
date. We have filed with the SEC a registration statement on Form
S-3 with respect to the securities offered hereby. This prospectus
supplement and the accompanying prospectus do not contain all of
the information set forth in the registration statement, parts of
which are omitted in accordance with the rules and regulations of
the SEC. For further information with respect to us and the
securities offered hereby, reference is made to the registration
statement and the exhibits that are a part of the registration
statement. We will disclose any material changes in our affairs in
a post-effective amendment to the registration statement and the
accompanying prospectus of which this prospectus supplement is a
part, a future prospectus supplement, a free writing prospectus or
a future filing with the Securities and Exchange Commission
incorporated by reference in this prospectus supplement. It is
important for you to read and consider all the information
contained in this prospectus supplement and the accompanying
prospectus, including the documents incorporated by reference
therein, in making your investment decision.
This document is in
two parts. The first part is this prospectus supplement, which adds
to and updates information contained in the accompanying prospectus
and the documents incorporated by reference into the accompanying
prospectus. The second part is the accompanying prospectus, which
gives more general information, some of which may not apply to this
offering of shares. This prospectus supplement adds, updates and
changes information contained in the accompanying prospectus and
the information incorporated by reference. To the extent the
information contained in this prospectus supplement differs or
varies from the information contained in the accompanying
prospectus or any document incorporated by reference, the
information in this prospectus supplement shall
control.
We further note that the representations, warranties and covenants
made by us or the underwriters in any agreement that is filed as an
exhibit to any document that is incorporated by reference in the
accompanying prospectus were made solely for the benefit of the
parties to such agreement, including, in some cases, for the
purpose of allocating risk among the parties to such agreements,
and should not be deemed to be a representation, warranty or
covenant to you. Moreover, such representations, warranties or
covenants were accurate only as of the date when made. Accordingly,
such representations, warranties and covenants should not be relied
on as accurately representing the current state of our
affairs.
Persons outside the United States who come into possession of this
prospectus supplement or the accompanying prospectus must inform
themselves about, and observe any restrictions relating to, the
offering of the securities and the distribution of this prospectus
supplement and accompanying prospectus outside of the United
States.
Our logo and other
trade names, trademarks, and service marks of Monaker Group, Inc.
appearing in this prospectus supplement and the accompanying
prospectus are the property of our company. Other trade names,
trademarks, and service marks appearing in this prospectus
supplement and the accompanying prospectus are the property of
their respective holders.
The market data and
certain other statistical information used throughout this
prospectus supplement and the accompanying prospectus are based on
independent industry publications, government publications and
other published independent sources. Although we believe that these
third-party sources are reliable and that the information is
accurate and complete, we have not independently verified the
information. Some data is also based on our good faith estimates.
While we believe the market data included in this prospectus
supplement, the accompanying prospectus and the information
incorporated herein and therein by reference is generally reliable
and is based on reasonable assumptions, such data involves risks
and uncertainties and is subject to change based on various
factors, including those discussed under the heading
“Risk Factors”
beginning on page S-14 of this prospectus
supplement and on page 8 of the accompanying
prospectus.
Unless otherwise
stated, information in this prospectus supplement assumes the
underwriters will not exercise their over-allotment option to
purchase additional shares of our common stock.
All references to
“we”,
“our”,
“us”,
the “Company”, and
“Monaker” in this
prospectus supplement mean Monaker Group, Inc. and all entities
owned or controlled by us except where it is made clear that the
term means only the parent company. The term “you” refers to a
prospective investor. Please carefully read this prospectus
supplement, the accompanying prospectus, any free writing
prospectus and any pricing supplement, in addition to the
information contained in the documents we refer to under the
headings “Where You Can Find More
Information” and “Incorporation of Certain Documents by
Reference”.
In addition, unless
the context otherwise requires and for the purposes of this
prospectus and the accompanying prospectus supplement:
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“Exchange
Act” refers to the Securities Exchange Act of 1934, as
amended;
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“SEC”
or the “Commission” refers to the United States
Securities and Exchange Commission; and
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“Securities
Act” refers to the Securities Act of 1933, as
amended.
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FORWARD-LOOKING STATEMENTS
Certain information included in this prospectus supplement, the
prospectus, any free writing prospectus we may file, the documents
or information incorporated by reference herein, as well as other
reports filed by us under the Exchange Act contain forward-looking
statements within the meaning of Section 27A of the Securities Act,
Section 21E of the Exchange Act, and the Private Securities
Litigation Reform Act of 1995, as amended. These forward-looking
statements are based on our management’s belief and
assumptions and on information currently available to our
management. Although we believe that the expectations reflected in
these forward-looking statements are reasonable, these statements
relate to future events or our future financial performance, and
involve known and unknown risks, uncertainties and other factors
that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
In some cases, you
can identify forward-looking statements by terminology such as
“may,”
“should,”
“expects,”
“intends,”
“plans,”
“anticipates,”
“believes,”
“estimates,”
“predicts,”
“potential,”
“will,”
“continue” or the negative
of these terms or other comparable terminology. These statements
are only predictions. You should not place undue reliance on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors, which are, in some cases,
beyond our control and which could materially affect results.
Factors that may cause actual results to differ materially from
current expectations include, among other things, those listed
under, and incorporated by reference in, “Risk Factors” and
elsewhere in this prospectus.
If one or more of
these risks or uncertainties occur, or if our underlying
assumptions prove to be incorrect, actual events or results may
vary significantly from those implied or projected by the
forward-looking statements. No forward-looking statement is a
guarantee of future performance. You should read this prospectus,
those documents incorporated by reference herein, and those
documents which we have filed with the SEC as exhibits to the
registration statement, of which this prospectus is a part,
completely and with the understanding that our actual future
results may be materially different from any future results
expressed or implied by these forward-looking
statements.
Forward-looking
statements speak only as of the date of this prospectus supplement
or the date of any document incorporated by reference in this
prospectus supplement or any free writing prospectus, as
applicable. We anticipate that subsequent events and developments
will cause our views to change. However, while we may elect to
update these forward-looking statements at some point in the
future, we have no current intention of doing so except to the
extent required by applicable law. You should therefore not rely on
these forward-looking statements as representing our views as of
any date subsequent to the date of this prospectus.
You should also
consider carefully the statements under and incorporated by
reference in “Risk
Factors” and other sections of this prospectus
supplement, and the documents we incorporate by reference or file
as part of any free writing prospectus, which address additional
facts that could cause our actual results to differ from those set
forth in the forward-looking statements. We caution investors not
to place significant reliance on the forward-looking statements
contained in this prospectus supplement, any free writing
prospectus, and the documents we incorporate by reference. We
undertake no obligation to publicly update or review any
forward-looking statements, whether as a result of new information,
future developments or otherwise, except as otherwise required by
law.
The following
summary highlights material information found in more detail
elsewhere in, or incorporated by reference in, this prospectus
supplement. It does not contain all of the information you should
consider. As such, before you decide to buy our common stock, in
addition to the following summary, we urge you to carefully read
this entire prospectus supplement and documents incorporated by
reference herein, and any other prospectus supplements or free
writing prospectuses, especially the risks of investing in our
common stock as discussed under, and incorporated by reference in,
“Risk Factors.” The following summary
is qualified in its entirety by the detailed information appearing
elsewhere in this prospectus supplement.
Overview
Monaker Group,
Inc., is an innovative technology company that is building next
generation solutions to power the travel, gaming, and
cryptocurrency industries. We believe the most promising part of
our business plan is our ability to achieve stockholder value
through acquisition and organic growth that presents new
opportunities in the leisure space and strengthens our existing
technology platforms.
Through our
subsidiaries NextTrip and Maupintour, we provide travel technology
solutions with a primary emphasis on alternative lodging rental
(ALR) properties. Our proprietary Booking Engine provides
travel distributors access to a sizeable inventory of ALR
properties allowing them to combine ALR with traditional components
of travel (Air, Car, Cruise, etc.).
Our platform
assists property managers in booking, and broadening the market
for, their homes. The Company serves three major constituents:
(1) property managers, (2) travelers, and (3) other
travel/lodging distributors. Property managers integrate their
detailed property listings into the Monaker Booking Engine with the
goal of reaching a broad audience of travelers seeking ALRs,
through distribution channels they could not access
otherwise.
All of
Monaker’s ALRs, also commonly referred to as Vacation Rentals
are:
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i)
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Controlled by
Property Management Companies. This is a key point of
differentiation for Monaker, as the sole focus of Property
Management Companies is to rent and service their properties,
unlike an individual homeowner who often rents their property on a
casual or part-time basis. We believe working with property
managers results in four key benefits:
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All properties are
Instantly Bookable (all Property Management Company inventory is
integrated into Monaker’s Booking Engine allowing for instant
confirmations);
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Higher levels of
service for renters (property managers are full-time
operators);
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Higher Quality
Assurance (property managers generally have an incentive to
eliminate trouble properties); and
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Certified Rentable
(most property managers are licensed and bonded requiring them to
ensure properties are “legal to rent” and are further
responsible for paying required taxes on behalf of
homeowners.
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ii)
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Exclusively
Individual Units. Our vacation homes and residential resort units
are never shared, nor do we rent rooms in homes like other ALR
companies. All ALR inventory is fully furnished, privately owned
residential properties, including homes, condominiums, apartments,
villas and cabins that property managers rent to the public on a
nightly, weekly or monthly basis.
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We believe we have
uniquely positioned ourselves in the ALR sector - which is one of
the fastest growth segments within the travel industry. ALR
inventory provides a key solution to traditional travel
distributors. According to a January 3, 2017 article by Kevin May,
the Editor In Chief of PhocusWire, as posted on Tnooz.com
(“Private
accommodation travel bookings to reach $106 billion by
2018”), it is estimated that roughly 1 out of 5
lodging accommodations in 2018 was an ALR transaction and by most
accounts this growth is continuing to accelerate (notwithstanding
the current decreases in lodging and travel caused by
COVID-19).
Monaker
business-to-business (B2B) ALR offerings are designed to be timely
in addressing traditional travel distributors’ needs to
protect their client base by allowing them seamless access to ALR
products. With the rapid growth of companies like Airbnb, we
believe that traditional travel companies are realizing that not
having access to this high demand vacation rental inventory means
risking the loss of their consumers to other ALR sites. By
connecting to Monaker’s Booking Engine, travel distributors
can sell ALR inventory alongside their existing travel products
(i.e., Air/Car/Hotel/Cruise/Tour bookings). This solves a key issue
by allowing the customers of traditional travel distributors to
complete their entire vacation package booking on their website
versus forcing them to go to an ALR website and potentially lose
the entire booking.
Monaker’s Direct to Consumer Websites
Monaker has
established a direct-to-consumer presence though a number of
websites. These sites include NextTrip.com, our corporate travel
management platform focused on small to medium-sized business, that
provides companies the ability to book travel, manage travel
expenses, and process employee expense reports. A differentiating
feature of our NextTrip.com solution is the ability for corporate
travelers to book ALR properties as part of their travel itinerary.
Our Maupintour.com marketplace provides luxury, personalized tours,
and activities at destinations, as well as the ability to book ALR
properties.
Monaker identifies
and sources ALR properties which it consolidates through its
Monaker Booking Engine, allowing for instantly bookable properties
being packaged alongside other travel products; this is its
distinguishing niche. The ALRs are owned and leased by third
parties and are available to rent through Monaker’s websites
as well as through other distributors. Monaker’s services
include critical elements such as technology, an extensive film
library, trusted brands and established partnerships that enhance
product offerings and reach. We believe that consumers are quickly
adopting video for researching and educating themselves prior to
purchases, and Monaker has carefully amassed video content, key
industry relationships and a prestigious travel brand as
cornerstones for the development and deployment of core-technology
on both proprietary and partnership platforms.
Monaker sells
travel services to leisure and corporate customers around the
world. Our primary focus is to incorporate ALR options into our
current offerings of scheduling, pricing and availability
information for booking reservations for airlines, hotels, rental
cars, as well as other travel products such as sightseeing tours,
shows and event tickets, and theme park passes. The Company sells
these travel services both individually and as components of
dynamically-assembled packaged travel vacations and trips. In
addition, the Company provides content that presents travelers with
information about travel destinations, maps and other travel
details. In December 2020, the Company introduced its new corporate
travel platform under the NextTrip brand. This platform allows our
users to search large travel suppliers of alternative lodging
inventories and combine ALR with their air and car
booking.
In March 2018, the
Company introduced Travelmagazine.com, an online travel publication
with the aim of giving travelers around the world inspiration for
future travel destinations and trips. The publication offers
written articles, videos, and podcasts. Moving forward, we hope
that Travelmagazine.com will become a central hub of information
for travelers who are looking to get detailed information on
destinations all around the world. We also plan to move
Travelmagazine.com from having content created by a team of staff
writers, to a team of worldwide writers who will contribute content
for publication in the future, funding permitting. The website is
expected to be supported by advertising and allow for promotion of
both ALR and Maupintour vacation products.
The Company sells
its ALR travel inventory through various distribution channels. The
primary distribution channel is through its B2B channel
partners which include sales via (i) other travel
companies’ websites and (ii) networks of third-party
travel agents. Secondary distribution will occur through the
Company’s own websites at NextTrip.com and Maupintour.com.
Additionally, we plan to offer high end ALR products along with
specialty travel products and services via Maupintour.com,
targeting high value inventory to customers with complex or
high-end travel needs.
Monaker’s
core holdings are planned to be streamlined by this summer into
four key platforms being; the Monaker Booking Engine (MBE),
NextTrip.com, Maupintour.com, and TravelMagazine.com.
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The Monaker Booking
Engine (MBE) is the Company’s proprietary technology and
platform providing access to more than 3.4 million instantly
bookable vacation rental homes, villas, chalets, apartments,
condos, resort residences, and castles. This ALR product can be
accessed by other travel distributors using the Company’s
application programming interface (API).
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NextTrip.com is
targeted at small to midsized businesses offering them a customized
travel solution for business travel to meetings, conferences,
conventions or even vacation travel and gives the companies lower
costs, better expense control and in the future the option for a
“self-branded” website.
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Maupintour
complements the Nextrip.com offerings by providing high-end tour
packages, activities/attractions, and specialized ALRs that cannot
be booked on a real-time basis. These ALRs tend to be sourced from
owners and managers who have not invested in a reservation
management system and/or the owner or manager prefers to personally
vet the customer before accepting a booking; typically, because the
ALR is a high value property.
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Travelmagazine.com
is an online travel publication with the aim of giving travelers
around the world inspiration for future travel destinations and
trips. The publication offers written articles, videos, and
podcasts. Moving forward, we plan for Travelmagazine.com to become
a central hub of information for travelers who are looking to get
detailed information on destinations all around the
world.
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Cryptocurrency Portal
On November 16,
2020, the Company acquired 100% of Longroot, Inc., a Delaware
corporation (“Longroot”), which in turn
owned 57% of Longroot Limited, a Cayman Islands company
(“Longroot
Cayman”). Longroot Cayman owned 49% of the outstanding
shares (100% of the ordinary shares) of Longroot Holding
(Thailand) Company Limited (“Longroot Thailand”),
provided that Longroot Cayman controls 90% of Longroot
Thailand’s voting shares and therefore effectively controls
Longroot Thailand. Longroot has since increased its ownership in
Longroot Cayman and currently Longroot owns an approximate 36.75%
indirect interest in Longroot Thailand, due to its ownership of 75%
of Longroot Cayman, which in turn owns 49% of Longroot Thailand
(75% x 49% = 36.75%)), provided that Longroot Cayman controls 90%
of Longroot Thailand’s voting shares and therefore
effectively controls Longroot Thailand. A total of 22.9% of
Longroot Cayman is owned by Axion Interactive Inc. (BVI), of which
Axion Ventures, Inc. (“Axion”), holds a 100%
interest. Monaker currently owns approximately 33.85% of
Axion’s shares, provide that, although the Axion Share
Exchange closed on November 16, 2020, the Company has yet to
formally complete the transfer of the ownership of the Axion shares
into its name, due to a Cease Trade Order issued by the British
Columbia Securities Commission, which impacts Axion.
Longroot Thailand,
provides blockchain technology solutions for the fast-growing
cryptocurrency marketplace. Longroot Thailand is an Initial Coin
Offering (ICO) portal operator authorized and regulated under
the Thai Digital Asset Business Law and licensed by the Thai
Securities and Exchange Commission. Longroot Thailand provides
fully regulated and licensed digital assets financing, and
investment services for digital assets. This innovative business
model opens the door for new digital currency financing mechanisms,
and new digital investment products. Monaker, with its indirect
control over Longroot Thailand, is planning to use Longroot
Thailand’s technology and digital asset capabilities to
create regulated cryptocurrencies designed to allow consumers to
invest in unique revenue streams in wholesale travel, real estate
homes and hotels, gaming assets and digital advertising – as
well as potential token and loyalty program opportunities
complementary to Monaker’s planned gaming and current travel
businesses.
Recent
Material Events
As disclosed in
greater detail in the Current
Report on Form 8-K filed by the Company with
the SEC on July 23, 2020, on July 23, 2020, the Company entered
into a Share Exchange Agreement (as amended by the first amendment
thereto dated October 28, 2020, as disclosed in the Current
Report on Form 8-K filed with the SEC on October
29, 2020, the second amendment thereto dated November 12, 2020, as
disclosed in the Current
Report on Form 8-K filed with the SEC on November
18, 2020, the third amendment thereto dated January 6, 2021, as
disclosed in the Current
Report on Form 8-K filed with the SEC on January
11, 2021, and the fourth amendment thereto dated February 22, 2021,
as disclosed in the Current Report on Form 8-K
filed with the SEC on February 26, 2021, the “HotPlay Exchange
Agreement” and the transactions contemplated therein,
the “HotPlay Share
Exchange”) with HotPlay Enterprise Limited
(“HotPlay”) and the
stockholders of HotPlay (the “HotPlay Stockholders”).
The transactions contemplated by the HotPlay Exchange Agreement are
subject to certain closing conditions, including, the
approval of the listing of the combined company’s common
stock on the NASDAQ Capital Market following the
closing.
Additionally, as
disclosed in the Current
Report on Form 8-K filed with the SEC on November
18, 2020, on November 12, 2020, the Company entered into an Amended
and Restated Share Exchange Agreement (as amended by the first
amendment thereto dated January 6, 2021, as disclosed in
the Current
Report on Form 8-K filed with the SEC on January
11, 2021, the “Axion
Exchange Agreement”) with certain stockholders holding
shares of Axion Ventures, Inc. (“Axion” and the
“Axion
Stockholders”) and certain debt holders holding debt
of Axion (the “Axion
Creditors”)(the “Axion Share Exchange”,
and collectively with the HotPlay Exchange Agreement, the
“Exchange
Agreements” and the transactions contemplated therein,
the “Share
Exchanges”). The transactions contemplated by the
Axion Exchange Agreement closed on November 16, 2020.
Pursuant to the
HotPlay Exchange Agreement, the HotPlay Stockholders agreed to
exchange 100% of the outstanding capital shares of HotPlay (making
HotPlay a wholly-owned subsidiary of the Company following the
closing of the transactions contemplated therein) for 52 million
shares of the Company’s common stock (the “HotPlay
Shares”).
Pursuant to the
Axion Exchange Agreement, (a) the Axion Stockholders (including
Cern One Limited (“Cern One”)), exchanged
ordinary shares of Axion equal to 33.85% of the outstanding common
shares of Axion, in consideration for 10,000,000 shares of newly
designated shares of Series B Convertible Preferred Stock of the
Company (the “Series
B Preferred Stock”), which are automatically
convertible into common shares of the Company upon the occurrence
of certain events, including the closing of the HotPlay Share
Exchange, into an aggregate of 7,417,700 shares of Monaker common
stock; and (b) the Axion Creditors exchanged debt of Axion in the
aggregate amount of $7,657,024 (the “Axion Debt”), for (i)
3,828,500 shares of newly designated shares of Series C Convertible
Preferred Stock of the Company (the “Series C Preferred
Stock”), which are automatically convertible into
common shares of the Company upon the occurrence of certain events,
including the closing of the HotPlay Share Exchange, on a
one-for-one basis; and (ii) a warrant, granted to Cern One, to
purchase 1,914,250 shares of the Company’s common stock (the
“Creditor
Warrants”), which is only exercisable upon the
occurrence of certain events (described below). Although the Axion
Share Exchange closed on November 16, 2020, the Company has yet to
formally complete the transfer of the ownership of the Axion shares
into its name, due to a Cease Trade Order issued by the British
Columbia Securities Commission, which impacts Axion
The Creditor
Warrants, have cashless exercise rights, an exercise price of $2.00
per share and have a term of two years, beginning on the Vesting
Date (defined below). The Creditor Warrants vest on the later of
(a) the date that of the Series B Preferred Stock and Series C
Preferred Stock converts into common stock, and the earlier of (i)
the date the Axion Debt is fully repaid by Axion or (ii) the date
that Monaker obtains 51% or more of the voting control of, and
economic rights to, Axion, provided that such vesting date must
occur before November 16, 2021, or the Creditor Warrants will
terminate (as applicable, the “Vesting Date”). All of
the Creditor Warrants were granted to Cern One.
The HotPlay
Exchange Agreement can be terminated by the parties thereto under
various circumstances, including if the transactions contemplated
thereby have not both been completed by April 30, 2021, provided
that such termination date is extended automatically, until up to
May 31, 2021, in the event that Monaker has, prior to such date,
filed a definitive proxy statement with the SEC, has called a
special meeting to approve the issuance of the shares to the
HotPlay Stockholders, among other things, and is continuing to work
in good faith to complete the closing of the HotPlay Share
Exchange, which termination date has been extended automatically to
May 31, 2021.
At a special
meeting of stockholders held on April 7, 2021, the stockholders of
the Company approved the issuance of shares of common stock in
connection with the HotPlay Share Exchange and the terms thereof
and the shares of common stock in connection with the conversion of
the Series B Preferred Stock and Series C Preferred Stock, among
other matters. The Company is currently working with The NASDAQ
Capital Market to obtain approval for the continued listing of the
Company’s common stock following the closing of the HotPlay
Share Exchange, which approval the Company hopes to receive prior
to June 2021 and which HotPlay Share Exchange the Company hopes to
close in or around early June 2021.
Following the
closing of the HotPlay Share Exchange, the current HotPlay
Stockholders are expected to own approximately 62.8% of the
outstanding common stock of Monaker, and the Axion Stockholders and
Axion Creditors are expected to own, upon the automatic conversion
of the outstanding Series B Preferred Stock shares and Series C
Preferred Stock shares into common stock of the Company upon the
closing of the HotPlay Share Exchange, approximately 13.6% of the
aggregate outstanding common stock of Monaker, without taking into
account the shares of common stock issuable upon exercise of the
Creditor Warrants, with the Monaker stockholders prior to the
effective date of the closing holding approximately 23.6% of the
aggregate outstanding common stock of the combined company, in each
case based on the current outstanding shares of common stock of
Monaker.
We previously
operated solely in the travel industry. With the recent acquisition
of Longroot, as previously discussed, we are now venturing into the
cryptocurrency industry. Upon the completion of the HotPlay
Exchange Agreement, the Company plans to transition its operations
to those of a travel, cryptocurrency, and an in-game advertising
company. During the period until the closing of the HotPlay
Exchange Agreement, and in the event the HotPlay Exchange Agreement
is not consummated, the Company intends to continue to actively
operate in the travel and cryptocurrency industries.
To date, HotPlay
has loaned the Company $15 million pursuant to the terms of the
HotPlay Exchange Agreement (collectively, the “HotPlay Loans”), pursuant
to which HotPlay was required to have at least $15 million in cash
on hand as of the closing of such HotPlay Exchange Agreement, less
amounts loaned to the Company. The HotPlay Loans are evidenced by
Convertible Promissory Notes (collectively, the “HotPlay Notes”), which
have an interest rate of 1% per annum.
The HotPlay Notes
are automatically forgiven by HotPlay in the event the HotPlay
Exchange Agreement is terminated in certain situations and
automatically convert into fully paid and nonassessable shares of
the Company’s common stock at a conversion price of $2.00 per
share, subject to the NASDAQ Limitation, described below, in the
event the HotPlay Exchange Agreement is terminated in certain other
situations.
In the event the
transactions contemplated by the HotPlay Share Exchange close, it
is anticipated that the HotPlay Notes will be forgiven as
intracompany loans.
The maximum number
of shares of common stock to be issued in connection with the
conversion of the HotPlay Convertible Notes, cannot (i) exceed
19.9% of the outstanding shares of common stock on the date of the
applicable note, (ii) exceed 19.9% of the combined voting power of
the then outstanding voting securities of the Company on the date
of the applicable note, in each of subsections (i) and (ii) before
the issuance of the common stock under such notes, or (iii)
otherwise exceed such number of shares of common stock that would
violate applicable listing rules of The NASDAQ Capital Market in
the event the Company’s stockholders do not approve the
issuance of the common stock (as applicable, the
“NASDAQ
Limitation”).
On March 22, 2021,
we entered into a Note Purchase Agreement dated March 23, 2021 (the
“March 2021 Note
Purchase Agreement”) with Streeterville, an
accredited investor, pursuant to which the Company sold
Streeterville a Secured Promissory Note in the original principal
amount of $9,370,000 (the “March 2021 Streeterville
Note”). Streeterville paid consideration of
(a) $7,000,000 in cash; and (b) issued the Company a
promissory note in the amount of $1,500,000 (the
“March 2021 Investor
Note”), in consideration for the March 2021
Streeterville Note, which included an original issue discount of
$850,000 (the “OID”) and
reimbursement of Streeterville’s transaction expenses of
$20,000. A total of $700,000 of the OID is fully earned and the
remaining $150,000 is not fully earned until the March 2021
Investor Note is fully-funded by Streeterville.
The March 2021
Streeterville Note bears interest at a rate of 10% per annum and
matures 12 months after its issuance date (i.e., on March 23,
2022). From time to time, beginning six months after issuance,
Streeterville may redeem a portion of the March 2021 Streeterville
Note, not to exceed an amount of $1.750 million per month if the
March 2021 Investor Note has not been funded by Streeterville, and
$2.125 million in the event the March 2021 Investor Note has been
funded in full. In the event we don’t pay the amount of any
requested redemption within three trading days, an amount equal to
25% of such redemption amount is added to the outstanding balance
of the March 2021 Streeterville Note. Under certain circumstances,
the Company may defer the redemption payments up to three times,
for 30 days each, provided that upon each such deferral the
outstanding balance of the March 2021 Streeterville Note is
increased by 2%. Subject to the terms and conditions set forth in
the March 2021 Streeterville Note, the Company may prepay all or
any portion of the outstanding balance of the March 2021
Streeterville Note at any time subject to a prepayment penalty
equal to 10% of the amount of the outstanding balance to be
prepaid. For so long as the March 2021 Streeterville Note remains
outstanding, the Company has agreed to pay to Streeterville 20% of
the gross proceeds that the Company receives from the sale of any
of its common stock or preferred stock, which payments will be
applied towards and will reduce the outstanding balance of the
March 2021 Streeterville Note, which percentage increases to 30%
upon the occurrence of, and continuance of, an event of default
under the March 2021 Streeterville Note (each an
“Equity
Payment”). Each time that we fail to pay an Equity
Payment, the outstanding balance of the March 2021 Streeterville
Note automatically increases by 10%. Additionally, in the event we
fail to timely pay any such Equity Payment, Streeterville may seek
an injunction which would prevent us from issuing common or
preferred stock until or unless we pay such Equity
Payment.
The March 2021
Streeterville Note provides that if any of the following events
have not occurred on or before June 30, 2021, the then outstanding
balance of the note (including accrued and unpaid
interest) increases by an amount equal to 25% of the
then-current outstanding balance thereof: (a) HotPlay must
have become a wholly-owned subsidiary of the Company;
(b) during the period beginning on July 21, 2020, and ending
on the date that the HotPlay Share Exchange is consummated,
HotPlay must have raised at least $15,000,000 in cash or debt
through equity investments (which has been completed);
(c) upon consummation of the HotPlay Share Exchange, all
outstanding debt owed by the Company to HotPlay must have either
been forgiven by HotPlay or converted into the Company’s
common stock; and (d) HotPlay must have become a co-borrower
on the March 2021 Streeterville Note.
The March 2021 Note
Purchase Agreement required that we complete the purchase of the
Reinhart Interactive TV AG equity interests discussed below (the
“Reinhart
Interest”), within ten days of the date of the sale of
the March 2021 Streeterville Note, and that the Company pledge the
Reinhart Interest to Streeterville pursuant to a pledge agreement
thereafter, both of which were timely completed.
In addition to the March 2021 Streeterville Note,
the Company previously sold Streeterville a Secured Promissory Note
in the original principal amount of $5,520,000 on November 23, 2020
(the “November 2020
Streeterville Note”).
Streeterville paid consideration of (a) $3,500,000 in cash;
and (b) issued the Company a promissory note in the amount of
$1,500,000 (the “November 2020 Investor
Note”), in consideration
for the November 2020 Streeterville Note, which included an
original issue discount of $500,000 and reimbursement of
Streeterville’s transaction expenses of $20,000. A total of
$350,000 of the OID was fully earned and the remaining $150,000 is
not fully earned until or unless the November 2020 Investor Note is
fully-funded by Streeterville. The November 2020 Streeterville Note
bears interest at a rate of 10% per annum and matures 12 months
after its issuance date (i.e., on November 23, 2021). From time to
time, beginning six months after issuance, Streeterville may redeem
a portion of the November 2020 Streeterville Note, not to exceed an
amount of $875,000 per month if the Investor Note has not been
funded by Streeterville, and $1.25 million in the event the
November 2020 Investor Note has been funded in full. The November
2020 Streeterville Note and purchase agreement has substantially
similar terms as the March 2021 Streeterville Note and purchase
agreement, in regards to required redemptions, penalties, required
equity payments and events of default. The November 2020
Streeterville Note has a current balance of approximately $2.39
million.
Reinhart Interactive TV AG Acquisition
On January 15,
2021, we entered into a Founding Investment and Subscription
Agreement (the “Investment Agreement”)
with Reinhart Interactive TV AG, a company organized in Switzerland
(“Reinhart”), and Jan C.
Reinhart, the founder of Reinhart (“Founder”).
The Investment
Agreement contemplated the Company acquiring 51% of the ownership
of Reinhart, in consideration for 10,000,000 Swiss Francs
(approximately $10.8 million US), The closing of the transactions
contemplated by the Investment Agreement was to take place on April
1, 2021, or earlier if the conditions to closing were earlier
satisfied. Conditions to closing included the Company paying the
required capital contribution, approval of the transaction by the
board of directors of the Company and Reinhart, and certain
requirements and confirmations required by Swiss law. The
Investment Agreement included customary representations and
warranties of the parties. We also agreed to reimburse the
Founder’s legal fees of up to 30,000 Swiss Francs
(approximately $33,670) in connection with the transaction.
Additionally, in the event we failed to close the transactions
contemplated by the Investment Agreement by April 1, 2021, we
agreed to pay the Founder 500,000 Swiss Francs (approximately
$560,000), as a break-up fee.
We closed the
transactions contemplated by the Investment Agreement on March 31,
2021, by paying the Founder $10.8 million in cash. The
consideration paid to the Founder came largely from funds advanced
by HotPlay pursuant to HotPlay Notes.
Reinhart is in the
business of providing a software-based TV and video distribution
platform to telecom operators and digital content owners and
providing services to telecom operators and digital content owners
for user interaction design, as well as software development,
deployment and support.
In connection with
our entry into the Investment Agreement, we entered into a Founding
Shareholders’ Agreement with the Founder (the
“Shareholders’
Agreement”). The Shareholders’ Agreement set
forth certain rules for the governance and control of Reinhart. The
Shareholders’ Agreement provides that the Board of Directors
of Reinhart will consist of five members, three of which will be
appointed by the Founder and other shareholders of Reinhart, and
two of which will be appointed by the Company which include William
Kerby, the Company’s Chief Executive Officer, and Mark Vange,
the Chief Technology Officer of HotPlay; that any material
shareholder matters are required to be approved by shareholders
holding at least 66 2/3% of the total outstanding vote of Reinhart;
that in the event Reinhart issues, within five years after the
closing date, any equity or convertible equity, with a price less
than the most recent valuation of Reinhart’s shares, the
shares held by each director who is appointed by the Founder are
subject to weighted average anti-dilution protection; provides for
various restrictions on transfers of shares of Reinhart, including
right of first refusal rights, tag-along rights, and drag-along
rights, as well as certain rights which would trigger the right of
the other parties to the Shareholders’ Agreement to acquire
the shares held by an applicable shareholder, for the higher of the
fair market value and the nominal value of the shares (except in
the case of (c) where the purchase price is the lower of such
amounts), if such shareholder (a) commits a criminal act against
the interests of another party, Reinhart or its affiliates; (b)
breaches the Shareholders’ Agreement, and fails to cure such
breach 20 days after notice thereof is provided; or (c) the
employment of any employed shareholder is terminated for certain
reasons.
The Shareholders'
Agreement also provides a right for the Founder and any other
persons appointed as directors by the Founder to put their shares
to the Company, at which time the Company will be required to
purchase such shares (the “Founder’s Shares”),
based on the following schedule:
|
Date right is
triggered
|
Percent of
Founder’s Shares eligible to be sold
|
Required Purchase
Price
|
|
January 1,
2024
|
33%
|
15 times EBITDA
based on audited 2023 Reinhart financials
|
|
January 1,
2025
|
66%
|
15 times EBITDA
based on audited 2024 Reinhart financials
|
|
December 20, 2025,
if the Board of Directors of Reinhart, together with a majority of
the directors appointed by the Company, agree to sell Reinhart to a
third party, but the Company and the Founder can’t agree on
such sale, by such date
|
100%
|
Higher of (a) 15
times EBITDA based on audited 2025 Reinhart financials; and (b) the
value of a fully-funded acquisition proposal based on audited 2025
Reinhart financials
|
|
January 1,
2026
|
100%
|
Lower of (a) 15
times EBITDA based on audited 2025 Reinhart financials; and (b) the
value of a fully-funded acquisition proposal based on audited 2025
Reinhart financials
|
The
Shareholders’ Agreement also allows the parties to file for
an initial public offering on a Swiss trading exchange. The
Shareholders’ Agreement has a term of 10 years, extendable
thereafter for successive five-year periods, unless terminated by
either party with 12 months prior written notice (provided that any
such termination shall only be applicable to the terminating
shareholder), subject to earlier termination in connection with
certain initial public offerings.
On April 8, 2021, the Company entered into an Exchange Agreement
with William Kerby, its Chief Executive Officer and director and
Monaco Investment Partners II, LP (“MI Partners”), of which
Donald P. Monaco is the managing general partner and the Chairman
of the Board of Directors of the Company (the “Exchange Agreement”).
Pursuant to the Exchange Agreement, the terms of which were
approved by the Board of Directors of the Company, Mr. Kerby and MI
Partners exchanged their right to an aggregate of $1,016,314 in
accrued dividends (the “Accrued Dividends”) which
had accrued on the Company’s outstanding Series A Preferred
Stock, which had been held by Mr. Kerby and MI Partners prior to
the conversion of such Series A Preferred Stock into common stock
of the Company in August 2017, for Convertible Promissory Notes.
Specifically, Mr. Kerby exchanged rights to $430,889 of accrued
dividends on the Series A Preferred Stock for a Convertible
Promissory Note with a principal balance of $430,889 and MI
Partners exchanged rights to $585,425 of accrued dividends on the
Series A Preferred Stock for a Convertible Promissory Note with a
principal balance of $585,425 (the “Convertible Promissory
Notes”).
The Convertible
Promissory Notes accrue interest at the rate of 12% per annum,
compounded monthly at the end of each calendar month, with such
interest payable at maturity or upon conversion. The principal and
accrued interest owed under the Convertible Promissory Notes is
convertible, at the option of the holders thereof, into shares of
the Company’s common stock, at any time beginning seven days
after the Closing Date (defined below) and prior to the payment in
full of such Convertible Promissory Notes by the Company, at a
conversion price equal to the greater of (i) the closing
consolidated bid price of the Company’s common stock on April
8, 2021 (which was $3.02); and (ii) the five-day volume weighted
average price of the Company’s common stock for the five
trading days following the date that the HotPlay Exchange Agreement
closes. The Convertible Promissory Notes are unsecured, have a
maturity date of April 7, 2022, and include standard and customary
events of default.
IFEB Bank Transaction
On April 1, 2021,
we entered into a Bill of Sale for Common Stock, effective March
22, 2021 (the “Bill
of Sale”), with certain third parties pursuant to
which the Company agreed to purchase 2,191,489 shares (the
“IFEB
Shares”) of authorized and outstanding Class A Common
Stock of International Financial Enterprise Bank, Inc., a Puerto
Rico corporation licensed as an Act 273-2012 international
financial entity headquartered in San Juan Puerto Rico
(“IFEB”), which IFEB Shares
total approximately 57.6% of the outstanding Class A Common Stock
of IFEB. The purchase price of the IFEB Shares was $6,400,000,
which amount was paid to the Sellers on April 1, 2021.
IFEB was
incorporated in 2017 as a corporation under the laws of the
Commonwealth of Puerto Rico and received its international
financial entity license on June 18, 2017 from the Office of the
Commissioner of Financial Institutions of Puerto Rico, in Spanish,
“Oficina del
Comisionado de Instituciones Financieras” or
“OCIF”,
as license #51. As a result, IFEB is regulated by OCIF, and intends
to update its application to establish a Fedwire account with the
Federal Reserve Bank, New York (“FRB”). IFEB conducts its
business activities out of its head office in Puerto Rico at 268
Ponce de Leon Ave., in San Juan.
Notwithstanding the
terms of the Bill of the Sale, and the payment by the Company of
the aggregate purchase price pursuant thereto, the transfer of the
IFEB Shares to the Company and the Company’s acquisition of
control of IFEB is subject to review of the Company’s
financial viability, as well as other matters, by OCIF, and as
such, the Company has filed a formal change of control application
which must be approved before taking ownership and control of the
IFEB Shares, which is subject to approval by OCIF, and may
ultimately not be approved. The Company anticipates receiving
confirmation of OCIF’s approval or non-approval of the
Company’s acquisition of the IFEB Shares by approximately
June 2021, if not sooner.
On May 6, 2021, in
anticipation of the acquisition of the IFEB Shares, and control of
IFEB, the Company and IFEB entered into a Preferred Stock Exchange
Agreement, which was amended by a First Amendment to Preferred
Stock Exchange Agreement entered into May 10, 2021 and effective
May 6, 2021 (as amended by the first amendment, the
“Preferred Exchange
Agreement”), pursuant to which the Company agreed to
exchange 1,950,000 shares of the Company’s restricted common
stock (the “Monaker
Shares”) for 5,850 shares of cumulative,
non-compounding, non-voting, non-convertible, perpetual Series A
preferred shares of IFEB (the “IFEB Preferred
Shares”).
The IFEB Preferred
Shares will have a coupon of 2% per annum, payable in quarterly
installments in arrears. The IFEB Preferred Shares will be
redeemable by the Company; however, IFEB may, by the vote of the
holders of a majority of its outstanding common stock, call and
redeem the IFEB Preferred Shares in exchange for the Monaker
Shares, plus accrued interest on the IFEB Preferred Shares at the
time of any such redemption; and upon a Change of Control (defined
below), the Company may cause IFEB to repurchase the IFEB Preferred
Shares in exchange for the Monaker Shares, plus accrued interest at
the time of any such Change of Control. “Change of Control” means
the sale of all or substantially all the assets of IFEB; any
merger, consolidation or acquisition of IFEB with, by or into
another corporation, entity or person; or any change in the
ownership of more than fifty percent (50%) of IFEB’s voting
securities or the economic rights of such IFEB’s
securities.
The closing of the
transactions contemplated by the Preferred Exchange Agreement,
including the issuance of the Monaker Shares and IFEB Preferred
Shares, are subject to various closing conditions, including, but
not limited to IFEB receiving approval from OCIF to issue preferred
stock (including the Series A preferred shares), and the filing of
a formal designation of the Series A preferred stock by IFEB with
the Secretary of State of Puerto Rico. As such, the transactions
contemplated by the Preferred Exchange Agreement may not close on a
timely basis, if at all. If not closed by June 30, 2021, the
Preferred Exchange Agreement can be terminated by either party with
written notice to the other.
Novel
Coronavirus (COVID-19)
In December 2019, a
novel strain of coronavirus, which causes the infectious disease
known as COVID-19, was reported in Wuhan, China. The World Health
Organization declared COVID-19 a “Public Health Emergency of
International Concern” on January 30, 2020 and a
global pandemic on March 11, 2020. In March and April, many U.S.
states and local jurisdictions began issuing
‘stay-at-home’ orders. For example, the state of
Florida, where the Company’s principal business operations
are, issued a ‘stay-at-home’ order effective on April
1, 2020, which remained in place, subject to certain exceptions,
through June 2020, when the order was gradually lifted. Since that
time the U.S., and Florida in particular, have seen rapid increases
in the spread of COVID-19. It is currently unclear whether the
state of Florida, or the other states, countries or other
jurisdictions in which we provide travel services, will issue new
or expanded ‘stay-at-home’ orders, or how those orders,
or others, may affect our operations and/or results of operations,
notwithstanding the recent start of the roll-out of COVID-19
vaccines. It is also too early to determine how effective or
widespread the available vaccines will be to curb the spread or
effects of COVID-19, or how many persons will choose to receive the
vaccine.
The COVID-19
pandemic, and governmental responses thereto, including travel
restrictions, ‘stay-at-home’ orders and required social
distancing orders, have severely restricted the level of economic
activity around the world, and is having an unprecedented effect on
the global travel industry. Additionally, the ability to travel has
been curtailed through border closures, mandated travel
restrictions and limited operations of hotels, airlines, and may be
further limited through additional voluntary or mandated closures
of travel-related businesses.
The measures
implemented to contain the COVID-19 pandemic have had, and are
expected to continue to have, a significant negative effect on our
business, financial condition, results of operations, cash flows
and liquidity position. In particular, such measures have led to
unprecedented levels of cancellations and limited new travel
bookings. Moreover, any additional measures or changes in laws or
regulations, whether in the United States or other countries, that
further impair the ability or desire of individuals to travel,
including laws or regulations banning travel, requiring the closure
of hotels or other travel-related businesses (such as restaurants)
or otherwise restricting travel due to the risk of the spreading of
COVID-19, may exacerbate the negative impact of the COVID-19
pandemic on our business, financial condition, results of
operations, cash flows and liquidity position.
The duration and
severity of the COVID-19 pandemic are uncertain and difficult to
predict at this time. The pandemic could continue to impede global
economic activity for an extended period of time, even as
restrictions are beginning to be lifted in many jurisdictions and
vaccines are beginning to be made available, leading to decreased
per capita income and disposable income, increased and sustained
unemployment or a decline in consumer confidence, all of which
could significantly reduce discretionary spending by individuals
and businesses on travel and may create a recession in the United
States or globally. In turn, that could have a negative impact on
demand for our services. We also cannot predict the long-term
effects of the COVID-19 pandemic on our partners and their business
and operations or the ways that the pandemic may fundamentally
alter the travel industry. The aforementioned circumstances could
result in a material adverse impact on our business, financial
condition, results of operations and cash flows, potentially for a
prolonged period.
The Company’s
liquidity could also be adversely impacted by delays in payments of
outstanding accounts receivable amounts beyond normal payment terms
and insolvencies. All of that could be exacerbated by the
Company’s financial position, and working capital deficit of
$534,137 as of November 30, 2020.
It is difficult to
estimate COVID-19’s impact on future revenues, results of
operations, cash flows, liquidity or financial condition, but such
impacts have been and will continue to be significant and could
continue to have a material adverse effect on our business,
financial condition, results of operations, cash flows and
liquidity position for the foreseeable future. In the near term, we
do expect that the COVID-19 pandemic will continue to negatively
affect our operating results and year-over-year
results.
Separately, our
capital requirements may increase in the near term and long-term
due to the impact of the COVID-19 pandemic, the resulting reduced
demand for travel services, the increases in cancellations and
re-bookings, and the extent to which such pandemic may further
impact the ability of our customers to fulfill their payment
obligations.
As a result of the
above, in the event the HotPlay Share Exchange described above does
not close timely, if at all, and/or if the HotPlay Share Exchange
is terminated, we may be forced to scale back our operations,
adjust our plan of operations, borrow or raise additional funding,
which may not be available on favorable terms if at all. In the
event we require and are unable to raise additional funding in the
future, we may be forced to seek bankruptcy
protection.
Risks
That We Face
An investment in
our securities involves a high degree of risk. You should carefully
consider the risks summarized below. The risks are discussed more
fully in, and incorporated by reference in, the “Risk
Factors” section of this prospectus. These risks
include, but are not limited to, the following:
●
The
number of shares of the Company’s common stock issuable at
the closing of the HotPlay Share Exchange and in connection with
the conversion of the Series B Preferred Stock and Series C
Preferred Stock (the “Axion Preferred
Conversion”) will result in significant dilution to
existing stockholders;
●
The
majority owners of HotPlay will obtain majority voting control over
the Company following the closing of the HotPlay Share
Exchange;
●
Monaker’s
officers and directors have interests in the HotPlay Share Exchange
different from the other stockholders of the Company;
●
Combining HotPlay
and the Company may be more difficult, costly or time-consuming
than expected and the Company may fail to realize the anticipated
benefits of the HotPlay share exchange, including expected
financial and operating performance of the combined company (i.e.,
Monaker after completion of the HotPlay Share
Exchange);
●
The
Company may be unable to close the HotPlay Share Exchange on the
schedule proposed, or if at all, and under certain circumstances
the HotPlay Share Exchange may be terminated, which termination may
have a material adverse effect on Monaker;
●
The
Company and its operations and prospects are subject to
restrictions while the HotPlay Share Exchange is
pending;
●
Uncertainty and
illiquidity in credit and capital markets can impair our ability to
obtain credit and financing on acceptable terms and can adversely
affect the financial strength of our business
partners;
●
The
closing of the HotPlay Share Exchange is contingent on the Company
obtaining certain approvals, which may not be obtained on a timely
basis or on favorable terms, if at all, including the requirement
that the Company meeting NASDAQ’s initial listing
requirements, which the combined company may be unable to
meet;
S-10
●
Various
third parties owe the Company a significant amount of money which
may not be timely paid, if at all;
●
The
Company owes significant amounts to Streeterville Capital, LLC,
which is secured by a security interest over substantially all of
its assets;
●
The
Company will need to raise additional funding to support its
operations, both before and after the closing, which funding may
not be available on favorable terms, if at all;
●
The
Company’s operations have been negatively affected by, and
have experienced material declines as a result of, COVID-19 and the
governmental responses thereto;
●
Currently pending
and future litigation affecting the Company and HotPlay may have a
material adverse effect on the Company and/or the combined company,
and/or prevent the closing of the HotPlay Share
Exchange;
●
The
Company’s operations are subject to uncertainties and risks
outside of its control, including third party delays in submissions
of alternative lodging rental listings and failures to maintain
such rental listings, integrations of such listings and the renewal
of such listings;
●
The
Company is subject to extensive government regulations and rules,
the failure to comply which may have a material adverse effect on
the Company;
●
The
success of the Company is subject to the development of new
products and services over time;
●
Longroot
Thailand’s operations are subject to risks associated with
cryptocurrency exchanges being a new industry, regulatory changes
and/or restrictions, potential illegal uses of cryptocurrencies,
the acceptance and widespread use of cryptocurrencies, cyber
security risks, and competing blockchain technologies;
●
The
Company is subject to competition with competitors who have
significantly more resources, more brand recognition and a longer
operating history than the Company;
●
The
Company is subject to risks associated with failures to maintain
intellectual property and claims by third parties relating to
allegation that the Company violated such third parties’
intellectual property rights;
●
The
Company relies on third party service providers and the failure of
such third parties to provide the services contracted for, on the
terms contracted, or otherwise, could have a material adverse
effect on the Company;
●
The
Company relies on the internet and internet infrastructure for its
operations and in order to generate revenues;
●
The
Company’s ability to raise funding, and dilution caused by
such fundings, anti-dilution rights included in outstanding
warrants; and
●
The
trading price of the Company’s common stock is subject to
numerous risks, including volatility and illiquidity;
●
The
price of our common stock may fluctuate significantly, and you
could lose all or part of your investment;
S-11
● The
officers and directors of the Company have the ability to exercise
significant influence over the Company;
● Our
business depends substantially on property owners and managers
renewing their listings;
● The
market in which we participate is highly competitive, and we may be
unable to compete successfully with our current or future
competitors;
● If
we are unable to adapt to changes in technology, our business could
be harmed;
● We
may be subject to liability for the activities of our property
owners and managers, which could harm our reputation and increase
our operating costs; and
● We
have incurred significant losses to date and require additional
capital which may not be available on commercially acceptable
terms, if at all.
Corporate Information
Our principal
executive offices are located at 1560 Sawgrass Corporate Parkway,
Suite 130, Sunrise, Florida 33323 and our telephone number is
(954) 888-9779.
Additional
information about us is available on our website at www.monakergroup.com.
We do not incorporate the information on or accessible through our
websites into this prospectus supplement or the accompanying
prospectus, and you should not consider any information on, or that
can be accessed through, our websites as part of this prospectus
supplement or the accompanying prospectus.
S-12
|
Issuer:
|
Monaker Group,
Inc.
|
|
Securities offered hereby:
|
3,230,000 shares of
common stock.
|
|
Common stock to outstanding prior to this offering:
|
19,739,703
shares.
|
|
|
|
|
Common stock to be outstanding after this offering:
|
22,969,703shares.
|
|
Offering Price:
|
$2.50 per
share.
|
|
|
|
|
|
Over-allotment option:
|
We have granted the
underwriters an option for a period of 45 days to purchase up to an
additional 484,500 shares of common stock.
|
|
|
|
|
|
|
Use of proceeds:
|
We
estimate that our net proceeds from this offering, after deducting
underwriting discounts and estimated fees and expenses, will be
approximately $7.40 million ($8.50 million if the underwriters
exercise their over- allotment option to purchase 484,500
additional shares of our common stock in full).
We
currently intend to use the net proceeds from this offering, if
any, to repay approximately $4.0 million ($4.2 million, if the
underwriters’ over-allotment option is exercised in full)
owed under Secured Promissory Notes held by Streeterville Capital,
LLC (“Streeterville”) sold in
November 2020 and March 2021, discussed in greater detail above
under “Prospectus Supplement
Summary—Recent Material Events—March 2021 Streeterville
Note Purchase”, provide capital to International
Financial Enterprise Bank, Inc. in advance of the closing of the
acquisition of control of IFEB, for general corporate purposes and
working capital or for other purposes that the Board of Directors,
in their good faith, deems to be in the best interest of the
Company. We may also use all or a portion of the remaining net
proceeds from this offering (after the payments described above) to
fund possible investments in, or acquisitions of, complementary
businesses, technologies or products, but we currently have no
definitive agreements or commitments with respect to any investment
or acquisition. See “Use of Proceeds” for
more information.
|
|
|
|
|
|
|
Risk factors:
|
An investment in
our common stock involves a significant degree of risk. You should
read the “Risk Factors” section of this prospectus
supplement and in the documents incorporated by reference in this
prospectus supplement and the accompanying prospectus for a
discussion of factors to consider before deciding to purchase
shares of our common stock.
|
|
|
|
|
|
|
Nasdaq Capital Market Symbol for our common stock:
|
MKGI
|
|
In this prospectus
supplement, unless otherwise indicated, the number of shares of our
common stock and other capital stock, and the other information
based thereon, is as of May 13, 2021, and excludes:
|
|
●
|
2,982,421 shares of
common stock issuable upon the exercise of outstanding warrants to
purchase shares of common stock at a weighted-average exercise
price of $2.45 per share; and
|
|
|
●
|
1,130,029 shares of
our common stock that are reserved for equity awards that may be
granted under our equity incentive plans.
|
Additionally,
unless otherwise stated, all information in this prospectus
supplement:
|
|
●
|
assumes no exercise
of the underwriters’ over-allotment option;
|
|
|
|
|
|
|
●
|
assumes no exercise
of outstanding options and warrants to purchase common stock, and
no issuance of shares available for future issuance under our
equity compensation plans; and
|
|
|
|
|
|
|
●
|
reflects all
currency in United States dollars.
|
S-13
RISK FACTORS
Before making an
investment decision, you should consider the “Risk
Factors” discussed below, in the section
entitled
“Risk
Factors” contained under Item 1A of Part I
of our most recent Annual Report on Form 10-K for the year ended
February 29, 2020, and under “Risk
Factors”
under Item 1A of Part II of our Quarterly Report on Form 10-Q for
the quarter ended November 30, 2020, and subsequently filed
quarterly reports on Form 10-Q and annual reports on Form 10-K, as
the same may be amended, supplemented or superseded from time to
time by our subsequent filings and reports under the Securities Act
or the Exchange Act, each of which are incorporated by reference in
this prospectus supplement. For more information, see
“Incorporation
of Certain Documents by Reference.” The
market or trading price of our securities could decline due to any
of these risks. In addition, please read “Forward-Looking
Statements” in this prospectus supplement, where
we describe additional uncertainties associated with our business
and the forward-looking statements included or incorporated by
reference in this prospectus supplement.
The securities
offered herein are highly speculative and should only be purchased
by persons who can afford to lose their entire investment in us.
You should carefully consider the following risk factors and the
aforementioned risk factors that are incorporated herein by
reference and other information in this prospectus supplement
before deciding to become a holder of our common stock. The risks
and uncertainties described in these incorporated documents and
described below are not the only risks and uncertainties that we
face. Additional risks and uncertainties not presently known to us
may also impair our business operations. If any of these risks
actually occur, our business and financial results could be
negatively affected to a significant extent. In that event, the
trading price of our common stock could decline, and you may lose
all or part of your investment in our common stock.
Risks
Relating to Our Business:
We need additional capital which may not be available on
commercially acceptable terms, if at all, which raises questions
about our ability to continue as a going concern.
As of November 30,
2020, the Company had an accumulated deficit of $122,955,764. Net
loss for the nine months ended November 30, 2020, amounted to
$7,102,867. Our travel and commission operations generated a gross
profit of only $4,579 for the nine months ended November 30, 2020,
and as of November 30, 2020, we had a working capital deficit of
$534,137. The consolidated financial statements incorporated herein
have been prepared assuming the Company will continue as a going
concern.
We are subject to
all the substantial risks inherent in the development of a new
business enterprise within an extremely competitive industry. Due
to the absence of a long-standing operating history and the
emerging nature of the markets in which we compete, we anticipate
operating losses until we can successfully implement our business
strategy, which includes all associated revenue streams. Our
revenue model is new and evolving, and we cannot be certain that it
will be successful. The potential profitability of this business
model is unproven. We may never ever achieve profitable operations
or generate significant revenues. Our future operating results
depend on many factors, including demand for our products, the
level of competition, and the ability of our officers to manage our
business and growth. As a result of the emerging nature of the
market in which we compete, we may incur operating losses until
such time as we can develop a substantial and stable revenue base.
Additional development expenses may delay or negatively impact the
ability of the Company to generate profits. Accordingly, we cannot
assure you that our business model will be successful or that we
can sustain revenue growth, achieve, or sustain profitability, or
continue as a going concern. Furthermore, due to our relatively
small size and market footprint, we may be more susceptible to
issues affecting the global travel and cryptocurrency industries in
general, such as COVID-19, contractions in the global travel
industry, and cryptocurrency regulatory changes, as compared to
larger competitors.
We currently have a
monthly cash requirement of approximately $600,000. We believe that
in the aggregate, we could require several millions of dollars to
support and expand the marketing and development of our products,
repay debt obligations, provide capital expenditures for additional
equipment and development costs, payment obligations, office space
and systems for managing the business, and cover other operating
costs until our planned revenue streams from all products are fully
implemented and begin to offset our operating costs. We require
additional funding in the future and if we are unable to obtain
additional funding on acceptable terms, or at all, it will
negatively impact our business, financial condition, and
liquidity.
Since our
inception, we have funded our operations with the proceeds from
equity and debt financings. Currently, revenues provide less than
10% of our cash requirements. Our remaining cash needs are derived
from debt and equity raises.
We have experienced
liquidity issues due to, among other reasons, our limited ability
to raise adequate capital on acceptable terms. We have historically
relied upon the sale of common stock and the issuance of promissory
notes to fund our operations and have devoted significant efforts
to reduce that exposure. We anticipate that we will need to issue
equity to fund our operations and continue to repay our outstanding
debt for the foreseeable future. If we are unable to achieve
operational profitability or are not successful in securing other
forms of financing, we will have to evaluate alternative actions to
reduce our operating expenses and conserve cash.
S-14
These conditions
raise substantial doubt about our ability to continue as a going
concern for the next twelve months. The accompanying financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America on a
going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of
business. Accordingly, the financial statements do not include any
adjustments relating to the recoverability of assets and
classification of liabilities that might be necessary should the
Company be unable to continue as a going concern. The financial
statements incorporated by reference herein also include a going
concern footnote from our auditors.
In the event we are
unable to raise adequate funding in the future for our operations
and to pay our outstanding debt obligations, we may be forced to
scale back our business plan and/or liquidate some or all our
assets or may be forced to seek bankruptcy protection, which could
result in the value of our outstanding securities declining in
value or becoming worthless.
The COVID-19 pandemic has had, and is expected to continue to have,
a material adverse impact on the travel industry and our business,
operating results, and liquidity.
The COVID-19
pandemic, and governmental responses thereto, including travel
restrictions, ‘stay-at-home’ orders and required social
distancing orders, have severely restricted the level of economic
activity around the world, and is having an unprecedented effect on
the global travel industry. Additionally, the ability to travel has
been curtailed through border closures, mandated travel
restrictions and limited operations of hotels and airlines and may
be further limited through additional voluntary or mandated
closures of travel-related businesses.
The measures
implemented to contain the COVID-19 pandemic have had, and are
expected to continue to have, a significant negative effect on our
business, financial condition, results of operations, cash flows
and liquidity position. In particular, such measures have led to
unprecedented levels of cancellations and limited new travel
bookings in our travel division. Moreover, any additional measures
or changes in laws or regulations, whether in the United States or
other countries, that further impair the ability or desire of
individuals to travel, including laws or regulations banning
travel, requiring the closure of hotels or other travel-related
businesses (such as restaurants) or otherwise restricting travel
due to the risk of the spreading of COVID-19, may exacerbate the
negative impact of the COVID-19 pandemic on our business, financial
condition, results of operations, cash flows and liquidity
position.
The duration and
severity of the COVID-19 pandemic are uncertain and difficult to
predict. The pandemic could continue to impede global economic
activity for an extended period, even as restrictions are beginning
to be lifted in many jurisdictions and vaccines are beginning to be
rolled out, leading to decreased per capita income and disposable
income, increased and sustained unemployment or a decline in
consumer confidence, all of which could significantly reduce
discretionary spending by individuals and businesses on travel and
may create a recession in the United States or globally. In turn,
that could have a negative impact on demand for our services. We
also cannot predict the long-term effects of the COVID-19 pandemic
on our partners and their business and operations or the ways that
the pandemic may fundamentally alter the travel industry. The
aforementioned circumstances could result in a material adverse
impact on our business, financial condition, results of operations
and cash flows, potentially for a prolonged period.
The Company’s
liquidity could also be adversely impacted by delays in payments of
outstanding accounts receivable amounts beyond normal payment terms
and insolvencies.
It is difficult to
estimate COVID-19’s impact on future revenues, results of
operations, cash flows, liquidity or financial condition, but such
impacts have been and will continue to be significant and could
continue to have a material adverse effect on our business,
financial condition, results of operations, cash flows and
liquidity position for the foreseeable future. In the near term, we
do expect that the COVID-19 pandemic will continue to negatively
affect our operating results and year-over-year
results.
Separately, our
capital requirements associated with our travel division may
increase in the near term and long-term due to the impact of the
COVID-19 pandemic, the resulting reduced demand for travel
services, the increases in cancellations and re-bookings, and the
extent to which such pandemic may further impact the ability of our
customers to fulfill their payment obligations.
As a result of the
above, in the event the HotPlay Share Exchange described above
under “Prospectus Supplement
Summary—Recent Events—HotPlay and Axion Share
Exchanges”, does not close timely, if at all, we
may be forced to scale back our operations, adjust our plan of
operations, borrow or raise additional funding, which may not be
available on favorable terms if at all. In the event we require,
and are unable to raise additional funding in the future, we may be
forced to seek bankruptcy protection.
S-15
A significant portion of our assets are subject to ongoing
litigation, the result of which may cause a reduction in the value
of such assets on our balance sheet and/or require such assets to
be written off.
The Company is
currently in ongoing litigation with IDS, Inc. (“IDS”) and certain other
defendants affiliated with IDS. In August 2019, the Company
acquired certain intellectual property from IDS pursuant to the
terms of an Intellectual Property Purchase Agreement (the
“IP Purchase
Agreement”). The litigation seeks rescission of the IP
Purchase Agreement and return of the 1,968,000 shares of restricted
common stock of the Company (the “IDS Shares”) issued to
IDS pursuant to the IP Purchase Agreement, among other things. In
the event the IP Purchase Agreement is unwound, the value of our
assets, or more specifically, the value of website development
costs and intangible assets, net, on our balance sheet ($10,321,343
as of November 30, 2020), may be decreased by the value of such
acquired assets ($5,015,593 as of November 30, 2021). Separately,
depending on the outcome of the litigation, we may determine that a
partial or full write-down of such intellectual property assets
obtained from IDS is necessary or warranted. The outcome of the
litigation with IDS and related parties may result in the value of
our assets decreasing in value significantly, which could have a
material adverse effect on our financial statements, our ability to
raise funding, could trigger a default under our loan and other
agreements, and/or could result in us failing to meet the continued
listing requirements of The NASDAQ Capital Market, all of which
could cause the value our securities to decline in
value.
Axion owes us a substantial amount of money, the payment of which
is in default, and which may not be timely repaid, if at
all.
Pursuant to the
Axion Share Exchange, which closed on November 16, 2020, the
Company acquired $7,657,024 of debt owed by Axion. As of June 30,
2019, the last date that publicly available information for Axion
is available, Axion had $2.5 million more liabilities than assets.
The Axion debt acquired by the Company pursuant to the November 16,
2020 closing of the Axion Share Exchange is currently past due and
has not been paid to date. We may have to take legal action to
enforce the repayment of such debt. Furthermore, Axion may not have
sufficient cash to repay such debt. The debt is unsecured and as
such, secured creditors of Axion may have priority rights to
Axion’s assets in connection with any liquidation or
bankruptcy. In the event the Axion debt is not paid and/or not paid
in full, it could have a material adverse effect on our cash flows
and our ability to pay our debts as they become due. Any continued
failure by Axion to timely repay their debt obligations under the
Axion debt acquired pursuant to the Axion Share Exchange could
cause the value of our securities to decline in value or become
worthless.
Our obligations under the Streeterville Capital, LLC Promissory
Notes are secured by a first priority security interest in
substantially all of our assets.
As described in
greater detail above under “Prospectus Supplement
Summary—Recent Material Events—March 2021 Streeterville
Note Purchase”, we currently have outstanding
secured promissory notes due to Streeterville totaling
approximately $11.9 million as of the date of this prospectus. In
connection with the Streeterville Secured Promissory Notes, the
Company entered into a Security Agreement with Streeterville (the
“Security
Agreement”), pursuant to which the obligations of the
Company are secured by substantially all of the assets of the
Company.
As such,
Streeterville may enforce its security interests over our assets
and/or our subsidiaries which secure the repayment of such
obligations, take control of our assets and operations, force us to
seek bankruptcy protection or force us to curtail or abandon our
current business plans and operations. If that were to happen, any
investment in the Company could become worthless.
Our Shareholders Agreement with the founder of Reinhart provides
for certain put rights, which if exercised by such founder, could
require us to pay significant amounts of money.
As described in
greater detail above under “Prospectus Supplement
Summary—Recent Material Events—Reinhart Interactive TV
AG Acquisition”, on January 15, 2021, we entered
into a Shareholders’ Agreement with Jan C. Reinhart, the
founder of Reinhart. Such Shareholders’ Agreement allows Mr.
Reinhart to put his 49% ownership of Reinhart to us on certain
dates from January 2024 to January 2026, as described above under
“Prospectus Supplement
Summary—Recent Material Events—Reinhart Interactive TV
AG Acquisition”. There is no cap on the required
purchase price which would be payable to Mr. Reinhart, and such
purchase price may be as high as 15 times EBITDA of Reinhart for
the applicable periods. We may need to raise additional funding in
the future to pay the put amount, and as such may need to seek
additional debt or equity financing. Such additional financing may
not be available on favorable terms, if at all. If debt financing
is available and obtained, our interest expense may increase and we
may be subject to the risk of default, depending on the terms of
such financing. If equity financing is available and obtained it
may result in our shareholders experiencing significant dilution.
If such financing is unavailable, we may be in breach of the terms
of the put requirement, which could subject us to litigation,
damages and penalties. The existence of the put right could make it
harder for us to sell our interest in Reinhart, devalue such
interest, or cause complex accounting issues which have a material
adverse effect on our financial statements and results of
operations.
S-16
Risks
Related to our Pending Acquisition of IFEB
We have paid a significant amount of cash to certain sellers of the
IFEB Shares in connection with the proposed acquisition of the
control of IFEB, which transaction may not be approved, and which
consideration we have no ability to obtain the return
of.
As described above
under “Prospectus Supplement
Summary—Recent Material Events— IFEB Bank
Transaction”, on April 1, 2021, we entered into
the Bill of Sale with certain third parties pursuant to which the
Company agreed to purchase 2,191,489 shares of authorized and
outstanding Class A Common Stock of IFEB, which IFEB Shares total
approximately 57.6% of the outstanding Class A Common Stock of
IFEB. The purchase price of the IFEB Shares was $6,400,000, which
amount was paid to the Sellers on April 1, 2021. Notwithstanding
the terms of the Bill of the Sale, and the payment by the Company
of the aggregate purchase price pursuant thereto, the transfer of
the IFEB Shares to the Company and the Company’s acquisition
of control of IFEB is subject to review of the Company’s
financial viability, as well as other matters, by OCIF, and as
such, the Company has filed a formal change of control application
which must be approved before taking ownership and control of the
IFEB Shares, which is subject to approval by OCIF, and may
ultimately not be approved. The Company anticipates receiving
confirmation of OCIF’s approval or non-approval of the
Company’s acquisition of the IFEB Shares by approximately
June 2021, if not sooner; however, in the event that OCIF does not
approve the transfer of the IFEB Shares and/or the Company’s
acquisition of control of IFEB, the Company has no way of unwinding
the transaction to purchase the IFEB Shares, or of obtaining the
return of the $6,400,000 paid to the Sellers in connection
therewith. The Company anticipates that if it is not approved for
transfer of the IFEB Shares, it would attempt to sell such shares
to a third party. Such sale may not be able to be completed on the
same terms as the original proposed acquisition of the IFEB Shares
by the Company, or at all. Any failure of OCIF to approve the
Company’s acquisition of the IFEB Shares may have an adverse
effect on the Company’s financial condition and results of
operations.
Combining IFEB and the Company may be more difficult, costly or
time-consuming than expected and the Company may fail to realize
the anticipated benefits of the acquisition of control of
IFEB.
The success of the
acquisition of control of IFEB, assuming such acquisition is
approved by OCIF, will depend, in part, on the combined
company’s ability to realize anticipated cost savings from
combining the businesses of the Company and IFEB. Combining IFEB
and the Company may be more difficult, costly or time-consuming
than expected and the Company may fail to realize the anticipated
benefits of the planned acquisition of IFEB.
We will be subject to business uncertainties until the acquisition
of IFEB is completed.
Uncertainty about
the effect of the Bill of Sale on employees and partners may have
an adverse effect on us. These uncertainties may impair our and
IFEB’s ability to attract, retain and motivate key personnel
until the Bill of Sale are completed, and could cause partners and
others that deal with us and IFEB to seek to change existing
business relationships, cease doing business with us and IFEB or
cause potential new partners to delay doing business with us and
IFEB until the Bill of Sale transactions have been successfully
completed. Retention of certain employees may be challenging during
the pendency of the Bill of Sale, as certain employees may
experience uncertainty about their future roles or compensation
structure. If key employees depart because of issues relating to
the uncertainty and difficulty of integration or a desire not to
remain with the business, our business following the Bill of Sale
could be negatively impacted. In addition, the Exchange Agreements
restrict us from making certain acquisitions and taking other
specified actions until the Bill of Sale are completed without
certain consents and approvals. These restrictions may prevent us
from pursuing attractive business opportunities that may arise
prior to the completion of the Bill of Sale.
Failure to complete the acquisition of IFEB could negatively impact
our stock price and future business and financial
results.
If the acquisition
of control of IFEB is not completed, our ongoing business may be
adversely affected and we would be subject to a number of risks,
including the following:
● we
will not realize the benefits expected from the acquisition of
control of IFEB, including a potentially enhanced competitive and
financial position, expansion of assets and therefore
opportunities, and will instead be subject to all the risks we
currently face as an independent company;
● we
may experience negative reactions from the financial markets and
our partners and employees; and
● matters
relating to the acquisition of control of IFEB (including
integration planning) may require substantial commitments of
time and resources by our management, which would otherwise have
been devoted to other opportunities that may have been beneficial
to us as an independent company.
Our inability to fully integrate IFEB’s business into our
operations could adversely affect our operations or
results.
Our future growth
and profitability depend on our ability to successfully integrate
IFEB’s banking operations into our operations. Integration of
an acquired business can be complex and costly, sometimes including
combining relevant accounting and data processing systems and
management controls and policies, as well as managing relevant
relationships with employees, clients, suppliers and other business
partners. Integration efforts have diverted and could continue to
divert management attention and resources, which could adversely
affect our operations or results. The loss of key employees in
connection with this acquisition could adversely affect our ability
to successfully conduct the combined operations. There can be no
assurance that any of these executives will choose to continue
working with us, or if they do, that we will be able to
successfully integrate these executives as part of our management
team in the combined business.
S-17
The acquisition of
IFEB may result in business disruptions that cause IFEB to lose
customers or cause customers to move their accounts or business to
competing financial institutions. It is possible that the
integration process related to the acquisition could disrupt our
ongoing business or result in inconsistencies in customer service
that could adversely affect IFEB’s ability to maintain
relationships with clients, customers, depositors and employees.
Our inability to overcome these risks could have a material adverse
effect on our business or financial condition, results of
operations and future prospects. There is no assurance that our
integration efforts will not result in other unanticipated
costs.
The operations of IFEB are in a completely different industry than
our current operations and we may not be successful in that new
industry.
IFEB was
incorporated in 2017 as a corporation under the laws of the
Commonwealth of Puerto Rico and received its international
financial entity license on June 18, 2017 from the Office of the
Commissioner of Financial Institutions of Puerto Rico, in Spanish,
“Oficina del
Comisionado de Instituciones Financieras”, as license
#51. As a result, IFEB is regulated by OCIF. Our officers do not
have significant experience running a bank and we may not be
profitable in this new line of business, assuming the acquisition
of control of IFEB is approved. Even if we achieve profitability in
the future by adopting this new business strategy, we may not be
able to sustain profitability in subsequent periods. The operation
of IFEB may subject us to unknown costs, liabilities, regulations
and expenses which haven’t budgeted for and we may ultimately
be unsuccessful in this new line of business in the event the
acquisition of IFEB is approved.
Risks
Relating to The Share Exchanges
The number of shares of common stock issuable pursuant to the
HotPlay Share Exchange and in connection with the Axion Preferred
Conversion will cause significant dilution to existing stockholders
and a change of control of the Company.
Pursuant to the
HotPlay Share Exchange, following the completion of the HotPlay
Share Exchange and at the time the outstanding shares of the
Company’s Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock automatically converts into common
stock of the Company (anticipated to occur five days after the
closing of the HotPlay Share Exchange), the current HotPlay
securityholders are expected to own approximately 62.7% of the
aggregate outstanding shares of common stock of Monaker, and the
Axion Stockholders and Axion Creditors are expected to own
approximately 13.6% of the aggregate outstanding common stock of
Monaker (without taking into account shares of common stock
issuable upon exercise of the Creditor Warrants), with the Monaker
stockholders prior to the effective date of the closing and
conversion holding approximately 23.8% of the aggregate outstanding
common stock of the combined company (without taking into account
shares of common stock issuable upon exercise of the Creditor
Warrants). As a result, the total shares of common stock issuable
upon closing of the HotPlay Share Exchange and in connection with
the Axion Preferred Conversion will cause significant dilution to
existing stockholders, and result in a change of
control.
The Company has not yet transferred the shares of Axion acquired
pursuant to the closing of the Axion Share Exchange into its
name.
Although the Axion
Share Exchange closed on November 16, 2020, the Company has yet to
formally complete the transfer of the ownership of the Axion shares
into its name, due to a Cease Trade Order issued by the British
Columbia Securities Commission, which impacts Axion, and the
Company may choose to not formally complete such transfer, but to
instead obtain the contractual rights to vote and receive the
economic rights to such shares, until such time as such shares can
be formally transferred. In the event the transfer of the Axion
shares is not approved, or delayed, the Company may be unable to
take title to such shares, which could have adverse effects on the
Company’s accounting for such acquisition and may ultimately
prevent the Company from recognizing the value of such shares. For
example, as of November 30, 2020, the Company has accounted for its
33.85% interest in Axion as an investment in affiliate, valued at
the aggregate liquidation preference of the Series B Convertible
Preferred Stock issued in consideration for such shares of Axion,
as ownership of such Axion shares have not yet been formally
transferred to the Company. The Company may also be prohibited by
the Cease Trade Order issued by the British Columbia Securities
Commission to obtain the contractual rights to vote and receive the
economic rights to the shares, and as such, may not be able to
obtain the full value of such shares or account for such shares to
their greatest value in the Company’s financial statements
moving forward.
Combining HotPlay and the Company may be more difficult, costly or
time-consuming than expected and the Company may fail to realize
the anticipated benefits of the HotPlay Share Exchange, including
expected financial and operating performance of the combined
company.
The success of the
HotPlay Share Exchange will depend, in part, on the combined
company’s ability to realize anticipated cost savings from
combining the businesses of the Company and HotPlay. To realize the
anticipated benefits and cost savings from the HotPlay Share
Exchange, the Company and HotPlay must successfully integrate and
combine their businesses in a manner that permits those cost
savings to be realized. If the Company and HotPlay are not able to
successfully achieve these objectives, the anticipated benefits of
the HotPlay Share Exchange may not be realized fully or at all or
may take longer to realize than expected. In addition, the actual
cost savings of the HotPlay Share Exchange could be less than
anticipated.
S-18
The Company and
HotPlay have operated and, until the completion of the HotPlay
Share Exchange, must continue to operate independently. It is
possible that the integration process could result in the loss of
key employees, the disruption of our ongoing businesses or
inconsistencies in standards, controls, procedures and policies
that adversely affect our ability to maintain relationships with
customers, suppliers and employees or to achieve the anticipated
benefits and cost savings of the HotPlay Share Exchange.
Integration efforts between the two companies may also divert
management attention and resources. These integration matters could
have an adverse effect on each of the Company and HotPlay during
this transition period and for an undetermined period after
completion of the HotPlay Share Exchange on the combined
company.
The combined company may be unable to retain Company and/or HotPlay
personnel successfully after the HotPlay Share Exchange is
completed.
The success of the
HotPlay Share Exchange will depend in part on the combined
company’s ability to retain the talents and dedication of key
employees currently employed by the Company and HotPlay. It is
possible that these employees may decide not to remain with the
Company or HotPlay, as applicable, while the HotPlay Share Exchange
is pending, or with the combined company after the HotPlay Share
Exchange is consummated. If key employees terminate their
employment, the combined company’s business activities may be
adversely affected and management’s attention may be diverted
from successfully integrating the Company and HotPlay to hiring
suitable replacements, all of which may cause the combined
company’s business to suffer. In addition, the Company and
HotPlay may not be able to locate or retain suitable replacements
for any key employees who leave either company.
The consummation of the
HotPlay Share Exchange will result in a change of control of the
Company.
Due to the
significant number of shares issuable at the closing of the HotPlay
Share Exchange (i.e., 52,000,000 shares of Monaker common stock
(currently representing approximately 62.7% of the shares of common
stock which will be outstanding at closing, based on
Monaker’s current outstanding shares)), a change of control
of the Company will be deemed to have occurred, and the owners of
HotPlay prior to the HotPlay Share Exchange will obtain control of
the Company (both as to the board of directors and voting control
over the Company). Additionally, the HotPlay Exchange Agreement
requires all but three of our current directors to resign and the
appointment of four new directors, which are to be nominated by the
principal stockholder of HotPlay, and such principal stockholder
and Monaker are required to mutually agree on a seventh, eight and
nineth director who will be independent, unless otherwise agreed by
the parties (one of which is currently anticipated to be one of
Monaker’s current directors). Additionally, the new
stockholders obtaining shares in the HotPlay Share Exchange will
exercise control in determining the outcome of all corporate
transactions or other matters, including the election and removal
of directors, mergers, consolidations, the sale of all or
substantially all of our assets, and also the power to prevent or
cause a further change in control. Any investors who purchase
shares or hold shares prior to the HotPlay Share Exchange will be
minority stockholders and as such will have little to no say in the
direction of the Company and the election of directors.
Additionally, it will be difficult if not impossible for investors
to remove the directors appointed by the prior owners of HotPlay,
which will mean they will remain in control of who serves as
officers of the Company as well as whether any changes are made in
the board of directors. An owner of the Company’s securities
should keep in mind that your shares, and your voting of such
shares, will likely have little effect on the outcome of corporate
decisions.
Upon the closing of the HotPlay Share Exchange we plan to
transition the majority of our business operations to those of
HotPlay.
While we plan to
continue to operate in the travel industry, and through Longroot,
following the closing of the HotPlay Share Exchange, we anticipate
that the more significant portion of our assets and operations will
be related to in-game advertising. We have no experience operating
as an in-game advertising company and our operations in such
industry will be subject to all of the risks of any new business in
a new industry. Our change in business structure may not be
successful. Additionally, such new controlling stockholders,
directors and officers may not be able to properly manage our new
direction. If our new management fails to properly manage and
direct our operations, we may be forced to scale back or abandon
our operations, which may cause the value of our common stock to
decline or become worthless.
S-19
We will be subject to business uncertainties and contractual
restrictions while the HotPlay Share Exchange is
pending.
Uncertainty about
the effect of the HotPlay Share Exchange on employees and partners
may have an adverse effect on us. These uncertainties may impair
our ability to attract, retain and motivate key personnel until the
HotPlay Share Exchange is completed, and could cause partners and
others that deal with us to seek to change existing business
relationships, cease doing business with us or cause potential new
partners to delay doing business with us until the HotPlay Share
Exchange has been successfully completed or terminated. Retention
of certain employees may be challenging during the pendency of the
HotPlay Share Exchange, as certain employees may experience
uncertainty about their future roles or compensation structure. If
key employees depart because of issues relating to the uncertainty
and difficulty of integration or a desire not to remain with the
business, our business following the HotPlay Share Exchange could
be negatively impacted. In addition, the HotPlay Share Exchange
restricts us from making certain acquisitions and taking other
specified actions until the HotPlay Share Exchange is completed
without certain consents and approvals. These restrictions may
prevent us from pursuing attractive business opportunities that may
arise prior to the completion of the HotPlay Share
Exchange.
The HotPlay Share Exchange limits our ability to pursue
alternatives to the HotPlay Share Exchange.
The HotPlay Share
Exchange contains provisions that could adversely impact competing
proposals to acquire us. These provisions include the prohibition
on us generally from soliciting any acquisition proposal or offer
for a competing transaction. These provisions might discourage a
third party that might have an interest in acquiring all or a
significant part of our company from considering or proposing an
acquisition, even if that party were prepared to pay consideration
with a higher value than the current proposed consideration payable
pursuant to the HotPlay Share Exchange.
The HotPlay Exchange Agreement may be terminated in accordance with
its terms and the HotPlay Share Exchange may not be
completed.
The HotPlay
Exchange Agreement is subject to several conditions that must be
fulfilled in order to complete the HotPlay Share Exchange. These
conditions to the closing of the HotPlay Share Exchange may not be
fulfilled and, accordingly, the HotPlay Share Exchange may not be
completed. In addition, the parties to the HotPlay Exchange
Agreement can generally terminate such agreement if the
transactions contemplated thereby do not close by May 31, 2021,
under certain other conditions if the terms of the HotPlay Share
Exchange are breached, and the parties can mutually decide to
terminate the HotPlay Exchange Agreement at any time. In addition,
the Company and the counterparties to the HotPlay Exchange
Agreement may elect to terminate the HotPlay Exchange Agreement in
certain other circumstances.
Litigation could prevent or delay the closing of the HotPlay Share
Exchange or otherwise negatively impact the business and operations
of the Company.
The Company may
incur costs in connection with the defense or settlement of any
stockholder lawsuits filed in connection with the HotPlay Share
Exchange. Such litigation could have an adverse effect on the
financial condition and results of operations of the Company and
could prevent or delay the consummation of the HotPlay Share
Exchange. Such litigation, affecting HotPlay and/or the HotPlay
Stockholders, could delay or prevent the closing of the HotPlay
Share Exchange.
Certain of the Company’s warrant holders will need to approve
the HotPlay Share Exchange or agree to modify such warrants, or
such warrant holders will have the right to require the Company to
repurchase such warrants upon the closing of the HotPlay Share
Exchange.
Certain of the
Company’s outstanding warrants agreements include provisions
which allow such holders the right, following a fundamental
transaction, such as the HotPlay Share Exchange, to require the
Company to repurchase such securities at their Black Scholes
values, which repurchase amounts may be significant and may be
several times more than the exercise prices of such warrants, even
if they are significantly out-of-the-money. As a result, in the
event such warrant holders do not consent to the HotPlay Share
Exchange, exercise their warrants prior to the date of closing of
the HotPlay Share Exchange, or otherwise agree to modify such
warrants, the Company may be forced to expend significant resources
repurchasing such warrants and the funding for such repurchases may
not be available on favorable terms, if at all, and/or such
conditions and requirements may ultimately prevent the HotPlay
Share Exchange from closing.
Termination of the HotPlay Share Exchange could negatively impact
the Company.
In the event the
HotPlay Share Exchange is terminated, our business may have been
adversely impacted by our failure to pursue other beneficial
opportunities due to the focus of management on the HotPlay Share
Exchange, and the market price of our common stock might decline to
the extent that the current market price reflects a market
assumption that the HotPlay Share Exchange will be completed. If
the HotPlay Share Exchange is terminated and our board of directors
seeks another acquisition or business combination, our stockholders
cannot be certain that we will be able to find a party willing to
offer equivalent or more attractive consideration than the
consideration provided for by the HotPlay Share
Exchange.
S-20
The combined company is required to re-meet the initial listing
standards of The NASDAQ Capital Market in order to close the
HotPlay Share Exchange.
The closing of the
HotPlay Share Exchange requires that the Company requalify for
initial listing on The NASDAQ Capital Market, pursuant to the
applicable guidance and requirements of NASDAQ as of the date of
the closing of the HotPlay Share Exchange. The NASDAQ Capital
Market initial listing standards include more stringent
requirements than The NASDAQ Capital Market continued listing
standards. The NASDAQ Capital Market initial listing standards
require that issuers meeting one of the following tests: (1)
$750,000 of pre-tax income (in either the last fiscal year or two
of the three most recent years), $5 million of public float, $4
million of stockholders’ equity and a minimum closing price
of $3 per share; (2) $15 million of public float, $5 million of
stockholders’ equity, a $3 per share price and 2 years of
operating history; or (3) a $50 million market cap; $15 million of
public float, $4 million of stockholders’ equity, and a $2
per share price, plus in each case 300 round lot stockholders and
1,000,000 shares of total public float, with at least half of such
required number of round lot stockholders holding unregistered
securities with a minimum value of $2,500.
While we believe
that we will meet the initial listing requirements of NASDAQ
following the closing of the HotPlay Share Exchange, if we cannot,
we will not be able to close the HotPlay Share Exchange as
currently contemplated.
Failure to complete the HotPlay Share Exchange could negatively
impact our stock price and future business and financial
results.
If the HotPlay
Share Exchange is not completed, our ongoing business may be
adversely affected and we would be subject to a number of risks,
including the following:
● we
will not realize the benefits expected from the HotPlay Share
Exchange, including a potentially enhanced competitive and
financial position, expansion of assets and therefore
opportunities, and will instead be subject to all the risks we
currently face as an independent company;
● we
may experience negative reactions from the financial markets and
our partners and employees;
● the
HotPlay Share Exchange places certain restrictions on the conduct
of our business prior to the completion of the HotPlay Share
Exchange or the termination of the HotPlay Share Exchange. Such
restrictions, the waiver of which is subject to the consent of the
counterparties to such agreement, may prevent us from making
certain acquisitions, taking certain other specified actions or
otherwise pursuing business opportunities during the pendency of
the HotPlay Share Exchange; and
● matters
relating to the HotPlay Share Exchange (including integration
planning) may require substantial commitments of time and resources
by our management, which would otherwise have been devoted to other
opportunities that may have been beneficial to us as an independent
company.
Significant costs are expected to be incurred in connection with
the consummation of the HotPlay Share Exchange and integration of
the Company and HotPlay into a single business, including legal,
accounting, financial advisory and other costs.
If the HotPlay
Share Exchange is consummated, the Company and HotPlay expect to
incur significant costs in connection with integrating their
operations and personnel. These costs may include costs
for:
● employee
redeployment, relocation or severance;
● integration
of information systems; and
● reorganization
or closures of facilities.
In addition, the
Company and HotPlay expect to incur a number of non-recurring costs
associated with combining the operations of the two companies,
which cannot be estimated accurately at this time. The Company and
HotPlay will also incur transaction fees and other costs related to
the HotPlay Share Exchange. Additional unanticipated costs may be
incurred in the integration of the businesses of the Company and
HotPlay. Although the Company and HotPlay expect that the
elimination of duplicative costs, as well as the realization of
other efficiencies related to the integration of the businesses,
may offset incremental transaction and transaction-related costs
over time, this net benefit may not be achieved in the near term,
or at all. There can be no assurance that the Company and HotPlay
will be successful in these integration efforts.
S-21
The conversion of the HotPlay Notes into common stock pursuant to
their terms, will cause immediate and substantial
dilution.
In certain
situations, the HotPlay Notes automatically convert into common
stock of the Company at a conversion price of $2.00 per share. If
converted in full as of the date of this prospectus, without taking
into account accrued interest, which also converts into common
stock at a conversion price of $2.00 per share, HotPlay would be
issued an aggregate of 7,500,000 shares of common stock (subject to
the NASDAQ Limitation). Such issuance would result in immediate and
substantial dilution to the interests of other
stockholders.
Risks
Relating to Longroot Thailand
Cryptocurrency exchanges and other trading venues are relatively
new.
When cryptocurrency
exchanges or other trading venues are involved in fraud or
experience security failures or other operational issues, such
events could result in a reduction in cryptocurrency prices, impact
the success of Longroot Thailand and have a material adverse effect
on the ability of Longroot Thailand to continue as a going concern,
which correspondingly could harm the business, prospects and
operations of the Company. Cryptocurrency market prices depend,
directly or indirectly, on the prices set on exchanges and other
trading venues, which are new and, in most cases, largely
unregulated as compared to established, regulated exchanges for
securities, commodities or currencies. In the event Longroot
Thailand faces fraud, security failures, operational issues or
similar events, such factors would have a material adverse effect
on the ability of Longroot Thailand to continue as a going concern,
which could have a material adverse effect on the business,
prospects or operations of Longroot Thailand.
Longroot Thailand’s business may be adversely affected by
market uncertainty or lack of confidence among
investors.
Longroot
Thailand’s revenues are derived from the participation in
fundraising activities via the issuance of crypto tokens through
its Initial Coin Offering (ICO) Portals. Uncertain economic and
market conditions, and other poor geopolitical conditions, may
adversely affect investor confidence and business activities of
potential clients. This could result in declines in size and number
of fundraises, which would likely negatively impact Longroot
Thailand’s results of operations.
Regulatory changes or actions may alter the nature of the
Company’s ownership of Longroot Thailand or restrict the use
of cryptocurrencies in a manner that adversely affects Longroot
Thailand’s business, prospects or operations.
As cryptocurrencies
have grown in both popularity and market size, governments around
the world have reacted differently to cryptocurrencies, with
certain governments deeming them illegal while others have allowed
their use and trade. Thailand, where Longroot Thailand is
regulated, is the first country to approve a legal initial coin
offering (“ICO”) portal for issuers.
Under Thai Securities and Exchange Commission (“Thai SEC”) regulation,
all crypto token issuance in Thailand must be approved by the Thai
SEC and carried out via an approved ICO Portal such as Longroot
Thailand. Governments may in the future take regulatory actions
that prohibit or severely restrict the right to acquire, own, hold,
sell, use or trade cryptocurrencies or to exchange cryptocurrencies
for fiat currency. Similar actions by governments or regulatory
bodies could impact the ability of Longroot Thailand to continue to
operate and such actions could affect the ability of Longroot
Thailand to continue as a going concern, which could have a
material adverse effect on the business, prospects or operations of
the Company.
Furthermore, tokens
issued by Longroot Thailand may be classified as securities
depending on the nature of the token and the regulatory frameworks
of the respective jurisdictions. Longroot Thailand’s
activities may be subject to securities regulations in different
jurisdictions, which could limit its business activity, such as
limits on the personnel it can issue tokens to, and this may
negatively impact Longroot Thailand’s profitability. In
addition, compliance with existing laws and regulations, will
involve significant amounts of time, including that of Longroot
Thailand’s senior leaders and that of dedicated compliance
personnel, all of which might negatively impact Longroot
Thailand’s results of operations.
S-22
The development and acceptance of cryptographic and algorithmic
protocols governing the issuance of and transactions in
cryptocurrencies are subject to a variety of factors that are
difficult to evaluate.
The use of
cryptocurrencies to, among other things, buy and sell goods and
services and complete transactions, is part of a new and rapidly
evolving industry that employs digital assets based upon a
computer-generated mathematical and/or cryptographic protocol. The
growth of this industry in general, and the use of cryptocurrencies
in particular, is subject to a high degree of uncertainty, and the
slowing or stopping of the development or acceptance of developing
protocols may occur and is unpredictable.
Longroot Thailand’s coins might be used for illegal or
improper purposes, which could expose Longroot Thailand to
additional liability and harm its business.
Longroot
Thailand’s coins remain susceptible to potentially illegal or
improper uses as criminals are using increasingly sophisticated
methods to engage in illegal activities involving internet
services, such as money laundering, terrorist financing, drug
trafficking, human trafficking, illegal online gaming, romance and
other online scams, prohibited sales of pharmaceuticals, fraudulent
sale of goods or services, piracy of software, movies, music and
other copyrighted or trademarked goods, unauthorized uses of credit
and debit cards or bank accounts and similar misconduct.
Coinholders may also encourage, promote, facilitate or instruct
others to engage in illegal activities. If the measures Longroot
Thailand has taken are too restrictive and inadvertently screen
proper transactions, this could diminish customer experience which
could harm its business. Thailand’s business could be harmed
if customers use its system for illegal or improper
purposes.
Acceptance and/or widespread use of cryptocurrency is
uncertain.
Currently, there is
a relatively small use of cryptocurrencies in the retail and
commercial marketplace for goods or services. In comparison, there
is relatively large use by speculators contributing to price
volatility. The relative lack of acceptance of cryptocurrencies in
the retail and commercial marketplace limits the ability of
end-users to use them to pay for goods and services. Such lack of
acceptance or decline in acceptances would have a material adverse
effect on the ability of Longroot Thailand to continue as a going
concern or to pursue this segment at all, which would have a
material adverse effect on the business, prospects or operations of
Longroot Thailand and ultimately the Company.
There are cyber security risks related to cryptocurrency
trading.
Trading platforms
and third-party service providers may be vulnerable to hacking or
other malicious activity. As with any computer code generally,
flaws in cryptocurrency codes may be exposed to such negative
activities. Several errors and defects have been found previously,
including those that disabled some functionality for users of
cryptocurrency trading platforms and exposed such users’
personal information. Flaws in and exploitations of the source code
allowing malicious actors to take or create money have previously
occurred. Any of the above events effecting Longroot Thailand may
adversely affect its operations and results of operations and
ultimately have a material adverse effect on the
Company.
Competing blockchain platforms and technologies may cause consumers
to use alternative distributed ledgers.
The development and
acceptance of competing blockchain platforms or technologies may
cause consumers to use alternative distributed ledgers or an
alternative to distributed ledgers altogether. This may adversely
affect Longroot Thailand.
Future regulatory changes affecting Longroot Thailand are unable to
predict.
Digital assets in
Thailand are regulated under the Securities and Exchange Commission
of Thailand, and are subject to comprehensive statutes, regulations
and margin requirements. In addition, the Securities and Exchange
Commission of Thailand is authorized to take extraordinary actions
in the event of a market emergency, including, for example, the
retroactive implementation of speculative position limits or higher
margin requirements, the establishment of daily price limits and
the suspension of trading. The regulation of digital assets both
inside and outside Thailand is a rapidly changing area of law and
is subject to modification by government and judicial action.
Digital assets also currently face an uncertain regulatory
landscape in various jurisdictions. Various foreign jurisdictions
may, in the near future, adopt laws, regulations or directives that
affect digital assets and its users, particularly digital asset
operators and service providers that fall within such
jurisdictions’ regulatory scope. Such laws, regulations or
directives may conflict with those of Thailand and may negatively
impact the acceptance of digital assets by users, merchants and
service providers outside of Thailand and may therefore impede the
growth of the digital asset economy. The effect of any future
domestic or foreign regulatory change on the Longroot Thailand is
unable to be predicted, but such change could be substantial and
adverse to Longroot Thailand’s operations and
prospects.
S-23
Risks
Relating to this Offering:
You will experience immediate and substantial dilution as a result
of this offering and may experience additional dilution in the
future.
Because
the price per share of our common stock being offered is higher
than the book value per share of our common stock, you will suffer
substantial dilution in the net tangible book value of the common
stock you purchase in this offering. Based on the public offering
price of $2.50 per share and the net tangible book value of the
common stock of $0.63 per common stock share as of November 30,
2020 ($0.89 per common stock share on a pro forma basis, see
“Dilution”, below),
if you purchase shares of common stock in this offering, you will
suffer dilution of $1.40 per common stock share in the net tangible
book value of the common stock (when compared to pro forma, as
adjusted book value per common stock share as of November 30,
2020), which will be approximately $1.10 per share following the
Offering (on a pro forma, as adjusted basis). See “Dilution” below for
a more detailed discussion of the dilution you will incur if you
purchase our common stock in the offering.
Management will have broad discretion as to the use of the proceeds
from this offering, and may not use the proceeds
effectively.
Our management will
have broad discretion in the application of the net proceeds from
this offering and could spend the proceeds in ways that may not
improve our results of operations or enhance the value of our
common stock. Our failure to apply these funds effectively could
have a material adverse effect on our business and cause the price
of our common stock to decline.
There may be future sales of our common stock, which could
adversely affect the market price of our common stock and dilute a
stockholder’s ownership of common stock.
The exercise of the
underwriters’ over-allotment option, the exercise of (a) any
options granted to executive officers and other employees under our
equity compensation plans and (b) of any warrants, and other
issuances of our common stock could have an adverse effect on the
market price of the shares of our common stock. Other than the
restrictions set forth in the section titled “Underwriting,” we are not restricted
from issuing additional shares of common stock, including any
securities that are convertible into or exchangeable for, or that
represent the right to receive shares of common stock, provided
that we are subject to the requirements of the Nasdaq Capital
Market (which generally requires stockholder approval for any
transactions which would result in the issuance of more than 20% of
our then outstanding shares of common stock or voting rights
representing over 20% of our then outstanding shares of stock).
Sales of a substantial number of shares of our common stock in the
public market or the perception that such sales might occur could
materially adversely affect the market price of the shares of our
common stock. Because our decision to issue securities in any
future offering will depend on market conditions and other factors
beyond our control, we cannot predict or estimate the amount,
timing or nature of our future offerings. Accordingly, our
stockholders bear the risk that our future offerings will reduce
the market price of our common stock and dilute their stock
holdings in us.
You may experience future dilution as a result of future equity
offerings.
In order to raise
additional capital, we may in the future offer additional shares of
our common stock or other securities convertible into or
exchangeable for our common stock. We cannot assure you that we
will be able to sell shares or other securities in any other
offering at a price per share that is equal to or greater than the
price per share paid by investors in this offering, and investors
purchasing our shares or other securities in the future could have
rights superior to existing stockholders. The price per share at
which we sell additional shares of our common stock or other
securities convertible into or exchangeable for our common stock in
future transactions may be higher or lower than the price per share
in this offering.
Future sales of our common stock could cause our stock price to
decline.
If our stockholders
sell substantial amounts of our common stock in the public market,
the market price of our common stock could decrease significantly.
The perception in the public market that our stockholders might
sell shares of our common stock could also depress the market price
of our common stock. Up to $100,000,000 in total aggregate value of
securities have been registered by us on a “shelf” registration
statement on Form S-3 (File No. 333-224309) that we filed with the
Securities and Exchange Commission on April 17, 2018, and which was
declared effective on July 2, 2018. When including securities sold
in this offering, there is still an aggregate of over $75 million
in securities which will be eligible for sale in the public markets
from time to time, subject to the requirements of Form S-3, which
limits us, until such time, if ever, as our public float exceeds
$75 million, from selling securities in a public primary offering
under Form S-3 with a value exceeding more than one-third of the
aggregate market value of the common stock held by non-affiliates
of the Company every twelve months. Additionally, if our existing
stockholders sell, or indicate an intention to sell, substantial
amounts of our common stock in the public market, the trading price
of our common stock could decline significantly. The market price
for shares of our common stock may drop significantly when such
securities are sold in the public markets. A decline in the price
of shares of our common stock might impede our ability to raise
capital through the issuance of additional shares of our common
stock or other equity securities.
S-24
The following table
sets forth our capitalization as of November 30, 2020:
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●
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on an actual
basis;
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|
|
|
|
●
|
on a pro forma
basis, to give effect to the sale of 3,542,000 shares of common
stock (when including the over-allotment option which was exercised
in full) at a public offering price of $2.50 per share, pursuant to
the Company’s underwritten public offering completed on
December 31, 2020;
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|
|
|
|
●
|
on an as adjusted
basis, to give effect to the sale by us, in this Offering, of
3,230,000 shares of common stock at a public offering price of
$2.50 per share, after deducting underwriting discounts and fees
and estimated offering expenses payable by us.
|
You should read
this table together with the “Use
of Proceeds” section included in this prospectus,
the “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations” section and our consolidated financial
statements and related notes included in our Annual Report on
Form 10-K for the year ended February 29, 2020 and
our Quarterly Report on Form 10-Q for the quarter ended
November 30, 2020, each of which are incorporated by reference into
this prospectus.
|
|
As of November
30, 2020
(In thousands,
except share and per share amounts) (unaudited)
|
||
|
|
Actual
|
Pro
Forma
|
Pro
Forma As Adjusted
|
|
Cash
|
$3,596
|
$15,266
|
$22,646
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
Series A Preferred
Stock, $0.01 par value; 3,000,000 authorized; no shares issued and
outstanding at November 30, 2020 on an actual, pro forma, and
adjusted basis
|
—
|
—
|
—
|
|
Series B Preferred
Stock, $0.00001 par value; 10,000,000 authorized; 10,000,000 shares
issued and outstanding at November 30, 2020 on an actual, pro
forma, and adjusted basis
|
100
|
100
|
100
|
|
Series C Preferred
Stock, $0.00001 par value; 3,828,500 authorized; 3,828,500 shares
issued and outstanding at November 30, 2020 on an actual, pro
forma, and adjusted basis
|
38
|
38
|
38
|
|
Common stock,
$.00001 par value; 500,000,000 shares authorized; 14,811,089,
18,353,089 and 21,583,089 shares issued and outstanding at November
30, 2020, on an actual, pro forma, and adjusted basis,
respectively
|
$148
|
$184
|
$216
|
|
Additional paid-in
capital
|
142,634
|
154,268
|
161,616
|
|
Accumulated
deficit
|
(122,956)
|
(122,956)
|
(122,956)
|
|
Total
stockholders’ equity
|
$19,678
|
$31,496
|
$38,876
|
The number of
issued and outstanding shares as of November 30, 2020, in the table
(except otherwise indicated):
|
|
●
|
assumes no exercise
by the underwriters of their over-allotment option;
|
|
|
|
|
|
|
●
|
excludes 3,170,921
shares of common stock issuable upon the exercise of outstanding
warrants to purchase shares of common stock at a weighted-average
exercise price of $2.48 per share; and
|
|
|
|
|
|
|
●
|
excludes 1,387,529
shares of our common stock that are reserved for equity awards that
may be granted under our equity incentive plans.
|
|
|
|
|
Additionally,
the actual, and as adjusted capitalization in the table above as of
November 30, 2020, does not take into account the (a) $10 million
in HotPlay Notes sold in March 2021 (as described in greater detail
above under “Prospectus Supplement
Summary—Recent Material Events—HotPlay and Axion Share
Exchanges”); (b) the sale of the March 2021
Streeterville Note or related transactions (as described in greater
detail above under “Prospectus Supplement
Summary—Recent Material Events—March 2021 Streeterville
Note Purchase”); (c) the Convertible Promissory
Notes (as described in greater detail above under “Prospectus Supplement
Summary—Recent Material Events—Convertible Promissory
Notes”); or (d) the January 2021 acquisition of
51% of Reinhart in consideration for $10.8 million (as described in
greater detail above under “Prospectus Supplement
Summary—Recent Material Events—Reinhart Interactive TV
AG Acquisition”).
S-25
DILUTION
If you invest in
our common stock, your interest will be diluted immediately to the
extent of the difference between the public offering price per
share and the pro forma net tangible book value per share of our
common stock after this offering.
Our net tangible
book value as of November 30, 2020 was approximately $9.4 million,
or $0.63 per share of common stock. “Net tangible book value”
is total assets minus the sum of liabilities and intangible assets.
“Net tangible book
value per share” is net tangible book value divided by
the total number of shares of common stock
outstanding.
The pro forma net
tangible book value of our common stock as of November 30, 2021, to
give effect to the sale of 3,542,000 shares of common stock (when
including the over-allotment option which was exercised in full) at
a public offering price of $2.50 per share, pursuant to the
Company’s underwritten public offering completed on December
31, 2020, was approximately $16.4 million, or $0.89 per common
stock share. Net tangible book value per share represents our total
tangible assets, less our total liabilities, divided by the number
of outstanding shares of our common stock.
Dilution in net
tangible book value per share of common stock represents the
difference between the public offering price per share of our
common stock and the adjusted net tangible book value per share of
our common stock after giving effect to this offering. After giving
effect to the sale of 3,230,000 shares of our common stock in this
offering at the public offering price of $2.50 per share of common
stock, and after deducting the underwriting discount and
commissions and estimated offering expenses payable by us, our
adjusted net tangible pro forma book value per share of our common
stock at November 30, 2020 would have been approximately $23.6
million, or $1.10 per share of common stock. This represents an
immediate increase in net tangible book value per share of our
common stock of approximately $0.21 per share of common stock to
existing stockholders (compared to pro forma, as adjusted, per
share net tangible book value) and an immediate dilution of
approximately $1.40 per share of common stock to purchasers in this
offering (compared to pro forma, as adjusted, per share net
tangible book value as of November 30, 2021). All calculations of
dilution in this prospectus supplement assume the sale of all of
the shares of common stock offered in this offering. The following
table illustrates this per-share dilution:
|
Public offering
price per share of common stock
|
|
$2.50
|
|
Net tangible book
value per common stock share as of November 30, 2020
|
$0.63
|
|
|
Increase in net
tangible book value per common stock attributable to the December
2020 underwritten offering
|
0.26
|
|
|
Pro forma net
tangible book value per common stock share as of November 30,
2020
|
0.89
|
|
|
Increase per common
stock share attributable to this offering
|
$0.21
|
|
|
Pro forma, as
adjusted net tangible book per common stock share after this
offering
|
|
$1.10
|
|
Dilution per common
stock share to investors participating in this
offering
|
|
$(1.40)
|
The information
above is as of November 30, 2020:
|
|
●
|
assumes no exercise
by the underwriters of their over-allotment option;
|
|
|
|
|
|
|
●
|
excludes 3,170,921
shares of common stock issuable upon the exercise of outstanding
warrants to purchase shares of common stock at a weighted-average
exercise price of $2.48 per share; and
|
|
|
|
|
|
|
●
|
excludes 1,387,529
shares of our common stock that are reserved for equity awards that
may be granted under our equity incentive plans.
|
|
|
|
|
Additionally, the
actual, and as adjusted capitalization in the table above as of
November 30, 2020, does not take into account the (a) $10 million
in HotPlay Notes sold in March 2021 (as described in greater detail
above under “Prospectus Supplement
Summary—Recent Material Events—HotPlay and Axion Share
Exchanges”); (b) the sale of the March 2021
Streeterville Note or related transactions (as described in greater
detail above under “Prospectus Supplement
Summary—Recent Material Events—March 2021 Streeterville
Note Purchase”); (c) the Convertible Promissory
Notes (as described in greater detail above under “Prospectus Supplement
Summary—Recent Material Events—Convertible Promissory
Notes”); or (d) the January 2021 acquisition of
51% of Reinhart in consideration for $10.8 million (as described in
greater detail above under “Prospectus Supplement
Summary—Recent Material Events—Reinhart Interactive TV
AG Acquisition”).
S-26
The following table
sets forth certain information with respect to the beneficial
ownership of our capital stock as of May 13, 2021, referred to in
the table below as the “Beneficial Ownership
Date”, and as adjusted to reflect the sale of our
shares offered by us in this Offering assuming no exercise of the
underwriters’ option to purchase additional shares,
by:
|
●
|
|
each person, or
group of affiliated persons, known by us to beneficially own more
than 5% of any class of our securities;
|
|
●
|
|
each of our
directors;
|
|
●
|
|
each of our named
executive officers; and
|
|
●
|
|
all directors and
executive officers as a group.
|
The column titled
“Percentage of
Shares Beneficially Owned—Before Offering” is
based on a total of 19,739,703 shares of our common stock
outstanding as of the Beneficial Ownership Date. The column titled
“Percentage of
Shares Beneficially Owned—After Offering” is
based on 22,969,703 shares of our common stock to be outstanding
after this offering, including the 3,230,000 shares of our common
stock that we are selling in this offering, but not including any
exercise (i) by the underwriters of their option to purchase up to
484,500 additional shares of common stock, and (ii) any shares of
common stock issuable upon conversion of our outstanding Series B
Preferred Stock and Series C Preferred Stock, which are not
currently convertible.
Beneficial
ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a person and
the percentage ownership of that person, ordinary shares subject to
options or warrants held by that person that are currently
exercisable or exercisable within 60 days of the Beneficial
Ownership Date are deemed outstanding but are not deemed
outstanding for computing the percentage ownership of any other
person.
The Company’s
Series B Preferred Stock and Series C Preferred Stock is
non-voting, and is not convertible into common stock until the
stockholders of the Company have approved the issuance thereof, and
as such, the ownership of such preferred stock has not been
included in the table below.
To our knowledge,
except as indicated in the footnotes to this table and pursuant to
applicable community property laws, (a) the persons named in
the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them, subject
to applicable community property laws; and (b) no person owns
more than 5% of our common stock. Unless otherwise indicated, the
address for each of the officers or directors listed in the table
below is 1560 Sawgrass Corporate Parkway, Suite 130, Sunrise,
Florida 33323.
S-27
|
Name of
Beneficial Owner
|
Shares of Common
Stock
Beneficially
Owned (1)
|
Percent
of
Common
Stock
Outstanding
Before Offering (2)
|
Percent
of
Common
Stock
Outstanding
After Offering (2)
|
|
Executive Officers and Directors
|
|
|
|
|
William
Kerby
|
898,622(3)
|
4.5%
|
3.9%
|
|
Sirapop
“Kent” Taepakdee
|
27,500
|
*
|
*
|
|
Tim
Sikora
|
28,000
|
*
|
*
|
|
Donald P.
Monaco
|
1,994,034(4)
|
10.1%
|
8.7%
|
|
Simon
Orange
|
481,649(5)
|
2.4%
|
2.1%
|
|
Pasquale
“Pat” LaVecchia
|
177,232
|
*
|
*
|
|
Doug
Checkeris
|
161,250
|
*
|
*
|
|
Rupert
Duchesne
|
50,833
|
*
|
*
|
|
Robert
“Jamie” Mendola, Jr.
|
526,439
|
2.7%
|
2.3%
|
|
Alexandra C.
Zubko
|
47,055
|
*
|
*
|
|
|
|
|
|
|
All
Executive Officers and Directors as a Group (10
persons)
|
4,392,614
|
22.3%
|
19.1%
|
|
|
|
|
|
|
5%
Stockholders
|
|
|
|
|
|
|
|
|
|
IDS, Inc.
(6)
|
1,968,000
|
10.0%
|
7.5%
|
* Less than
1%.
|
|
(1)
|
Includes options,
warrants and convertible securities exercisable or convertible for
common stock within 60 days of the Beneficial Ownership
Date.
|
|
|
(2)
|
Before offering
percentages are based on 19,739,703 shares of common stock
outstanding as of the Beneficial Ownership Date and after offering
percentages assume the sale of 3,230,000 shares of common stock in
this Offering.
|
|
|
(3)
|
William Kerby holds
670,872 shares of common stock and warrants to purchase 15,300
shares of common stock of the Company individually. Mr. Kerby is
deemed to own 80,000 shares held by In-Room Retail Systems, LLC,
which entity he owns. On April 7, 2021, the Board of Directors of
the Company, consistent with Mr. Kerby’s employment
agreement, which provides for Mr. Kerby to receive a base salary of
$400,000 per year, and an annual bonus payable at the discretion of
the Board of Directors, of up to 100% of his base salary (50% based
on meeting short term goals and 50% based on meeting long-term
goals), and other bonuses which may be granted from time to time in
the discretion of the Board of Directors, agreed to award Mr. Kerby
a discretionary bonus for fiscal 2021 of $400,000, which is payable
in cash or shares of common stock, at Mr. Kerby’s option,
under the Company’s Amended and Restated 2017 Equity
Incentive Plan (the “Plan”), with a conversion price of
$3.02 per share, the closing sales price of the Company’s
common stock on the date the Board of Directors approved such
bonus. If Mr. Kerby exercises his right to receive the entire bonus
in shares of common stock, he would be due 132,450 shares of common
stock, which shares of common stock are included in his beneficial
ownership above.
|
|
|
(4)
|
Donald P. Monaco
beneficially owns (i) 934,224 shares of common stock owned by
the Donald P. Monaco Insurance Trust (the “Trust”), and
(ii) 822,302 shares are beneficially owned by Monaco
Investment Partners II, LP (“MI Partners”). Mr. Monaco
also individually owns 237,508 shares of common stock of the
Company. Mr. Monaco is the managing general partner of MI Partners
and trustee of the Trust. Mr. Monaco disclaims beneficial ownership
of all shares held by the Trust and MI Partners in excess of his
pecuniary interest, if any.
|
|
|
(5)
|
Simon Orange holds
234,542 shares of common stock individually. Mr. Orange is deemed
to own 186,557 shares of common stock and warrants to purchase
60,550 shares of common stock of the Company held by Charcoal
Investment LTD, which entity he owns.
|
|
|
(6)
|
Address: 21781
Ventura Blvd Ste. 231, Woodland Hills, California 91634. The shares
held in the name of IDS, Inc. are beneficially owned by Ari
Daniels, the Chief Executive Officer of IDS, Inc.
(“IDS”). Based on
information reported on Schedule 13G filed by IDS, Inc. with the
SEC on October 3, 2019, which has not been independently verified.
On April 27, 2020, the Company filed a verified complaint for
injunctive relief against IDS and certain other defendants
affiliated with IDS in the Circuit Court of the Seventeenth
Judicial Circuit in and for Broward County, Florida. Pursuant to
the complaint, the Company alleges causes of action against the
defendants, including IDS, based on among other things, fraud,
conspiracy to commit fraud, aiding and abetting fraud, rescission,
and breach of contract, and seeks a temporary and permanent
injunction against the defendants, requiring such persons to return
the 1,968,000 shares of common stock disclosed above to the Company
and preventing such persons from selling or transferring any
shares, seeks damages from the defendants, rescission of an
Intellectual Property Purchase Agreement (“IP Purchase
Agreement”) pursuant to which the shares were
issued, attorneys fees and other amounts. The complaint was filed
as a result of IDS’s failure to deliver certain intellectual
property assets which were acquired by the Company from IDS in
August 2019, certain other actions of IDS and the other defendants
which the Company alleges constitutes fraud and to seek to unwind
the IP Purchase Agreement and provide damages to the Company due to
IDS’s and the other defendants’ breaches thereunder.
The action is still pending as of the date of this prospectus
supplement.
|
S-28
Description of Common Stock
We have authorized
capital stock consisting of 500,000,000 shares of common stock,
$0.00001 par value per share and 100,000,000 shares of preferred
stock, $0.00001 par value per share. As of May 13, 2021, we had
19,739,703 shares of common stock outstanding and approximately 438
stockholders of record.
The following
summary of certain provisions of our common stock does not purport
to be complete. You should refer to our Articles of Incorporation
(as amended) and our Bylaws (as amended), both of which have
been filed with the SEC, and have been incorporated by reference as
exhibits to our Annual Report on Form 10-K (see also
“Where You Can Find More
Information” beginning on page S-37, below). The
summary below is also qualified by provisions of applicable
law.
Each share of our
common stock is entitled to equal dividends and distributions per
share with respect to the common stock when, as and if declared by
our board of directors. No holder of any shares of our common stock
has a preemptive right to subscribe for any of our securities, nor
are any shares of our common stock subject to redemption or
convertible into other securities. Upon liquidation, dissolution or
winding-up of the Company, and after payment to our creditors and
preferred stockholders, if any, our assets will be divided pro rata
on a share-for-share basis among the holders of our common stock.
Each share of our common stock is entitled to one vote on all
stockholder matters. Shares of our common stock do not possess any
cumulative voting rights.
The presence of the
persons entitled to vote of 33 1/3% of the outstanding voting
shares on a matter before the stockholders constitutes the quorum
necessary for the consideration of the matter at a
stockholders’ meeting.
Except as otherwise
required by law, the Articles of Incorporation, or any certificate
of designations, (i) at all meetings of stockholders for the
election of directors, a plurality of votes cast are sufficient to
elect such directors; (ii) any other action taken by
stockholders are be valid and binding upon the Company if the
number of votes cast in favor of the action exceeds the number of
votes cast in opposition to the action, at a meeting at which a
quorum is present, except that adoption, amendment or repeal of the
Bylaws by stockholders requires the vote of a majority of the
shares entitled to vote; and (iii) broker non-votes and
abstentions are considered for purposes of establishing a quorum
but not considered as votes cast for or against a proposal or
director nominee. Each stockholder has one vote for every share of
stock having voting rights registered in his or her name, except as
otherwise provided in any preferred stock designation setting forth
the right of preferred stock stockholders.
The common stock
does not have cumulative voting rights, which means that the
holders of 51% of the common stock voting for election of directors
can elect 100% of our directors if they choose to do
so.
Description of Preferred Stock
Shares of preferred
stock may be issued from time to time in one or more series, each
of which shall have such distinctive designation or title as shall
be determined by our board of directors prior to the issuance of
any shares thereof. Preferred stock shall have such voting powers,
full or limited, or no voting powers, and such preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be
stated in such resolution or resolutions providing for the issue of
such class or series of preferred stock as may be adopted from time
to time by the board of directors prior to the issuance of any
shares thereof.
The powers,
preferences and relative, participating, optional and other special
rights of each class or series of preferred stock, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding.
S-29
Series A Convertible Preferred Stock
The holders of
record of shares of Series A Preferred Stock are entitled to vote
on all matters submitted to a vote of the stockholders of the
Company and are entitled to one hundred (100) votes for each
share of Series A Preferred Stock. Each share of Series A Preferred
Stock is redeemable at $1.00 per share. The Series A Preferred
Stock is entitled to a 10% annual dividend, payable as, when and
if, declared by the board of directors, payable on the first day of
April, July, October and January.
Per the terms of
the Amended and Restated Certificate of Designations relating to
the Series A Preferred Stock, subject to the availability of
authorized and unissued shares of Series A Preferred Stock, the
holders of Series A Preferred Stock may, by written notice to the
Company:
|
|
●
|
elect to convert
all or any part of such holder’s shares of Series A Preferred
Stock into common stock at a conversion rate of the lower
of:
|
|
|
|
(a) $62.50 per
share; or
|
|
|
|
(b) at the
lowest price the Company has issued stock as part of a
financing.
|
|
|
●
|
convert all or part
of such holder’s shares (excluding any shares issued pursuant
to conversion of unpaid dividends) into debt obligations of
the Company, secured by a security interest in all of the assets of
the Company and its subsidiaries, at a rate of $62.50 of debt for
each share of Series A Preferred Stock.
|
In the event of any
liquidation, dissolution or winding up of this Company, either
voluntary or involuntary (any of the foregoing, a
“liquidation”), holders of
Series A Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this Company
to the holders of the common Stock or any other series of preferred
stock by reason of their ownership thereof an amount per share
equal to $1.00 for each share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) of Series
A Preferred Stock held by each such holder, plus the amount of
accrued and unpaid dividends thereon (whether or not
declared) from the beginning of the dividend period in which
the liquidation occurred to the date of liquidation. Additionally,
each holder of Series A Preferred Stock holds a security interest
in substantially all of our assets in order to secure our
obligations in connection with such Series A Preferred
Stock.
On July 9, 2013,
the Company amended the Certificate of Designations for the
Company’s Series A Preferred Stock to allow for conversion
into Series C Preferred stock to grant to a holder of the Series A
Preferred Stock the option to:
●
elect
to convert all or any part of such holder’s shares of Series
A Preferred Stock into shares of the Company’s Series C
Convertible Preferred Stock, par value $0.00001 per share (which
has since been withdrawn and is no longer designated), at a
conversion rate of five (5) shares of Series A Preferred Stock
for every one (1) share of Series C Preferred Stock; or to
allow conversion into common stock at the lowest price the Company
has issued stock as part of a financing to include all financings
such as new debt and equity financing and stock issuances as well
as existing debt conversions into stock.
On February 28,
2014, the Company’s Series A Preferred Stock stockholders
agreed to authorize a change to the Certificate of Designations of
the Series A Preferred Stock to lock the conversion price to the
lower of (a) a fixed price of $2.50 per share; and
(b) the lowest price the Company has issued stock as part of a
financing after January 1, 2006.
Except for
transfers to family members, or trusts for the benefit of Series A
Preferred Stock holders, no holder of Series A Preferred Stock is
able to transfer his/her/its shares of Series A Preferred
Stock.
There are currently
no shares of Series A Preferred Stock issued or
outstanding.
In connection with
the Axion Exchange Agreement, Monaker filed a certificate of
designation of its Series B Convertible Preferred Stock with the
Secretary of State of Nevada on November 13, 2020, which was
amended and restated by an amended and restated certificate of
designation of its Series B Convertible Preferred Stock, filed with
the Secretary of State of Nevada on January 8, 2021 (as amended and
restated, the “Series B Designation”).
The Series B Designation designated 10,000,000 shares of Series B
Preferred Stock, $0.00001 par value per share (“Series B Preferred
Stock”). The Series B Preferred Stock has the
following rights:
S-30
Dividend
Rights. The Series B Preferred Stock does not accrue
dividends.
Liquidation
Preference. The Series B Designation provides that the
Series B Preferred Stock has a liquidation preference which is
(a) pari passu with respect to the Company’s common
stock and Series C Preferred Stock; and (b) junior to all
current and future senior indebtedness of the Company. If the
Company determines to liquidate, dissolve or wind-up its business
and affairs, the Company will prior to or concurrently with the
closing, effectuation or occurrence of any such action, pay the
holders of the Series B Preferred Stock, pari passu with the
holders of the Series C Preferred Stock and common stock, an
amount equal to $0.9272121 per share, or $9,272,121 in
aggregate.
Conversion
Rights. Each share of Series B Preferred Stock is
automatically convertible on the Approval Date (defined below),
into 0.74177 shares of common stock. For the purposes of the
following sentence:
|
|
●
|
“Approval
Date” means the later of (a) the fifth business day
after the approval by Monaker’s stockholders of the Axion
Preferred Conversion; (b) the business day that the Company
has affected a reverse stock split of its outstanding common stock
subsequent to the approval by Monaker’s stockholders of the
Axion Preferred Conversion, to the extent such reverse stock split
is deemed necessary by a Majority In Interest (defined below);
(c) the date that NASDAQ has approved the continued listing of
the Company’s common stock on NASDAQ following the closing of
the HotPlay Share Exchange; and (d) the closing of the HotPlay
Share Exchange.
|
|
|
●
|
“Majority In
Interest” means holders holding a majority of the then
aggregate shares of Series B Preferred Stock issued and outstanding
or the majority of the then aggregate shares of Series C Preferred
Stock issued and outstanding, depending on which class of preferred
stock holders are approving such matter.
|
Additionally, the
maximum number of shares of common stock to be issued in connection
with the conversion of all of the outstanding shares of Series B
Preferred Stock and Series C Preferred Stock shares (and upon
conversion or exercise of any other securities required to be
aggregated with the Series B Preferred Stock and Series C Preferred
Stock shares pursuant to the applicable rules and requirements of
NASDAQ), cannot exceed such number of shares of common stock that
would violate applicable listing rules of NASDAQ in the event the
Company’s stockholders do not approve the issuance of the
common stock issuable in connection with such
conversion.
Voting
Rights. The Series B Preferred Stock have no voting rights
on general matters to come before the stockholders of the Company;
however, the Company is prohibited from undertaking any of the
following actions without the approval of a Majority In
Interest:
(a) Increasing
or decreasing (other than by redemption or conversion) the
total number of authorized shares of Series B Preferred
Stock;
(b) Re-issuing
any shares of Series B Preferred Stock converted pursuant to the
terms of the Series B Designation;
(c) Effecting
an exchange, reclassification, or cancellation of all or a part of
the Series B Preferred Stock;
(d) Effecting
an exchange, or creating a right of exchange, of all or part of the
shares of another class of shares into shares of Series B Preferred
Stock;
(e) Issuing
any shares of Series B Preferred Stock other than pursuant to the
Axion exchange agreement;
(f) Altering
or changing the rights, preferences or privileges of the shares of
Series B Preferred Stock so as to affect adversely the shares of
such series; or
(g) Amending
or waiving any provision of the Company’s articles of
incorporation or bylaws relative to the Series B Preferred Stock so
as to affect adversely the shares of Series B Preferred Stock in
any material respect as compared to holders of other series of
shares.
Redemption
Rights. The Series B Preferred Stock does not have any
redemption rights.
S-31
Series C Convertible Preferred Stock
In connection with
the Axion exchange agreement, Monaker filed a certificate of
designation of its Series C Convertible Preferred Stock with the
Secretary of State of Nevada on November 13, 2020 (the
“Series C
Designation”). The Series C Designation, which was
approved by the Board of Directors of the Company on November 12,
2020, designates 3,828,500 shares of Series C Preferred Stock,
$0.00001 par value per share of the Company (“Series C Preferred
Stock”). The Series C Preferred Stock has the
following rights:
Dividend
Rights. The Series C Preferred Stock does not accrue
dividends.
Liquidation
Preference. The Series C Designation provides that the
Series C Preferred Stock has a liquidation preference which is
(a) pari passu with respect to the Company’s common
stock and Series B Preferred Stock; and (b) junior to all
current and future senior indebtedness of the Company. If the
Company determines to liquidate, dissolve or wind-up its business
and affairs, the Company will prior to or concurrently with the
closing, effectuation or occurrence any such action, pay the
holders of the Series C Preferred Stock, pari passu with the
holders of the Series B Preferred Stock and common stock, an amount
equal to $2.00 per share, or $7,657,000 in aggregate.
Conversion
Rights. Each share of Series C Preferred Stock is
automatically convertible on the Approval Date (defined and
described above under “Series B Convertible Preferred
Stock”), into one share of common stock
(adjustable for stock splits and similar
recapitalizations).
Additionally, the
maximum number of shares of common stock to be issued in connection
with the conversion of all of the outstanding shares of Series C
Preferred Stock and Series B Preferred Stock shares (and upon
conversion or exercise of any other securities required to be
aggregated with the Series C Preferred Stock and Series B Preferred
Stock shares pursuant to the applicable rules and requirements of
NASDAQ), cannot exceed such number of shares of common stock that
would violate applicable listing rules of NASDAQ in the event the
Company’s stockholders do not approve the issuance of the
common stock issuable in connection with such
conversion.
Voting
Rights. The Series C Preferred Stock have no voting rights
on general matters to come before the stockholders of the Company;
however, the Company is prohibited from undertaking any of the
following actions without the approval of a Majority In
Interest:
(a) Increasing
or decreasing (other than by redemption or conversion) the
total number of authorized shares of Series C Preferred
Stock;
(b) Re-issuing
any shares of Series C Preferred Stock converted pursuant to the
terms of the Series C Designation;
(c) Effecting
an exchange, reclassification, or cancellation of all or a part of
the Series C Preferred Stock;
(d) Effecting
an exchange, or creating a right of exchange, of all or part of the
shares of another class of shares into shares of Series C Preferred
Stock;
(e) Issuing
any shares of Series C Preferred Stock other than pursuant to the
A&R Axion Exchange Agreement;
(f) Altering
or changing the rights, preferences or privileges of the shares of
Series C Preferred Stock so as to affect adversely the shares of
such series; or
(g) Amending
or waiving any provision of the Company’s articles of
incorporation or bylaws relative to the Series C Preferred Stock so
as to affect adversely the shares of Series C Preferred Stock in
any material respect as compared to holders of other series of
shares.
Redemption
Rights. The Series C Preferred Stock does not have any
redemption rights.
S-32
Transfer Agent and Registrar
The transfer agent
and registrar for our common stock is Colonial Stock Transfer Co,
Inc.
NASDAQ Capital Market
Our common stock is
listed on the NASDAQ Capital Market under the symbol
“MKGI.”
Anti-Takeover Provisions Under the Nevada Revised
Statutes
Certain provisions
of Nevada law, and our Articles of Incorporation and our Bylaws,
each as amended and subject, where applicable as described below,
our opting out of certain provisions of Nevada law, contain
provisions that could make the following transactions more
difficult: acquisition of us by means of a tender offer;
acquisition of us by means of a proxy contest or otherwise; or
removal of our incumbent officers and directors. It is possible
that these provisions could make it more difficult to accomplish or
could deter transactions that stockholders may otherwise consider
to be in their best interest or in our best interests, including
transactions that might result in a premium over the market price
for our shares.
These provisions,
summarized below, are expected to discourage coercive takeover
practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of us to
first negotiate with our board of directors. We believe that the
benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure us outweigh the disadvantages of
discouraging these proposals because negotiation of these proposals
could result in an improvement of their terms.
Business Combinations
Sections 78.411 to
78.444 of the Nevada revised statues (the “NRS”) prohibit a
Nevada corporation from engaging in a “combination” with an
“interested
stockholder” for three years following the date that
such person becomes an interested stockholder and place certain
restrictions on such combinations even after the expiration of the
three-year period. With certain exceptions, an interested
stockholder is a person or group that owns 10% or more of the
corporation’s outstanding voting power (including stock with
respect to which the person has voting rights and any rights to
acquire stock pursuant to an option, warrant, agreement,
arrangement, or understanding or upon the exercise of conversion or
exchange rights) or is an affiliate or associate of the
corporation and was the owner of 10% or more of such voting stock
at any time within the previous three years.
A Nevada
corporation may elect not to be governed by Sections 78.411 to
78.444 by a provision in its Articles of Incorporation. We have
such a provision in our Articles of Incorporation, as amended,
pursuant to which we have elected to opt out of Sections 78.411 to
78.444; therefore, these sections do not apply to us.
Control Shares
Nevada law also
seeks to impede “unfriendly” corporate
takeovers by providing in Sections 78.378 to 78.3793 of the NRS
that an “acquiring
person” shall only obtain voting rights in the
“control
shares” purchased by such person to the extent
approved by the other stockholders at a meeting. With certain
exceptions, an acquiring person is one who acquires or offers to
acquire a “controlling interest” in
the corporation, defined as one-fifth or more of the voting power.
Control shares include not only shares acquired or offered to be
acquired in connection with the acquisition of a controlling
interest, but also all shares acquired by the acquiring person
within the preceding 90 days. The statute covers not only the
acquiring person but also any persons acting in association with
the acquiring person.
A Nevada
corporation may elect to opt out of the provisions of Sections
78.378 to 78.3793 of the NRS. We have no provision in our Articles
of Incorporation pursuant to which we have elected to opt out of
Sections 78.378 to 78.3793; therefore, these sections do not apply
to us.
Removal of Directors
Section 78.335 of
the NRS provides that 2/3rds of the voting power of the issued and
outstanding shares of the Company are required to remove a director
from office. As such, it may be more difficult for stockholders to
remove directors due to the fact the NRS requires greater than
majority approval of the stockholders for such
removal.
Undesignated Preferred Stock
The ability to
authorize undesignated preferred stock pursuant to our Articles of
Incorporation, as amended, will make it possible for our board of
directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change
control of us. These and other provisions may have the effect of
deterring hostile takeovers or delaying changes in control or
management of the Company.
S-33
DESCRIPTION OF SECURITIES WE ARE
OFFERING
In this offering,
we are offering 3,230,000 shares of common stock. The material
terms and provisions of our common stock are described in the
section entitled “Description of Capital Stock - Common
Stock”, above.
USE OF PROCEEDS
We
estimate the net proceeds to us from our sale of the common stock
in this offering will be approximately $7.4 million (after
deducting the underwriting discount and estimated offering expenses
payable by us), or approximately $8.50 million if the underwriters
exercise their over-allotment in full, based on the public offering
price of $2.50 per share.
We
currently intend to use the net proceeds from this offering, if
any, to repay approximately $4.0 million ($4.2 million, if the
underwriters’ over-allotment option is exercised in full)
owed under Secured Promissory Notes held by Streeterville Capital,
LLC (“Streeterville”) sold in
November 2020 and March 2021, discussed in greater detail below
above under “Prospectus
Supplement Summary—Recent Material
Events—March 2021 Streeterville Note
Purchase”, provide capital to IFEB in advance of
the closing of the acquisition of control of IFEB, for general
corporate purposes and working capital or for other purposes that
the Board of Directors, in their good faith, deems to be in the
best interest of the Company. We may also use all or a portion of
the remaining net proceeds from this offering (after the payments
described above) to fund possible investments in, or acquisitions
of, complementary businesses, technologies or products, but we
currently have no agreements or commitments with respect to any
investment or acquisition.
Notwithstanding the above, the amounts and timing of our actual
expenditures will depend on numerous factors. We may find it
necessary or advisable to use portions of the net proceeds for
other purposes, and we will have broad discretion in the
application and allocation of the net proceeds from this offering.
Pending the use of the net proceeds from this offering as described
above, we intend to invest the proceeds in investment grade,
interest-bearing instruments.
We are offering the shares of common stock
described in this prospectus supplement and the accompanying
prospectus through the underwriters listed below. Kingswood Capital
Markets, division of Benchmark Investments, Inc. (the
“Representative”)
is acting as sole bookrunner in this Offering. The underwriters
named below have agreed to buy, subject to the terms of the
underwriting agreement, the number of shares of common stock listed
opposite its name below. The underwriters are committed to purchase
and pay for all of the shares of common stock if any are purchased,
other than those shares of common stock covered by the
over-allotment option described below.
|
Name of
Underwriters
|
Number of
Shares
|
|
Kingswood Capital
Markets, division of Benchmark Investments, Inc.
|
3,223,500
|
|
Westpark Capital,
Inc.
|
6,500
|
|
Total
|
3,230,000
|
The
underwriters have advised us that they propose to offer the shares
of common stock to the public at an offering price of $2.50. The
underwriters propose to offer the shares of common stock to certain
dealers at the same price less a concession of not more than
$0.075. After the offering, these figures may be changed by the
underwriters.
The common stock
sold in this offering are expected to be ready for delivery on or
about May 18, 2021, against payment in immediately available funds.
The underwriters may reject all or part of any order.
S-34
Our common stock
trades on the Nasdaq Capital Market under the symbol
“MKGI.”
The underwriting
agreement provides that the obligation of the underwriters to
purchase the shares of common stock offered by this prospectus
supplement and the accompanying base prospectus is subject to the
approval of certain legal matters by counsel for the representative
and to certain other conditions. The foregoing description of the
underwriting agreement is only a summary, does not purport to be
complete and is qualified in its entirety by reference to the
underwriting agreement, a copy of which will be attached as an
exhibit to a Current Report on Form 8-K filed with the SEC in
connection with this offering and are incorporated herein by
reference. See
“Where You
Can Find More Information” and “Incorporation
of Certain Documents by Reference” on pages S-37
and S-38.
We have granted to
the underwriters an option to purchase up to an additional 484,500
shares of common stock from us at the same price to the public, and
with the same underwriting discount, as set forth in the table
below. The underwriters may exercise this option any time during
the 45-day period after the date of this prospectus supplement, but
only to cover over-allotments, if any. To the extent the
underwriters exercise the option, the underwriters will become
obligated, subject to certain conditions, to purchase the shares of
common stock for which they exercise the option.
The
table below summarizes the underwriting discounts that we will pay
to the underwriters. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option. In
addition to the underwriting discount, we have agreed to pay up to
$50,000 of the fees and expenses of the Representative of the
underwriters, which may include the fees and expenses of counsel to
the Representative and have agreed to pay the Representative a
non-accountable expense reimbursement equal to 1% of the gross
proceeds raised in this Offering. The fees and expenses of the
Representative that we have agreed to reimburse are not included in
the underwriting discounts set forth in the table below. The
underwriting discount and reimbursable expenses the Representative
will receive were determined through arms’ length
negotiations between us and the Representative.
|
|
Per
Share
|
Total with no
Over-Allotment
|
Total with Over-
Allotment
|
|
Public offering
price
|
$2.50
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$8,075,000
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$9,286,250
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|
Underwriting
discount
|
$0.15
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$484,500
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$557,175
|
|
Proceeds, before
expenses, to us
|
$2.35
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$7,590,500
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$8,729,075
|
We estimate that
the total expenses of this offering, excluding underwriting
discounts, will be approximately $210,750 (approximately $223,000
if the underwriters exercise their full over-allotment option).
This includes $50,000 of the fees and expenses of the
Representative and the 1% non-accountable fee reimbursement we
agreed to pay the Representative of the underwriters. These
expenses are payable by us.
We also have agreed
to indemnify the underwriters against certain liabilities,
including civil liabilities under the Securities Act of 1933, as
amended, or to contribute to payments that the underwriters may be
required to make in respect of those liabilities.
We,
as well as our officers and directors have agreed, subject to
limited exceptions, for a period of 30 days after the closing of
this Offering, not to offer, sell, contract to sell, pledge, grant
any option to purchase, make any short sale or otherwise dispose
of, directly or indirectly any shares of common stock or any
securities convertible into or exchangeable for our common stock
either owned as of the date of the underwriting agreement or
thereafter acquired without the prior written consent of the
Representative. The Representative may, in its sole discretion and
at any time or from time to time before the termination of the
lock-up period, without notice, release all or any portion of the
securities subject to lock-up agreements.
The
Company has agreed not to issue, enter into any agreement to issue
or announce the issuance or proposed issuance of any shares of the
Company’s common stock or common stock equivalents for a
period of forty-five days from the closing of the offering, other
than certain exempt issuances including, but not limited to,
securities issued pursuant to the Company’s equity
compensation plans. The Company has also agreed not to effect or
enter into an agreement to affect any issuance by the Company of
common stock or common stock equivalents involving a Variable Rate
Transaction (as defined in the Underwriting Agreement) for a period
of ninety days from the closing of the
offering.
Price
Stabilization, Short Positions, and Penalty Bids
In connection with
this offering, each underwriter may engage in transactions that
stabilize, maintain or otherwise affect the price of our
securities. Specifically, such underwriter may over-allot in
connection with this offering by selling more securities than are
set forth on the cover page of this prospectus. This creates a
short position in our securities for such underwriter’s own
accounts. The short position may be either a covered short position
or a naked short position. In a covered short position, the number
of securities over-allotted by such underwriter is not greater than
the number of securities that it may purchase in the over-allotment
option. In a naked short position, the number of securities
involved is greater than the number of securities in the
over-allotment option. To close out a short position, such
underwriter may elect to exercise all or part of the over-allotment
option. Such underwriter may also elect to stabilize the price of
our securities or reduce any short position by bidding for, and
purchasing, securities in the open market.
The underwriters
may also impose a penalty bid. This occurs when a particular
underwriter or dealer repays selling concessions allowed to it for
distributing a security in this offering because the underwriter
repurchases that security in stabilizing or short covering
transactions.
S-35
Finally, each
underwriter may bid for, and purchase, shares of our securities in
market-making transactions, including “passive” market-making
transactions as described below.
These activities
may stabilize or maintain the market price of our securities at a
price that is higher than the price that might otherwise exist in
the absence of these activities. The underwriters are not required
to engage in these activities, and may discontinue any of these
activities at any time without notice. These transactions may be
affected on NASDAQ, in the over-the-counter market, or
otherwise.
In connection with
this offering, the underwriters and selling group members, if any,
or their affiliates may engage in passive market-making
transactions in our common stock immediately prior to the
commencement of sales in this offering, in accordance with Rule 103
of Regulation M under the Exchange Act. Rule 103 generally provides
that:
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●
|
a passive market
maker may not affect transactions or display bids for our
securities in excess of the highest independent bid price by
persons who are not passive market makers;
|
|
|
|
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●
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net purchases by a
passive market maker on each day are generally limited to 30% of
the passive market maker’s average daily trading volume in
our common stock during a specified two-month prior period or 200
shares, whichever is greater, and must be discontinued when that
limit is reached; and
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●
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passive
market-making bids must be identified as such.
|
Determination
of Offering Price
The public offering
price of the securities we are offering was negotiated between us
and the underwriters based on the trading of our common stock prior
to the Offering, among other things. Other factors considered in
determining the public offering price of the shares include the
history and prospects of the Company, the stage of development of
our business, our business plans for the future and the extent to
which they have been implemented, an assessment of our management,
general conditions of the securities markets at the time of the
Offering and such other factors as were deemed
relevant.
Electronic
Distribution
This prospectus in
electronic format may be made available on websites or through
other online services maintained by the underwriters, or by their
affiliates. Other than this prospectus in electronic format, the
information on the underwriters’ websites and any information
contained in any other websites maintained by an underwriter is not
part of this prospectus or the registration statement of which this
prospectus forms a part, has not been approved and/or endorsed by
us or the underwriters in their capacity as underwriter, and should
not be relied upon by investors.
Other than the
prospectus in electronic or printed format, the information on the
underwriters’ website and any information contained in any
other website maintained by an underwriter is not part of the
prospectus or the registration statement of which this prospectus
forms a part, has not been approved and/or endorsed by us or the
underwriters in their capacity as underwriters and should not be
relied upon by investors.
Certain
Relationships
From time to time,
the underwriters and/or their affiliates have provided, and may in
the future provide, various investment banking and other financial
services for us for which services it has received and, may in the
future receive, customary fees.
Except for the
services provided in connection with this Offering and as described
below, the underwriters have not provided any investment banking or
other financial services during the 180-day period preceding the
date of this prospectus, except as set forth below.
Kingswood Capital
Markets, division of Benchmark Investments, Inc., acted as the sole
placement agent for the Company on a “reasonable best efforts”
basis, in connection with the July 2020 offering of 2 million
shares of common stock at a public offering price of $2.00 per
share and was paid $140,000 in placement agent fees in connection
with such offering as described in greater detail in
our Current
Report on Form 8-K filed with the SEC on July 27,
2020, which is incorporated by reference into this
prospectus.
S-36
Kingswood Capital
Markets, division of Benchmark Investments, Inc., acted as joint
book-running manager (together with Aegis Capital Corp.), in
connection with the December 2020 underwritten public offering of
3,542,000 shares of common stock (when including the over-allotment
option which was exercised in full) at a public offering price of
$2.50 per share and was paid $ 531,300 as an underwriting discount
in connection with such offering as described in greater detail in
our Current
Report on Form 8-K filed with the SEC on December
31, 2020, which is incorporated by reference into this
prospectus.
Offers
Outside the United States
Other than in the
United States, no action has been taken by us or the underwriters
that would permit a public offering of the securities offered by
this prospectus in any jurisdiction where action for that purpose
is required. The securities offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or
any other offering material or advertisements in connection with
the offer and sale of any such securities be distributed or
published in any jurisdiction, except under circumstances that will
result in compliance with the applicable rules and regulations of
that jurisdiction. Persons into whose possession this prospectus
comes are advised to inform themselves about and to observe any
restrictions relating to the offering and the distribution of this
prospectus. This prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any securities offered by this
prospectus in any jurisdiction in which such an offer or a
solicitation is unlawful.
The McGeary Law
Firm, P.C., Bedford, Texas, will issue an opinion with respect to
the validity of the shares of common stock offered
hereby. Ellenoff Grossman &
Schole LLP, New York, New York is acting as counsel to the
underwriters in this offering.
The consolidated
balance sheets of the Company as of February 29, 2020 and February
28, 2019, and the related consolidated statements of operations,
stockholders’ equity, and cash flows for the years then
ended, appearing in the Company’s Annual Report on Form 10-K
for the year ended February 29, 2020, have been audited by Thayer
O’Neal Company, LLC, as set forth in their report
thereon, and incorporated
herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such reports
given on the authority of such firm as an expert in accounting and
auditing.
No expert or
counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the
validity of the securities being registered or upon other legal
matters in connection with the registration or offering of the
common stock was employed on a contingency basis, or had, or is to
receive, any interest, directly or indirectly, in our Company or
any of our parents or subsidiaries, nor was any such person
connected with us or any of our parents or subsidiaries, if any, as
a promoter, managing or principal underwriter, voting trustee,
director, officer, or employee.
We file annual,
quarterly, and current reports, proxy statements and other
information with the SEC. Our SEC filings are available to the
public over the Internet at the SEC’s web site
at www.sec.gov and on the
“Stock
Info” page of our website at www.monakergroup.com.
Information on our web site is not a part of this prospectus, and
we do not desire to incorporate by reference such information
herein. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding
issuers that file electronically with the SEC like us. Our SEC
filings are also available to the public from the SEC’s
website at http://www.sec.gov.
This prospectus
supplement is part of the registration statement and the
accompanying prospectus contained therein and does not contain all
of the information included in the registration statement or the
accompanying prospectus. Whenever a reference is made in this
prospectus supplement to any of our contracts or other documents,
the reference may not be complete and, for a copy of the contract
or document, you should refer to the exhibits that are a part of
the registration statement. You should rely only on the information
contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus and any supplement or
amendment hereto. We have not authorized anyone to provide you with
information different from that contained in this prospectus
supplement and the accompanying prospectus. The securities offered
under this prospectus supplement and the accompanying prospectus
are offered only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus supplement
and the accompanying prospectus, and any free writing prospectus,
is accurate only as of the date of this prospectus supplement, the
accompanying prospectus and any such free writing prospectus,
regardless of the time of delivery of this prospectus supplement,
the accompanying prospectus, or any free writing prospectus, or any
sale of the securities.
This prospectus
supplement and the accompanying prospectus constitute a part of a
registration statement we filed with the SEC under the Securities
Act. This prospectus supplement and the accompanying prospectus do
not contain all of the information set forth in the registration
statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information with
respect to us and the shares offered hereby, reference is hereby
made to the registration statement. The registration statement may
be inspected at the public reference facilities maintained by the
SEC at the addresses set forth in the paragraph above. Statements
contained herein concerning any document filed as an exhibit are
not necessarily complete, and, in each instance, reference is made
to the copy of such document filed as an exhibit to the
registration statement. Each such statement is qualified in its
entirety by such reference.
S-37
The SEC allows us
to “incorporate by
reference” into this prospectus the information we
file with it, which means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is considered to be part of
this prospectus from the date on which we file that document. Any
reports filed by us with the SEC (i) on or after the date of filing
of the registration statement and (ii) on or after the date of this
prospectus and before the termination of the offering of the
securities by means of this prospectus will automatically update
and, where applicable, supersede information contained in this
prospectus or incorporated by reference into this
prospectus.
We incorporate by
reference the documents listed below, all filings filed by us
pursuant to the Exchange Act after the date of the registration
statement of which this prospectus forms a part, and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, prior to the time that all securities
covered by this prospectus have been sold; provided, however, that
we are not incorporating any information furnished under either
Item 2.02 or Item 7.01 of any current report on Form
8-K:
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●
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Our Annual Report
on Form 10-K and Amendment No. 1 thereto on Form 10-K/A, for the
fiscal year ended February 29, 2020, filed with the SEC on
May 29, 2020 and
June 25, 2020, respectively,
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●
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our Quarterly
Report on Form 10-Q for the quarter ended May 31, 2020, filed with
the SEC on
July 13, 2020; our Quarterly Report on Form 10-Q for the
quarter ended August 31, 2020, filed with the SEC on
October 15, 2020; and our Quarterly Report on Form 10-Q for the
quarter ended November 30, 2020, filed with the SEC on
January 19, 2021;
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●
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Our Current Reports
on Form 8-K and Form 8-K/A (other than information furnished rather
than filed) filed with the SEC on
March 17, 2020;
March 30; 2020;
April 9, 2020;
April 29, 2020;
May 13, 2020;
June 12, 2020;
July 8, 2020;
July 23, 2020;
July 27, 2020;
September 8, 2020;
September 24, 2020;
October 1, 2020;
October 5, 2020;
October 29, 2020;
November 6, 2020;
November 18, 2020;
November 19, 2020;
November 27, 2020;
December 14, 2020;
December 18, 2020;
December 31, 2020;
January 7, 2021;
January 11, 2021;
January 13, 2021;
February 26, 2021;
March 22, 2021;
March 26; 2021;
April 6, 2021;
April 7, 2021;
April 8, 2021;
April 9, 2021;
April 19, 2021; and
May 11, 2021; and
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●
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Our Definitive
Proxy Statements on Schedule 14A, filed with the SEC on
January 11, 2021 and
March 4, 2021; and
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●
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The description of
our common stock contained in our
Registration Statement on Form S-1 (File No. 333-220619), as
originally filed with the SEC on September 25, 2017, including any
amendment or report filed for the purpose of updating such
description.
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These documents
contain important information about us, our business and our
financial condition. Copies of documents incorporated by reference,
excluding exhibits except to the extent such exhibits are
specifically incorporated by reference, are available from us
without charge, upon oral or written request to:
Monaker Group,
Inc.
1560 Sawgrass
Corporate Parkway, Suite 130
Sunrise, Florida
33323
Attn: Sirapop
‘Kent’ Taepakdee, Secretary
Phone: (954)
888-9779
Fax: (954)
888-9082
All documents filed
by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Act or the Exchange Act, excluding any information in
those documents that are deemed by the rules of the SEC to be
furnished but not filed, after the date of this prospectus and
before the termination of this offering shall be deemed to be
incorporated in this prospectus and to be a part hereof from the
date of the filing of such document. Any statement contained in a
document incorporated by reference herein shall be deemed to be
modified or superseded for all purposes to the extent that a
statement contained in this prospectus, or in any other
subsequently filed document which is also incorporated or deemed to
be incorporated by reference, modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this prospectus. You will be deemed to have notice of all
information incorporated by reference in this prospectus as if that
information was included in this prospectus.
Statements made in
this prospectus or in any document incorporated by reference in
this prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily
complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the
documents incorporated by reference, each such statement being
qualified in all material respects by such reference.
We maintain an
Internet website at www.monakergroup.com where
the incorporated reports listed above can be accessed. Neither this
website nor the information on this website is included or
incorporated in, or is a part of, this prospectus.
S-38
PROSPECTUS
Monaker Group, Inc.
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
We may from time to time, in one or more offerings
at prices and on terms that we will determine at the time of each
offering, sell common stock, preferred stock, debt securities,
warrants, or a combination of these securities or units
(collectively referred to as ”securities”)
for an aggregate initial offering price of up to $100 million.
This prospectus describes the general manner in which our
securities may be offered using this prospectus. Each time we offer
and sell securities, we will provide you with a prospectus
supplement that will contain specific information about the terms
of that offering. We may also authorize one or more free writing
prospectuses to be provided to you in connection with these
offerings. Any prospectus supplement and any related free writing
prospectus may also add, update, or change information contained in
this prospectus. You should carefully read this prospectus, the
applicable prospectus supplement and any related free writing
prospectus as well as the documents incorporated or deemed to be
incorporated by reference herein or therein before you purchase any
of the securities offered hereby.
Securities may be sold by us to or through
underwriters or dealers, directly to purchasers or through agents
designated from time to time. For additional information on the
methods of sale, you should refer to the section entitled
“Plan of
Distribution” in this
prospectus. If any underwriters are involved in the sale of any
securities with respect to which this prospectus is being
delivered, the names of such underwriters and any applicable
discounts or commissions and over-allotment options will be set
forth in a prospectus supplement. The price to the public of such
securities and the net proceeds we expect to receive from such sale
will also be set forth in a prospectus
supplement.
Our common stock is listed on the Nasdaq Capital
Market under the symbol “MKGI.”
There is currently no market for the other securities we may offer.
The prospectus supplement will contain information, where
applicable, as to any other listing of the securities on the Nasdaq
Capital Market or any other securities market or exchange covered
by the prospectus supplement. Pursuant to Instruction I.B.6 of Form
S-3, in no event will we sell our common stock in a public primary
offering with a value exceeding more than one-third of our public
float in any 12-month period so long as our public float remains
below $75 million. As of the date of this prospectus, the
aggregate market value of our outstanding voting and nonvoting
common equity held by non-affiliates of the Company (i.e., our
public float) was approximately $12,979,952 and the total value of
our entire voting and nonvoting common equity was approximately
$28,615,823, each based on the closing price of the Company’s
common stock on June 13, 2018, which closing price was $3.51
per share. We have offered and sold no securities pursuant to
General Instruction I.B.6 of Form S-3 during the twelve calendar
months prior to and including the date of this
prospectus.
This prospectus may not be used to offer or sell our securities
unless accompanied by a prospectus supplement. The information
contained or incorporated in this prospectus or in any prospectus
supplement is accurate only as of the date of this prospectus, or
such prospectus supplement, as applicable, regardless of the time
of delivery of this prospectus or any sale of our
securities.
Investing in our securities involves risks. You should carefully
consider the risk factors beginning on page 8 of this prospectus
and set forth in the documents incorporated by reference herein
before making any decision to invest 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 July 2, 2018.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We
may provide information to you about the securities we are offering
in three separate documents that progressively provide more
detail:
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this prospectus,
which provides general information, some of which may not apply to
your securities;
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a prospectus
supplement (including any free writing prospectus), which describes
the terms of the securities, some of which may not apply to your
securities and which may not include information relating to the
prices of the securities being offered; and
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if necessary, a
pricing supplement, which describes the pricing terms of your
securities.
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If
the terms of your securities vary among the pricing supplement, the
prospectus supplement and the prospectus, you should rely on the
information in the following order of priority:
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the pricing
supplement, if any;
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the prospectus
supplement; and
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this
prospectus.
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We
include cross-references in this prospectus and the prospectus
supplement to captions in these materials where you can find
further related discussions. The following Table of Contents and
the Table of Contents included in the prospectus supplement provide
the pages on which these captions are located.
Unless
indicated in the applicable prospectus supplement, we have not
taken any action that would permit us to publicly sell these
securities in any jurisdiction outside the United States. If you
are an investor outside the United States, you should inform
yourself about and comply with any restrictions as to the offering
of the securities and the distribution of this
prospectus.
ABOUT THIS PROSPECTUS
This prospectus is a part of a registration
statement that we filed with the Securities and Exchange
Commission, the SEC or the Commission, utilizing a
“shelf”
registration process. Under this shelf registration process, we may
offer to sell any combination of the securities described in this
prospectus, either individually or in units, in one or more
offerings up to a total dollar amount of $100,000,000. This
prospectus provides you with a general description of the
securities we may offer. Each time we sell securities under this
shelf registration, we will provide a prospectus supplement that
will contain specific information about the terms of that offering.
We may also authorize one or more free writing prospectuses to be
provided to you that may contain material information about the
terms of that offering. The prospectus supplement and any related
free writing prospectus that we may authorize to be provided to you
may also add, update or change information contained in this
prospectus. To the extent that any statement that we make in a
prospectus supplement and any related free writing prospectus
thatwe may authorize to be provided to you is inconsistent with
statements made in this prospectus, the statements made in this
prospectus will be deemed modified or superseded by those made in
the prospectus supplement. You should read this prospectus and any
prospectus supplement and free writing prospectus, including all
documents incorporated herein or therein by reference, together
with additional information described under
“Where You Can Find
More Information” and
“Incorporation of
Certain Documents By Reference” before making an investment decision. We
may only use this prospectus to sell the securities if it is
accompanied by a prospectus supplement.
You
should rely only on the information included or incorporated by
reference in this prospectus, the accompanying prospectus
supplement and any free writing prospectus. We have not authorized
any dealer, salesman or other person to provide you with additional
or different information. If anyone provides you with different or
inconsistent information, you should not rely on it. This
prospectus, the accompanying prospectus supplement and any free
writing prospectus are not an offer to sell or the solicitation of
an offer to buy any securities other than the securities to which
they relate and are not an offerto sell or the solicitation of an
offer to buy securities in any jurisdiction to any person to whom
it is unlawful to make an offer or solicitation in that
jurisdiction. You should not assume that the information contained
in this prospectus and the accompanying prospectus supplement, and
any free writing prospectus, is accurate on any date subsequent to
the date set forth on the front of the document or that any
information we have previously filed with the SEC and incorporated
by reference is correct on any date subsequent to the date of the
document incorporated by reference, even though this prospectus and
any accompanying prospectus supplement and any free writing
prospectus is delivered or securities are sold on a later date. Our
business, financial condition, results of operations and prospects
may have changed since those dates. We will disclose any material
changes in our affairs in a post-effective amendment to the
registration statement of which this prospectus is a part, a
prospectus supplement, free writing prospectus or a future filing
with the Securities and Exchange Commission incorporated by
reference in this prospectus. We do not imply or represent by
delivering this prospectus that Monaker Group, Inc., or its
business, financial condition or results of operations, are
unchanged after the date on the front of this prospectus or that
the information in this prospectus is correct at any time after
such date.
Persons
outside the United States who come into possession of this
prospectus must inform themselves about, and observe any
restrictions relating to, the offering of the securities and the
distribution of this prospectus outside of the United
States.
Our
logo and some of our trademarks and tradenames are used in this
prospectus. This prospectus also includes trademarks, tradenames
and service marks that are the property of others. Solely for
convenience, trademarks, tradenames and service marks referred to
in this prospectus may appear without the ®, ™ and SM
symbols. References to our trademarks, tradenames and service marks
are not intended to indicate in any way that we will not assert to
the fullest extent under applicable law our rights or the rights of
the applicable licensors if any, nor that respective owners to
other intellectual property rights will not assert, to the fullest
extent under applicable law, their rights thereto. We do not intend
the use or display of other companies’ trademarks and trade
names to imply a relationship with, or endorsement or sponsorship
of us by, any other companies.
The market data and certain other statistical
information used throughout this prospectus are based on
independent industry publications, reports by market research firms
or other independent sources that we believe to be reliable
sources. Industry publications and third-party research, surveys
and studies generally indicate that their information has been
obtained from sources believed to be reliable, although they do not
guarantee the accuracy or completeness of such information. We are
responsible for all of the disclosure contained in this prospectus,
and we believe these industry publications and third-party
research, surveys and studies are reliable. While we are not aware
of any misstatements regarding any third-party information
presented in this prospectus, their estimates, in particular, as
they relate to projections, involve numerous assumptions, are
subject to risks and uncertainties, and are subject to change based
on various factors, including those discussed under, and
incorporated by reference into, the section entitled
“Risk
Factors” beginning on
page 8 of this prospectus and any accompanying prospectus
supplement or free writing prospectus. These and other factors
could cause our future performance to differ materially from our
assumptions and estimates. Some market and other data included
herein, as well as the data of competitors as they relate to
Monaker Group, Inc., is also based on our good faith
estimates.
Unless the context otherwise requires, references
in this prospectus and the accompanying prospectus supplement to
“we,”“us,” “our,” the “Registrant,”
the “Company,”
“Monaker”
and “Monaker
Group” refer to Monaker
Group, Inc. and its subsidiaries. In addition, unless the context
otherwise requires, “FYE” refers to fiscal year end;
“Exchange
Act” refers to the
Securities Exchange Act of 1934, as amended;
“SEC” or the “Commission”
refers to the United States Securities and Exchange Commission; and
“Securities
Act” refers to the
Securities Act of 1933, as amended. All dollar amounts in this
prospectus are in U.S. dollars unless otherwise stated. You
should read the entire prospectus before making an investment
decision to purchase our securities.
PROSPECTUS SUMMARY
The following summary highlights material
information found in more detail elsewhere in, or incorporated by
reference in, the prospectus. It does not contain all of the
information you should consider. As such, before you decide to buy
our securities, in addition to the following summary, we urge you
to carefully read the entire prospectus and documents incorporated
by reference herein, the prospectus supplement, and any free
writing prospectus, especially the risks of investing in our
securities as discussed under “Risk
Factors” herein and
therein. The following summary is qualified in its entirety by the
detailed information appearing elsewhere in this
prospectus.
Summary
We
and our subsidiaries operate an online marketplace for the
alternative lodging rental industry. Alternative lodging rentals
(ALRs) are whole unit vacation homes or timeshare resort units that
are fully furnished, privately owned residential properties,
including homes, condominiums, villas and cabins, that property
owners and managers rent to the public on a nightly, weekly or
monthly basis. As an added feature to our ALR offerings, we also
provide access to airline, car rental, hotel and activities
products along with concierge tours and activities, at the
destinations, that are catered to the traveler through our
Maupintour products.
We
provide a vacation rental platform with auxiliary services so
travelers can purchase vacations through our sites; our
NextTrip.com, Maupintour.com or EXVG.com (or through distributors
the Company provides ALRs) while providing inquiries and bookings
to property owners and managers. NextTrip serves three major
constituents: (1) property owners and managers, (2) travelers, and
(3) other distributors. Property owners and managers provide
detailed listings of their properties to the Company with the
goalof reaching a broad audience of travelers seeking ALRs. The
property owners and managers provide us their properties, at a
preferential net rate for each booking and, in return, their
properties are listed for free as an available ALR on NextTrip.com
(as well as other distributors who the Company has provided ALRs).
Travelers visit NextTrip.com (as well as other distributors who the
Company has provided ALRs) and are able to search and compare our
large and detailed inventory of listings to find ALRs meeting their
needs.
We
are a technology driven travel and logistics company with ALR
products as our distinguishing niche. The ALRs are owned and leased
by third parties and are available to rent through our websites as
well as other distributors who we have provided ALRs. Our services
include critical elements such as technology, an extensive film
library, media distribution, trusted brands and established
partnerships that enhance product offerings and reach. We have
video content, media distribution, key industry relationships and a
prestigious Travel Brand as cornerstones for the development and
planned deployment of core-technology on both proprietary and
partnership platforms.
We
sell travel services to leisure and corporate customers around the
world. The primary focus is providing ALR options as well as
providing schedule, pricing and availability information for
booking reservations for airlines, hotels, rental cars, cruisesand
other travel products such as sightseeing tours, show and event
tickets and theme park passes. The Company sells these travel
services both individually and as components of
dynamically-assembled packaged travel vacations and trips. In
addition, the Company provides content that presents travelers with
information about travel destinations, maps and other travel
details; this content information is the product of proprietary
video-centered technology that allows the Company to create
targeted travel videos from its film libraries. In April 2017,
the Company introduced its new Travel Platform under the NextTrip
brand. This platform continues to be improved with a focus on
maximizing the consumer’s experience and assisting them in
the decision and purchasing process.
The
platform is a combination of proprietary and licensed technology
that connects and searches large travel suppliers of alternative
lodging inventories to present to consumers comprehensive and
optimal alternatives at the most inexpensive rates to choose
from.
The Company sells its travel services through
various distribution channels. The primary distribution channel
will be providing real-time bookable ALRs to other distributors
(such as other travel companies’ websites and networks of
third-party travel agents) who will sell the ALRs to their
customers. The second distribution channel is through its own
website at NextTrip.com and the NextTrip mobile application
(“app”) as well as EXVG.com (which is anticipated
to be operational prior to fiscal year end). The third distribution
channel is selling travel services to customers through a toll-free
telephone number designed to assist customers with complex or
high-priced offerings of Maupintour.
Overview
We
are a technology driven Travel Company with multiple divisions and
brands, leveraging our principals with more than 65 years of
operation in leisure travel. The Company has structured its travel
assets to focus on the burgeoning $100 billion Alternative Lodging
Travel space (according to LeisureLink), expected to increase to
$169 billion by 2019 (as discussed below), through its
state-of-the-art flagship platform NextTrip.com. We have amassed
contracts representing over 1.2 million vacation rental
properties for listing and display on the Company’s NextTrip
booking platform utilizing rich content, imagery and high-quality
video. The platform is designed to maximize the traveler’s
experience and assist in the search, decision and purchasing
process of alternative lodging and other travel related products.
The NextTrip platform is powered by our proprietary booking engine
which features real-time booking on the entire alternative lodging
(vacation home rentals, resort residences, rooms and unused
timeshares) inventory, whereas the industry standard and peer
company sites mostly require requesting availability directly from
the homeowner and waiting for a response or acceptance
communication.
Additionally, the NextTrip platform has combined
key features and functionality with advanced proprietary and
licensed technology, to support vacationers travel needs with a
vast array of airlines, hotels, rental cars, tours, activities,
restaurants and alternative lodging suggestions thereby empowering
consumers to search and create comprehensive vacation packages at
one site – “Travel Made
Easy!” The
Company’s mission is to continue to expand the NextTrip
offerings and to become the “one
stop” vacation center,
which we hope to achieve with key partnerships and established
travel brands as cornerstones.
A January 2016 report by Research and Markets
projected the global vacation rental market will reach $169 billion
by 2019. In light of this projected remarkable growth, the Company
recognized there would be significant opportunities in amassing ALR
inventory into a real-time booking platform for supply to large and
established OTA’s (“Online Travel
Agent’s”) who, for
the most part have not achieved access to this type of product and
rapidly growing market segment. Our proprietary booking engine was
designed and built to unlock these business-2-business (B2B)
partnerships and handle significant transactional volumes. By
providing our ALR products with real-time booking capabilities to
existing OTA customers, the Company believes it has positioned
itself to capture a meaningful percentage of their
bookings.
*****
Additional information about us can be obtained
from the documents incorporated by reference herein. See
“Where You Can Find
More Information.”
Our Contact Information
Our
principal executive offices are located at 2893 Executive Park
Drive, Suite 201, Weston, Florida 33331 and our telephone number is
(954) 888–9779.
Additional
information about us is available on our website at
www.Monakergroup.com. We do not incorporate the information on or
accessible through our websites into this prospectus, and you
should not consider any information on, or that can be accessed
through, our websites as part of this prospectus.
*****
THIS PROSPECTUS MAY NOT BE USED TO OFFER OR SELL ANY
SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
SECURITIES REGISTERED HEREBY THAT WE MAY OFFER
We
may offer any of the following securities, either individually or
in combination, with a total value of up to $100,000,000 from time
to time under this prospectus at prices and on terms to be
determined by market conditions at the time of the
offering:
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common
stock;
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preferred stock, in
one or more series;
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debt
securities;
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warrants to
purchase shares of common stock, shares of preferred stock or debt
securities; or
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any combination of
the foregoing securities, in units.
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We refer to our common stock, preferred stock,
debt securities, warrants, and units collectively in this
prospectus as the “securities.”
This prospectus provides you with a general description of the
securities we may offer. Each time we offer a type or series of
securities, we will provide a prospectus supplement and may provide
a free writing prospectus that will describe the specific amounts,
prices and other important terms of the securities, including, to
the extent applicable:
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designation or
classification;
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aggregate offering
price;
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rates and times of
payment of dividends, if any;
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redemption,
conversion or sinking fund terms, if any;
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voting or other
rights, if any;
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conversion prices,
if any; and
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important federal
income tax considerations.
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We
may sell the securities to or through underwriters or dealers,
directly to purchasers or through agents designated from time to
time. We and our agents, underwriters and dealers reserve the right
to accept or reject all or part of any proposed purchase of
securities. If we do offer securities to or through agents,
underwriters or dealers, we will include in the applicable
prospectus supplement:
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the names of those
agents, underwriters or dealers;
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applicable fees,
discounts and commissions to be paid to them;
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details regarding
over-allotment options, if any; and
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the net proceeds to
us.
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Common Stock. We may offer
shares of our common stock. Our common stock currently is listed on
the Nasdaq Capital Market under the symbol
“MKGI.”
Shares of common stock that may be offered in this offering will,
when issued and paid for, be fully paid and
non-assessable.
Preferred Stock. We may offer
shares of our preferred stock, in one or more series. Prior to the
issuance of shares of each series, our Board of Directors will
determine the rights, preferences, privileges and restrictions of
such preferred stock series, and will adopt resolutions and file a
certificate of designation with the Secretary of State of the State
of Nevada. The certificate of designation fixes for each class or
series the designations, powers, preferences, rights,
qualifications, limitations and restrictions, including, but not
limited to, the following: any dividend rights, conversion rights,
voting rights, rights and terms of redemption, liquidation
preferences, sinking fund terms and the number of shares
constituting any series or the designation of any series.
Convertible preferred stock will be convertible into shares of our
common stock. Conversion may be mandatory or at your option and
would be at prescribed conversion rates. Shares of preferred stock
that may be offered in this offering will, when issued and paid
for, be fully paid and non-assessable. If we elect to issue
preferred stock, we will describe the specific terms of a
particular series of preferred stock in the prospectus supplement
relating to that series. We will file as an exhibit to the
registration statement of which this prospectus is a part, or will
incorporate by reference from another report that we file with the
SEC, the certificate of designation that describes the terms of any
series of preferred stock we offer under this prospectus before the
issuance of shares of that series of preferred stock. You should
read any prospectus supplement and any free writing prospectus that
we may authorize to be provided to you related to the series of
preferred stock being offered. We have summarized certain general
features of the preferred stock under “Description of
Preferred Stock.” We urge
you to read the complete certificate of designations containing the
terms of the applicable series of preferred stock, as well as the
applicable prospectus supplement, and any related free writing
prospectus that we may authorize to be provided to you, related to
such series.
Debt Securities. We
may issue debt securities from time to time, in one or more series,
as either senior or subordinated debt or as senior or subordinated
convertible debt. The senior debt securities will rank equally with
any other unsecured and unsubordinated debt. The subordinated debt
securities will be subordinate and junior in right of payment, to
the extent and in themanner described in the instrument governing
the debt, to all of our senior indebtedness. Convertible debt
securities will be convertible into or exchangeable for our common
stock or other securities. Conversion may be mandatory or at your
option and would be at prescribed conversion
rates.
Any debt securities issued under this prospectus
will be issued under one or more documents called indentures, which
are contracts between us and a national banking association or
other eligible party, as trustee. In this prospectus, we have
summarized certain general features of the debt securities under
“Description of Debt
Securities.” We urge you,
however, to read the applicable prospectus supplement (and any free
writing prospectus that we may authorize to be provided to you)
related to the series of debt securities being offered, as well as
the complete indentures that contain the terms of the debt
securities. We have filed the form of indenture as an exhibit to
the registration statement of which this prospectus isa part, and
supplemental indentures and forms of debt securities containing the
terms of the debt securities being offered will be filed as
exhibits to the registration statement of which this prospectus is
a part or will be incorporated by reference from reports that we
file with the SEC.
Warrants. We may issue warrants
for the purchase of common stock, preferred stock in one or more
series, and/or debt securities in one or more series. We may issue
warrants independently or in combination with common stock,
preferred stock, and/or debt securities. In this prospectus, we
have summarized certain general features of the warrants under
“Description of
Warrants.” We urge you,
however, to read the applicable prospectus supplement, and any
related free writing prospectus that we may authorize to be
provided to you, related to the particular series of warrants being
offered, as well as the form of warrant and/or the warrant
agreement and warrant certificate, as applicable, that contain the
terms of the warrants. We will file as exhibits to the registration
statement of which this prospectus is a part, or will incorporate
by reference from reports that we file with the SEC, the form of
warrant and/or the warrant agreement and warrant certificate, as
applicable, that describe the terms of the particular series of
warrants we are offering, and any supplemental agreements, before
the issuance of such warrants.
Any
warrants issued under this prospectus may be evidenced by warrant
certificates. Warrants also may be issued under an applicable
warrant agreement that we enter into with a warrant agent. We will
indicate the name and address of the warrant agent, if any, in the
applicable prospectus supplement relating to a particular series of
warrants.
Units. We may issue units
representing any combination of common stock, preferred stock, debt
securities and/or warrants from time to time. The units may be
issued under one or more unit agreements. In this prospectus, we
have summarized certain general features of the
units.
We will incorporate by reference into the
registration statement, of which this prospectus is a part, the
form of unit agreement under which the units are designated, if
any, describing the terms of the units we are offering before the
issuance of the related units. We have summarized certain general
features of the units under “Description of
Units.” We urge you to
read the prospectus supplements related to any units being offered,
as well as the complete unit agreement, if any, designating the
units.
RISK FACTORS
An investment in our securities involves a high
degree of risk. The prospectus supplement applicable to each
offering of our securities will, and any free writing prospectus
may, contain a discussion of the risks applicable to an investment
in our securities. Prior to making a decision about investing in
our securities, you should carefully consider the specific factors
discussed under the heading “Risk
Factors” in the
applicable prospectus supplement and any information contained in
any free writing prospectus, together with all of the other
information contained or incorporated by reference in the
prospectus supplement or appearing or incorporated by reference in
this prospectus. You should also consider the risks, uncertainties
and assumptions discussed under Item 1A,
“Risk
Factors,” in our Annual
Report on Form 10-K for the fiscal year ended
February 28, 2018, all of which are incorporated herein
by reference, and may be amended, supplemented or superseded from
time to time by other reports we file with the Securities and
Exchange Commission in the future. For more information, see
“Incorporation of
Certain Documents By Reference.” The risks and uncertainties we have
described are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently deem
immaterial may also affect our business and operations. If one or
more of the possibilities described as risks actually occurs, our
operating results and financial condition would likely suffer and
the trading price of our securities could fall, causing you to lose
some or all of your investment in the securities we are
offering.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the
meaning of Section 27A of the Securities Act, Section 21E of the
Exchange Act, and the Private Securities Litigation Reform Act of
1995, as amended. These forward-looking statements are based on our
management’s belief and assumptions and on information
currently available to our management. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, these statements relate to future events or our future
financial performance, and involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements.
In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,”
“expects,”
“intends,”
“plans,”
“anticipates,”
“believes,”
“estimates,”
“predicts,”
“potential,”
“continue”
or the negative of these terms or other comparable terminology.
These statements are only predictions. You should not place undue
reliance on forward-looking statements because they involve known
and unknown risks, uncertainties and other factors, which are, in
some cases, beyond our control and which could materially affect
results. Factors that may cause actual results to differ materially
from current expectations include, among other things, those listed
under, and incorporated by reference in, “Risk
Factors” and elsewhere in
this prospectus, including, but not limited to the fact that the
officers and directors of the Company have the ability to exercise
significant influence over the Company; our business depends
substantially on property owners and managers renewing their
listings; our long-term success depends, in part, on our ability to
expand our property owner, manager and traveler bases outside of
the United States and, as a result, our business is susceptible to
risks associated with international operations; unfavorable changes
in, or interpretations of, government regulations or taxation of
the evolving ALR, Internet and e-commerce industries could harm our
operating results; the market in which we participate is highly
competitive, and we may be unable to compete successfully with our
current or future competitors; ifwe are unable to adapt to changes
in technology, our business could be harmed; we may be subject to
liability for the activities of our property owners and managers,
which could harm our reputation and increase our operating costs;
our business has substantial indebtedness; and we have incurred
significant losses to date and require additional capital which may
not be available on commercially acceptable terms, if at all. If
one or more of these risks or uncertainties occur, or if our
underlying assumptions prove to be incorrect, actual events or
results may vary significantly from those implied or projected by
the forward-looking statements. No forward-looking statement is a
guarantee of future performance. You should read this prospectus,
those documents incorporated by reference herein, and those
documents which we have filed with the SEC as exhibits to the
registration statement, of which this prospectus is a part,
completely and with the understanding that our actual future
results may be materially different from any future results
expressed or implied by these forward-looking
statements.
Forward-looking
statements speak only as of the date of this prospectus or the date
of any document incorporated by reference in this prospectus, any
prospectus supplement or any free writing prospectus, as
applicable. Except to the extent required by applicable law or
regulation, we do not undertake any obligation to update
forward-looking statements to reflect events or circumstances after
the date of this prospectus, any prospectus supplement or any free
writing prospectus or to reflect the occurrence of unanticipated
events.
You should also consider carefully the statements
under and incorporated by reference in “Risk
Factors” in this
prospectus, any prospectus supplement, and other sections of this
prospectus, and the documents we incorporate by reference or file
as part of any prospectus supplement or free writing prospectus,
which address additional facts that could cause our actual results
to differ from those setforth in the forward-looking statements. We
caution investors not to place significant reliance on the
forward-looking statements contained in this prospectus, any
prospectus supplement, any free writing prospectus, and the
documents we incorporate by reference. We undertake no obligation
to publicly update or review any forward-looking statements,
whether as a result of new information, future developments or
otherwise, except as otherwise required by law.
USE OF PROCEEDS
Unless
otherwise indicated in the applicable prospectus supplement, we
intend to use the net proceeds from the sale of the securities
offered in the prospectus and any prospectus supplement for future
development, acquisitions, working capital and general corporate
purposes. We may also use a portion of the net proceeds to acquire
or invest in businesses and assets that are complementary to our
own, although we have no current plans, commitments or agreements
with respect to any acquisitions as of the date of this prospectus.
Pending the uses described above, we intend to invest the net
proceeds in short-term, interest bearing, investment-grade
securities.
DESCRIPTION OF CAPITAL STOCK
We have authorized capital stock consisting of
500,000,000 shares of common stock, $0.00001 par value per share
and 100,000,000 shares of preferred stock, $0.00001 par value per
share (“Preferred
Stock”).
As of the date of this prospectus, we have
8,152,656 shares of our common stock outstanding and no shares of
Preferred Stock issued and outstanding, with 3,000,000 shares of
Preferred Stock designated as shares of Series A 10% Cumulative
Convertible Preferred Stock (“Series A
Preferred” or
“Series A Preferred
Stock”).
The following description of our capital stock is
a summary only and is subject to and qualified in its entirety by
reference to the applicable provisions of the Nevada Revised
Statutes, and our charter and by-laws, copies of which are
incorporated by reference as exhibits to the registration statement
of which this prospectus forms a part. Please refer to the
“Where You Can Find
More Information” section
of this prospectus for directions on obtaining these documents. You
should refer to, and read this summary together with, our Articles
of Incorporation, designations of preferred stock and Bylaws, each
as amended and restated from time to time, to review all of the
terms of our capital stock. Our Articles of Incorporation and
amendments thereto are incorporated by reference as exhibits to the
registration statement of which this prospectus is a part and other
reports incorporated by reference herein.
Common Stock
Each
share of our common stock is entitled to equal dividends and
distributions per share with respect to the common stock when, as
and if declared by our Board of Directors. No holder of any shares
of our common stock has a preemptive right to subscribe for any of
our securities, nor are any shares of our common stock subject to
redemption or convertible into other securities. Upon liquidation,
dissolution or winding-up of the Company, andafter payment to our
creditors and preferred stockholders, if any, our assets will be
divided pro rata on a share-for-share basis among the holders of
our common stock. Each share of our common stock is entitled to one
vote on all stockholder matters. Shares of our common stock do not
possess any cumulative voting rights.
The
presence of the persons entitled to vote of 33 1/3% of the
outstanding voting shares on a matter before the stockholders
constitute the quorum necessary for the consideration of the matter
at a stockholders’ meeting.
Except
as otherwise required by law, the Articles of Incorporation, or any
certificate of designations, (i) at all meetings of stockholders
for the election of directors, a plurality of votes cast are
sufficient to elect such directors; (ii) any other action taken by
stockholders are valid and binding upon the Company if the number
of votes cast in favor of the action exceeds the number of votes
cast in opposition to the action, at a meeting at which a quorum is
present, except that adoption, amendment or repeal of the Bylaws by
stockholders requires the vote of a majority of the shares entitled
to vote; and (iii) broker non-votes and abstentions are considered
for purposes of establishing a quorum butnot considered as votes
cast for or against a proposal or director nominee. Each
stockholder has one vote for every share of stock having voting
rights registered in his or her name, except as otherwise provided
in any preferred stock designation setting forth the right of
preferred stock stockholders.
The
common stock does not have cumulative voting rights, which means
that the holders of 51% of the common stock voting for election of
directors can elect 100% of our directors if they choose to do
so.
Preferred Stock
Shares of Preferred Stock may be issued from time
to time in one or more series, each of which shall have such
distinctive designation or title as shall be determined by our
Board of Directors (“Board of
Directors”) prior to the
issuance of any shares thereof. Preferred Stock shall have such
voting powers, full or limited, or no voting powers, and such
preferences and relative, participating, optional or other special
rights and such qualifications, limitations or restrictions
thereof, as shall be stated in such resolution or resolutions
providing for the issue of such class or series of Preferred Stock
as may be adopted from time to time by the Board of Directors prior
to the issuance of any shares thereof.
The
powers, preferences and relative, participating, optional and other
special rights of each class or series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding.
Series A Convertible Preferred Stock
The
holders of record of shares of Series A Preferred Stock are
entitled to vote on all matters submitted to a vote of the
stockholders of the Company and are entitled to one hundred (100)
votes for each share of Series A Preferred Stock. Each share of
Series A Preferred Stock is redeemable at $1.00 per share. The
Series A Preferred Stock is entitled to a 10% annual dividend,
payable as, when and if, declared by the Board of Directors,
payable on the first day of April, July, October and
January.
Per
the terms of the Amended and Restated Certificate of Designations
relating to the Series A Preferred Stock, subject to the
availability of authorized and unissued shares of Series A
Preferred Stock, the holders of Series A Preferred Stock may, by
written notice to the Company:
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elect to convert
all or any part of such holder’s shares of Series A Preferred
Stock into common stock at a conversion rate of the lower
of:
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(a)
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$62.50 per share;
or
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(b)
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at the lowest price
the Company has issued stock as part of a financing.
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convert all or part
of such holder’s shares (excluding any shares issued pursuant
to conversion of unpaid dividends) into debt obligations of the
Company, secured by a security interest in all of the assets of the
Company and its subsidiaries, at a rate of $62.50 of debt for each
share of Series A Preferred Stock.
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In the event of any liquidation, dissolution or
winding up of this Company, either voluntary or involuntary (any of
the foregoing, a “liquidation”),
holders of Series A Preferred Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets of
this Company to the holders of the common Stock or any other series
of Preferred Stock by reason of their ownership thereof an amount
per share equal to $2.50 for each share (as adjusted for any stock
dividends, combinations or splits with respect to such shares) of
Series A Preferred Stock held by each such holder, plus the amount
of accrued and unpaid dividends thereon (whether or not declared)
from the beginning of the dividend period in which the liquidation
occurred to the date of liquidation. Additionally, each holder of
Series A Preferred Stock holds a security interest in substantially
all of our assets in order to secure our obligations in connection
with such Series A Preferred Stock.
Except
for transfers to family members, or trusts for the benefit of
Series A Preferred Stock holders, no holder of Series A Preferred
Stock is able to transfer his/her/its shares of Series A Preferred
Stock.
There
are currently no shares of Series A Preferred Stock issued or
outstanding.
Anti-Takeover Provisions Under The Nevada Revised
Statutes
Certain
provisions of Nevada law, and our Articles of Incorporation and our
Bylaws (subject, where applicable as described below, our opting
out of certain provisions of Nevada law), contain provisions that
could make the following transactions more difficult: acquisition
of us by means of a tender offer; acquisition of us by meansof a
proxy contest or otherwise; or removal of our incumbent officers
and directors. It is possible that these provisions could make it
more difficult to accomplish or could deter transactions that
stockholders may otherwise consider to be in their best interest or
in our best interests, including transactions that might result in
a premium over the market price for our shares.
These
provisions, summarized below, are expected to discourage coercive
takeover practices and inadequate takeover bids. These provisions
are also designed to encourage persons seeking to acquire control
of us to first negotiate with our Board of Directors. We believe
that the benefits of increased protection of our potential ability
to negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure us outweigh the disadvantages of
discouraging these proposals because negotiation of these proposals
could result in an improvement of their terms.
Business Combinations
Sections 78.411 to 78.444 of the Nevada revised
statues (the “NRS”) prohibit a Nevada corporation from
engaging in a “combination”
with an “interested
stockholder” for three
years following the date that such person becomes an interested
stockholder and place certain restrictions on such combinations
even after the expiration of the three-year period. With certain
exceptions, an interested stockholder is a person or group that
owns 10% or more of the corporation’s outstanding voting
power (including stock with respect to which the person has voting
rights and any rights to acquire stock pursuant to an option,
warrant, agreement, arrangement, or understanding or upon the
exercise of conversion or exchange rights) or is an affiliate or
associate of the corporation and was the owner of 10% or more of
such voting stock at any time within the previous three
years.
A
Nevada corporation may elect not to be governed by Sections 78.411
to 78.444 by a provision in its Articles of Incorporation. We have
such a provision in our Articles of Incorporation, as amended,
pursuant to which we have elected to opt out of Sections 78.411 to
78.444; therefore, these sections do not apply to us.
Control Shares
Nevada law also seeks to impede
“unfriendly”
corporate takeovers by providing in Sections 78.378 to 78.3793 of
the NRS that an “acquiring
person” shall only obtain
voting rights in the “control
shares” purchased by such
person to the extent approved by the other stockholders at a
meeting. With certain exceptions, an acquiring person is one who
acquires or offers to acquire a “controlling
interest” in the
corporation, defined as one-fifth or more of the voting power.
Control shares include not only shares acquired or offered to be
acquired in connection with the acquisition of a controlling
interest, but also all shares acquired by the acquiring person
within the preceding 90 days. The statute covers not only the
acquiring person but also any persons acting in association with
the acquiring person.
A
Nevada corporation may elect to opt out of the provisions of
Sections 78.378 to 78.3793 of the NRS. We have no provision in our
Articles of Incorporation pursuant to which we have elected to opt
out of Sections 78.378 to 78.3793; therefore, these sections do not
apply to us.
Removal of Directors
Section
78.335 of the NRS provides that 2/3rds of the voting power of the
issued and outstanding shares of the Company are required to remove
a Director from office. As such, it may be more difficult for
stockholders to remove Directors due to the fact the NRS requires
greater than majority approval of the stockholders for such
removal.
Undesignated Preferred Stock
The
ability to authorize undesignated preferred stock pursuant to our
Articles of Incorporation, as amended, will make it possible for
our Board of Directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any
attempt to change control of us. These and other provisions may
have the effect of deterring hostile takeovers or delaying changes
in control or management of the Company.
Transfer Agent
The
transfer agent for our common stock is American Stock Transfer
& Trust Company, 6201 15th Ave, Brooklyn, New York 11219,
telephone (800) 937–5449.
Quotation on NASDAQ Capital Market
Our common stock is quoted on the NASDAQ Capital
Market under the symbol “MKGI.”
DESCRIPTION OF PREFERRED STOCK
A
prospectus supplement relating to any series of preferred stock
being offered will include specific terms relating to the offering.
Such prospectus supplement will include:
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the title and
stated or par value of the preferred stock;
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the number of
shares of the preferred stock offered, the liquidation preference
per share and the offering price of the preferred
stock;
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the dividend
rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to the preferred stock;
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whether dividends
shall be cumulative or non-cumulative and, if cumulative, the date
from which dividends on the preferred stock shall
accumulate;
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the provisions for
a sinking fund, if any, for the preferred stock;
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any voting rights
of the preferred stock;
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the provisions for
redemption, if applicable, of the preferred stock and any
restriction on the repurchase or redemption of shares by the
Company while there is any arrearage in the payment of dividends or
sinking fund installments;
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any listing of the
preferred stock on any securities exchange;
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the terms and
conditions, if applicable, upon which the preferred stock will be
convertible into our common stock, including the conversion price
or the manner of calculating the conversion price and conversion
period;
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if appropriate, a
discussion of Federal income tax consequences applicable to the
preferred stock; and
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any other specific
terms, preferences, rights, limitations or restrictions of the
preferred stock.
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The
terms, if any, on which the preferred stock may be convertible into
or exchangeable for our common stock will also be stated in the
prospectus supplement. The terms will include provisions as to
whether conversion or exchange is mandatory, at the option of the
holder and/or at our option, and may include provisions pursuant to
which the number of shares of our common stock to be received by
the holders of preferred stock would be subject to
adjustment.
When
we issue shares of preferred stock, the shares will be fully paid
and non-assessable, which means the full purchase price of the
shares will have been paid and holders of the shares will not be
assessed any additional monies for the shares. Unless the
applicable prospectus supplement indicates otherwise, each series
of the preferred stock will rank equally with any outstanding
shares of our preferred stock and each other series of the
preferredstock. Unless the applicable prospectus supplement states
otherwise, the preferred stock will have no preemptive rights to
subscribe for any additional securities which are issued by us,
meaning, the holders of shares of preferred stock will have no
right to buy any portion of the issued securities.
In addition, unless the applicable prospectus
indicates otherwise, we will have the right to
“reopen”
a previous issue of a series of preferred stock by issuing
additional preferred stock of such series.
The
transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in
the prospectus supplement relating to such series.
DESCRIPTION OF DEBT SECURITIES
We
may issue debt securities from time to time, in one or more series,
as either senior or subordinated debt or as senior or subordinated
convertible debt. While the terms we have summarized below will
apply generally to any debt securities that we may offer under this
prospectus, we will describe the particular terms of any debt
securities that we may offer in more detail in the applicable
prospectus supplement. The terms of any debt securities offered
under a prospectus supplement may differ from the terms described
below. Unless the context requires otherwise, whenever we refer to
the indenture, we also are referring to any supplemental indentures
that specify the terms of a particular series of debt
securities.
We will issue the debt securities under the
indenture that we will enter into with the trustee named in the
indenture. The indenture will be qualified under the Trust
Indenture Act of 1939, as amended, or the
“Trust
Indenture Act.” We have
filed the form of indenture as an exhibit to the registration
statement of which this prospectus is a part, and supplemental
indentures and forms of debt securities containing the terms of the
debt securities being offered will be filed as exhibits to the
registration statement of which this prospectus is a part or will
be incorporated by reference from reports that we file with the
SEC.
The
following summary of material provisions of the debt securities and
the indenture is subject to, and qualified in its entirety by
reference to, all of the provisions of the indenture applicable to
a particular series of debt securities. We urge you to read the
applicable prospectus supplements and any related free writing
prospectuses related to the debt securities that we may offer under
this prospectus, as well as the complete indenture that contains
the terms of the debt securities.
General
The
indenture does not limit the amount of debt securities that we may
issue. It provides that we may issue debt securities up to the
principal amount that we may authorize and may be in any currency
or currency unit that we may designate. Except for the limitations
on consolidation, merger and sale of all or substantially all of
our assets contained in the indenture, the terms of the indenture
do not contain any covenants or other provisions designed to give
holders of any debt securities protection against changes in our
operations, financial condition or transactions involving
us.
We may issue the debt securities issued under the
indenture as “discount
securities,” which means
they may be sold at a discount below their stated principal amount.
These debt securities, as well as other debt securities that are
not issued at a discount, may be issued with
“original issue
discount,” or
“OID,”
for U.S. federal income tax purposes because of interest
payment and other characteristics or terms of the debt securities.
Material U.S. federal income tax considerations applicable to
debt securities issued with OID will be described in more detail in
any applicable prospectus supplement.
We
will describe in the applicable prospectus supplement the terms of
the series of debt securities being offered,
including:
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the title and form
of the debt securities;
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any limit on the
aggregate principal amount of the debt securities or the series of
which they are a part;
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the person to whom
any interest on a debt security of the series will be
paid;
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the date or dates
on which we must repay the principal;
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the rate or rates
at which the debt securities will bear interest;
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the date or dates
from which interest will accrue, and the dates on which we must pay
interest;
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the place or places
where we must pay the principal and any premium or interest on the
debt securities;
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the terms and
conditions on which we may redeem any debt security, if at
all;
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any obligation to
redeem or purchase any debt securities, and the terms and
conditions on which we must do so;
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the denominations
in which we may issue the debt securities;
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the manner in which
we will determine the amount of principal of or any premium or
interest on the debt securities;
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the currency in
which we will pay the principal of and any premium or interest on
the debt securities;
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the principal
amount of the debt securities that we will pay upon declaration of
acceleration of their maturity;
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the amount that
will be deemed to be the principal amount for any purpose,
including the principal amount that will be due and payable upon
any maturity or that will be deemed to be outstanding as of any
date;
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if applicable, that
the debt securities are defeasible and the terms of such
defeasance;
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if applicable, the
terms of any right to convert debt securities into, or exchange
debt securities for, shares of our debt securities, common stock,
or other securities or property;
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whether we will
issue the debt securities in the form of one or more global
securities and, if so, the respective depositaries for the global
securities and the terms of the global securities;
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the subordination
provisions that will apply to any subordinated debt
securities;
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any addition to or
change in the events of default applicable to the debt securities
and any change in the right of the trustee or the holders to
declare the principal amount of any of the debt securities due and
payable;
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any addition to or
change in the covenants in the indentures; and
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any other terms of
the debt securities not inconsistent with the applicable
indentures.
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We may sell the debt securities at a substantial
discount below their stated principal amount. We will describe
U.S. federal income tax considerations, if any, applicable to
debt securities sold at an original issue discount in the
prospectus supplement. An “original issue
discount security” is any
debt security sold for less than its face value, and which provides
that the holder cannot receive the full face value if maturity is
accelerated. The prospectus supplement relating to any original
issue discount securities will describe the particular provisions
relating to acceleration of the maturity upon the occurrence of an
event of default. In addition, we will describe U.S. federal
income tax or other considerations applicable to any debt
securities that are denominated in a currency or unit other than
U.S. dollars in the prospectus supplement.
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the title of the
series of debt securities;
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any limit upon the
aggregate principal amount that may be issued;
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the maturity date
or dates;
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the form of the
debt securities of the series;
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the applicability
of any guarantees;
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whether or not the
debt securities will be secured or unsecured, and the terms of any
secured debt;
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whether the debt
securities rank as senior debt, senior subordinated debt,
subordinated debt or any combination thereof, and the terms of any
subordination;
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if the price
(expressed as a percentage of the aggregate principal amount
thereof) at which such debt securities will be issued is a price
other than the principal amount thereof, the portion of the
principal amount thereof payable upon declaration of acceleration
of the maturity thereof, or if applicable, the portion of the
principal amount of such debt securities that is convertible into
another security or the method by which any such portion shall be
determined;
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the interest rate
or rates, which may be fixed or variable, or the method for
determining the rate and the date interest will begin to accrue,
the dates interest will be payable and the regular record dates for
interest payment dates or the method for determining such
dates;
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our right, if any,
to defer payment of interest and the maximum length of any such
deferral period;
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if applicable, the
date or dates after which, or the period or periods during which,
and the price or prices at which, we may, at our option, redeem the
series of debt securities pursuant to any optional or provisional
redemption provisions and the terms of those redemption
provisions;
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the date or dates,
if any, on which, and the price or prices at which we are
obligated, pursuant to any mandatory sinking fund or analogous fund
provisions or otherwise, to redeem, or at the holder’s option
to purchase, the series of debt securities and the currency or
currency unit in which the debt securities are
payable;
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the denominations
in which we will issue the series of debt securities, if other than
denominations of $1,000 and any integral multiple
thereof;
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any and all terms,
if applicable, relating to any auction or remarketing of the debt
securities of that series and any security for our obligations with
respect to such debt securities and any other terms which may be
advisable in connection with the marketing of debt securities of
that series;
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whether the debt
securities of the series shall be issued in whole or in part in the
form of a global security or securities; the terms and conditions,
if any, upon which such global security or securities may be
exchanged in whole or in part for other individual securities; and
the depositary for such global security or securities;
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if applicable, the
provisions relating to conversion or exchange of any debt
securities of the series and the terms and conditions upon which
such debt securities will be so convertible or exchangeable,
including the conversion or exchange price, as applicable, or how
it will be calculated and may be adjusted, any mandatory or
optional (at our option and/or the holders’ option)
conversion or exchange features, the applicable conversion or
exchange period and the manner of settlement for any conversion or
exchange;
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if other than the
full principal amount thereof, the portion of the principal amount
of debt securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof;
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any changes in or
additions to the covenants applicable to the particular debt
securities being issued, including, among others, the
consolidation, merger or sale covenant;
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additions to or
changes in the events of default with respect to the securities and
any change in the right of the trustee or the holders to declare
the principal, premium, if any, and accrued interest, if any, with
respect to such securities to be due and payable;
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additions to or
changes in or deletions of the provisions relating to covenant
defeasance and legal defeasance;
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additions to or
changes in the provisions relating to satisfaction and discharge of
the indenture;
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additions to or
changes in the provisions relating to the modification of the
indenture both with and without the consent of holders of debt
securities issued under the indenture;
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the currency of
payment of debt securities if other than U.S. dollars and the
manner of determining the equivalent amount in
U.S. dollars;
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whether interest
will be payable in cash or additional debt securities at our or the
holder’s option and the terms and conditions upon which the
election may be made;
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the terms and
conditions, if any, upon which we will pay amounts in addition to
the stated interest, premium, if any and principal amounts of the
debt securities of the series to any holder that is not a
“United States person” for federal tax
purposes;
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any restrictions on
transfer, sale or assignment of the debt securities of the series;
and
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any other specific
terms, preferences, rights or limitations of, or restrictions on,
the debt securities, any other additions or changes in the
provisions of the indenture, and any terms that may be required by
us or advisable under applicable laws or regulations.
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Conversion and Exchange Rights
We
will set forth in the prospectus supplement the terms on which a
series of debt securities may be convertible into or exchangeable
for our common stock or our other securities. We will include
provisions as to settlement upon conversion or exchange and whether
conversion or exchange is mandatory, at the option of the holder or
at our option. We may include provisions pursuant to which the
number of shares of our common stock or our other securities that
the holders of the series of debt securities receive would be
subject to adjustment.
Consolidation, Merger or Sale
Unless
we provide otherwise in the prospectus supplement applicable to a
particular series of debt securities, the indenture will not
contain any covenant that restricts our ability to merge or
consolidate, or sell, convey, transfer or otherwise dispose of all
or substantially all of our assets. However, any successor to or
acquirer of such assets must assume all of our obligations under
the indenture or the debt securities, as appropriate. If the debt
securities are convertible into or exchangeable for our other
securities or securities of other entities, we or the person with
whom we consolidate or merge or to whom we sell all of our property
must make provisions for the conversion of the debt securities into
securities that the holders of the debt securities would have
received if they had converted the debt securities before the
consolidation, merger or sale.
Events of Default Under the Indenture
Unless
we provide otherwise in the prospectus supplement applicable to a
particular series of debt securities, the following are events of
default under the indenture with respect to any series of debt
securities that we may issue:
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if we fail to pay
any installment of interest on any series of debt securities, as
and when the same shall become due and payable, and such default
continues for a period of 90 days; provided, however, that a
valid extension of an interest payment period by us in accordance
with the terms of any indenture supplemental thereto shall not
constitute a default in the payment of interest for this
purpose;
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if we fail to pay
the principal of, or premium, if any, on any series of debt
securities as and when the same shall become due and payable
whether at maturity, upon redemption, by declaration or otherwise,
or in any payment required by any sinking or analogous fund
established with respect to such series; provided, however, that a
valid extension of the maturity of such debt securities in
accordance with the terms of any indenture supplemental thereto
shall not constitute a default in the payment of principal or
premium, if any;
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if we fail to
observe or perform any other covenant or agreement contained in the
debt securities or the indenture, other than a covenant
specifically relating to another series of debt securities, and our
failure continues for 90 days after we receive written notice
of such failure, requiring the same to be remedied and stating that
such is a notice of default thereunder, from the trustee or holders
of at least 25% in aggregate principal amount of the outstanding
debt securities of the applicable series;and
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if specified events
of bankruptcy, insolvency or reorganization occur.
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If
an event of default with respect to debt securities of any series
occurs and is continuing, other than an event of default specified
in the last bullet point above, the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding debt
securities of that series, by notice to us in writing, and to the
trustee if notice is given by such holders, may declare the unpaid
principal of, premium, if any, and accrued interest, if any, due
and payable immediately. If an event of default specified in the
last bullet point above occurs with respect to us, the principal
amount of and accrued interest, if any, of each issue of debt
securities then outstanding shall be due and payable without any
notice or other action on the part of the trustee or any
holder.
The
holders of a majority in principal amount of the outstanding debt
securities of an affected series may waive any default or event of
default with respect to the series and its consequences, except
defaults or events of default regarding payment of principal,
premium, if any, or interest, unless we have cured the default or
event of default in accordance with the indenture. Any waiver shall
cure the default or event of default.
Subject
to the terms of the indenture, if an event of default under an
indenture shall occur and be continuing, the trustee will be under
no obligation to exercise any of its rights or powers under such
indenture at the request or direction of any of the holders of the
applicable series of debt securities, unless such holders have
offered the trustee reasonable indemnity. The holders of a majority
in principal amount of the outstanding debt securities of any
series will 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, with
respect to the debt securities of that series, provided
that:
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the direction so
given by the holder is not in conflict with any law or the
applicable indenture; and
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subject to its
duties under the Trust Indenture Act, the trustee need not take any
action that might involve it in personal liability or might be
unduly prejudicial to the holders not involved in the
proceeding.
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A
holder of the debt securities of any series will have the right to
institute a proceeding under the indenture or to appoint a receiver
or trustee, or to seek other remedies only if:
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the holder has
given written notice to the trustee of a continuing event of
default with respect to that series;
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the holders of at
least 25% in aggregate principal amount of the outstanding debt
securities of that series have made written request, and such
holders have offered reasonable indemnity to the trustee to
institute the proceeding as trustee; and
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the trustee does
not institute the proceeding, and does not receive from the holders
of a majority in aggregate principal amount of the outstanding debt
securities of that series other conflicting directions within
90 days after the notice, request and offer.
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These
limitations do not apply to a suit instituted by a holder of debt
securities if we default in the payment of the principal, premium,
if any, or interest on, the debt securities.
We
will periodically file statements with the trustee regarding our
compliance with specified covenants in the indenture.
Modification of Indenture; Waiver
We
and the trustee may change an indenture without the consent of any
holders with respect to specific matters:
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to cure any
ambiguity, defect or inconsistency in the indenture or in the debt
securities of any series;
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to comply with the
provisions described above under “Description of Debt
Securities—Consolidation, Merger or Sale”;
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to provide for
uncertificated debt securities in addition to or in place of
certificated debt securities;
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to add to our
covenants, restrictions, conditions or provisions such new
covenants, restrictions, conditions or provisions for the benefit
of the holders of all or any series of debt securities, to make the
occurrence, or the occurrence and the continuance, of a default in
any such additional covenants, restrictions, conditions or
provisions an event of default or to surrender any right or power
conferred upon us in the indenture;
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to add to, delete
from or revise the conditions, limitations, and restrictions on the
authorized amount, terms, or purposes of issue, authentication and
delivery of debt securities, as set forth in the
indenture;
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to make any change
that does not adversely affect the interests of any holder of debt
securities of any series in any material respect;
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to provide for the
issuance of and establish the form and terms and conditions of the
debt securities of any series as provided above under
“Description of Debt Securities—General” to
establish the form of any certifications required to be furnished
pursuant to the terms of the indenture or any series of debt
securities, or to add to the rights of the holders of any series of
debt securities;
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to evidence and
provide for the acceptance of appointment under any indenture by a
successor trustee; or
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to comply with any
requirements of the SEC in connection with the qualification of any
indenture under the Trust Indenture Act.
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In
addition, under the indenture, the rights of holders of a series of
debt securities may be changed by us and the trustee with the
written consent of the holders of at least a majority in aggregate
principal amount of the outstanding debt securities of each series
that is affected. However, unless we provide otherwise in the
prospectus supplement applicable to a particular series of debt
securities, we and the trustee may make the following changes only
with the consent of each holder of any outstanding debt securities
affected:
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extending the fixed
maturity of any debt securities of any series;
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reducing the
principal amount, reducing the rate of or extending the time of
payment of interest, or reducing any premium payable upon the
redemption of any series of any debt securities; or
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reducing the
percentage of debt securities, the holders of which are required to
consent to any amendment, supplement, modification or
waiver.
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Discharge
Each
indenture provides that we can elect to be discharged from our
obligations with respect to one or more series of debt securities,
except for specified obligations, including obligations
to:
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provide for
payment;
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register the
transfer or exchange of debt securities of the series;
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replace stolen,
lost or mutilated debt securities of the series;
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pay principal of
and premium and interest on any debt securities of the
series;
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maintain paying
agencies;
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hold monies for
payment in trust;
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recover excess
money held by the trustee;
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compensate and
indemnify the trustee; and
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appoint any
successor trustee.
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In
order to exercise our rights to be discharged, we must deposit with
the trustee money or government obligations sufficient to pay all
the principal of, any premium, if any, and interest on, the debt
securities of the series on the dates payments are
due.
Form, Exchange and Transfer
We will issue the debt securities of each series
only in fully registered form without coupons and, unless we
provide otherwise in the applicable prospectus supplement, in
denominations of $1,000 and any integral multiple thereof. The
indenture provides that we may issue debt securities of a series in
temporary or permanent global form and as book-entry securities
that will be deposited with, or on behalf of, The Depository Trust
Company, or “DTC,”
or another depositary named by us and identified in a prospectus
supplement with respect to that series. To the extent the debt
securities of a series are issued in global form and as book-entry,
a description of such terms will be set forth in the applicable
prospectus supplement.
At
the option of the holder, subject to the terms of the indenture and
the limitations applicable to global securities described in the
applicable prospectus supplement, the holder of the debt securities
of any series can exchange the debt securities for other debt
securities of the same series, in any authorized denomination and
of like tenor and aggregate principal amount.
Subject
to the terms of the indenture and the limitations applicable to
global securities set forth in the applicable prospectus
supplement, holders of the debt securities may present the debt
securities for exchange or for registration of transfer, duly
endorsed or with the form of transfer endorsed thereon duly
executed if so required by us or the security registrar, at the
office of the security registrar or at the office of any transfer
agent designated by us for this purpose. Unless otherwise provided
in the debt securities that the holder presents for transfer or
exchange, we will impose no service charge for any registration of
transfer or exchange, but we may require payment of any taxes or
other governmental charges.
We
will name in the applicable prospectus supplement the security
registrar, and any transfer agent in addition to the security
registrar, that we initially designate for any debt securities. We
may at any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that we will be
required to maintain a transfer agent in each place of payment for
the debt securities of each series.
If
we elect to redeem the debt securities of any series, we will not
be required to:
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issue, register the
transfer of, or exchange any debt securities of that series during
a period beginning at the opening of business 15 days before
the day of mailing of a notice of redemption of any debt securities
that may be selected for redemption and ending at the close of
business on the day of the mailing; or
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register the
transfer of or exchange any debt securities so selected for
redemption, in whole or in part, except the unredeemed portion of
any debt securities we are redeeming in part.
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Information Concerning the Trustee
The
trustee, other than during the occurrence and continuance of an
event of default under an indenture, undertakes to perform only
those duties as are specifically set forth in the applicable
indenture. Upon an event of default under an indenture, the trustee
must use the same degree of care as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this
provision, the trustee is under no obligation to exercise any of
the powers given it by the indenture at the request of any holder
of debt securities unless it is offered reasonable security and
indemnity against the costs, expenses and liabilities that it might
incur.
Payment and Paying Agents
Unless
we otherwise indicate in the applicable prospectus supplement, we
will make payment of the interest on any debt securities on any
interest payment date to the person in whose name the debt
securities, or one or more predecessor securities, are registered
at the close of business on the regular record date for the
interest.
We
will pay principal of and any premium and interest on the debt
securities of a particular series at the office of the paying
agents designated by us, except that unless we otherwise indicate
in the applicable prospectus supplement, we will make interest
payments by check that we will mail to the holder or by wire
transfer to certain holders. Unless we otherwise indicate in the
applicable prospectus supplement, we will designate thecorporate
trust office of the trustee as our sole paying agent for payments
with respect to debt securities of each series. We will name in the
applicable prospectus supplement any other paying agents that we
initially designate for the debt securities of a particular series.
We will maintain a paying agent in each place of payment for the
debt securities of a particular series.
All
money we pay to a paying agent or the trustee for the payment of
the principal of or any premium or interest on any debt securities
that remains unclaimed at the end of two years after such
principal, premium or interest has become due and payable will be
repaid to us, and the holder of the debt security thereafter may
look only to us for payment thereof.
Defeasance
To
the extent stated in the prospectus supplement, we may elect to
apply the provisions in the indentures relating to defeasance and
discharge of indebtedness, or to defeasance of restrictive
covenants, to the debt securities of any series. The indentures
provide that, upon satisfaction of the requirements described
below, we may terminate all of our obligations under the debt
securities of any series and the applicable indenture, known as
legal defeasance, other than our obligation:
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to maintain a
registrar and paying agents and hold monies for payment in
trust;
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to register the
transfer or exchange of the notes; and
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to replace
mutilated, destroyed, lost or stolen notes.
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In
addition, we may terminate our obligation to comply with any
restrictive covenants under the debt securities of any series or
the applicable indenture, known as covenant
defeasance.
We
may exercise our legal defeasance option even if we have previously
exercised our covenant defeasance option. If we exercise either
defeasance option, payment of the notes may not be accelerated
because of the occurrence of events of default.
To
exercise either defeasance option as to debt securities of any
series, we must irrevocably deposit in trust with the trustee money
and/or obligations backed by the full faith and credit of the
United States that will provide money in an amount sufficient in
the written opinion of a nationally recognized firm of independent
public accountants to pay the principal of, premium, if any, and
each installment of interest on the debt securities. We may only
establish this trust if, among other things:
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no event of default
shall have occurred or be continuing;
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in the case of
legal defeasance, we have delivered to the trustee an opinion of
counsel to the effect that we have received from, or there has been
published by, the Internal Revenue Service a ruling or there has
been a change in law, which in the opinion of our counsel, provides
that holders of the debt securities will not recognize gain or loss
for federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to federal income tax
on the same amount, in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge
had not occurred;
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in the case of
covenant defeasance, we have delivered to the trustee an opinion of
counsel to the effect that the holders of the debt securities will
not recognize gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred;
and
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we satisfy other
customary conditions precedent described in the applicable
indenture.
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Notices
We
will mail notices to holders of debt securities as indicated in the
prospectus supplement.
Title
We
may treat the person in whose name a debt security is registered as
the absolute owner, whether or not such debt security may be
overdue, for the purpose of making payment and for all other
purposes.
Governing Law
The
indenture and the debt securities will be governed by and construed
in accordance with the laws of the State of New York, except to the
extent that the Trust Indenture Act is applicable.
DESCRIPTION OF WARRANTS
General
The
following description, together with the additional information we
may include in any applicable prospectus supplements and free
writing prospectuses, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus, which may
consist of warrants to purchase common stock, preferred stock or
debt securities and may be issued in one or more series. Warrants
may be offered independently or in combination with common stock,
preferred stock or debt securities, or as a part of units, offered
by any prospectus supplement. While the terms we have summarized
below will apply generally to any warrants that we may offer under
this prospectus, we will describe the particular terms of any
series of warrants in more detail in the applicable prospectus
supplement. The following description of warrants will apply to the
warrants offered by this prospectus unless we provide otherwise in
the applicable prospectus supplement. The applicable prospectus
supplement for a particular series of warrants may specify
different or additional terms.
We
will file as exhibits to the registration statement of which this
prospectus is a part, or will incorporate by reference from reports
that we file with the SEC, the form of warrant and/or the warrant
agreement and warrant certificate, as applicable, that describe the
terms of the particular series of warrants we are offering, and any
supplemental agreements, before the issuance of such warrants. The
following summaries of material terms and provisions of the
warrants are subject to, and qualified in their entirety by
reference to, all the provisions of the form of warrant and/or the
warrant agreement and warrant certificate, as applicable, and any
supplemental agreements applicable to a particular series of
warrants that we may offer under this prospectus. We urge you to
read the applicable prospectus supplement related to the particular
series of warrants that we may offer under this prospectus, as well
as any related free writing prospectuses, and the complete form of
warrant and/or the warrant agreement and warrant certificate, as
applicable, and any supplemental agreements, that contain the terms
of the warrants.
The
prospectus supplement relating to a particular series of warrants
to purchase our common stock or preferred stock will describe the
terms of the warrants, including the following:
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the title of the
warrants;
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the offering price
for the warrants, if any;
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the aggregate
number of the warrants;
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the designation and
terms of the common stock, preferred stock or debt securities that
may be purchased upon exercise of the warrants;
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if applicable, the
designation and terms of the securities with which the warrants are
issued and the number of warrants issued with each
security;
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if applicable, the
date from and after which the warrants and any securities issued
with the warrants will be separately transferable;
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the number of
shares of common stock or preferred stock that may be purchased
upon exercise of a warrant and the exercise price for the
warrants;
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the dates on which
the right to exercise the warrants shall commence and
expire;
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if applicable, the
minimum or maximum amount of the warrants that may be exercised at
any one time;
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the currency or
currency units in which the offering price, if any, and the
exercise price are payable;
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if applicable, a
discussion of material U.S. federal income tax
considerations;
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the anti-dilution
provisions of the warrants, if any;
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the redemption or
call provisions, if any, applicable to the warrants;
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any provisions with
respect to a holder’s right to require us to repurchase the
warrants upon a change in control; and
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any additional
material terms of the warrants, including terms, procedures, and
limitations relating to the exchange, exercise and settlement of
the warrants.
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Holders of warrants
will not be entitled to:
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vote, consent or
receive dividends;
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receive notice as
shareholders with respect to any meeting of shareholders for the
election of our directors or any other matter; or
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exercise any rights
as shareholders of the Company.
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Exercise of Warrants
Each
warrant will entitle the holder to purchase the securities that we
specify in the applicable prospectus supplement or free writing
prospectus at the exercise price that we describe in the applicable
prospectus supplement. Unless we otherwise specify in the
applicable prospectus supplement, holders of the warrants may
exercise the warrants at any time up to the specified time on the
expiration date that we set forth in the applicable prospectus
supplement. After the close of business on the expiration date,
unexercised warrants will become void.
Holders
of the warrants may exercise the warrants by delivering the warrant
or warrant certificate representing the warrants to be exercised
together with specified information, and paying the required amount
to the warrant agent, if applicable, in immediately available
funds, as provided in the applicable prospectus supplement. We will
set forth on the reverse side of any warrant certificate and in the
applicable prospectus supplement the information that the holder of
the warrant will be required to deliver to any warrant
agent.
Upon
receipt of the required payment and any warrant certificate
properly completed and duly executed at the corporate trust office
of any warrant agent or any other office indicated in the
applicable prospectus supplement, we will issue and deliver the
securities purchasable upon such exercise. If fewer than all of the
warrants represented by a warrant certificate are exercised, then
we will issue a new warrant certificate for the remaining amount of
warrants. If we so indicate in the applicable prospectus
supplement, holders of the warrants may surrender securities as all
or part of the exercise price for warrants.
Enforceability of Rights by Holders of Warrants
Each
warrant agent, if any, will act solely as our agent under the
applicable warrant agreement and will not assume any obligation or
relationship of agency or trust with any holder of any warrant. A
single bank or trust company may act as warrant agent for more than
one issue of warrants. A warrant agent will have no duty or
responsibility in case of any default by us under the applicable
warrant agreement or warrant, including any duty or responsibility
to initiate any proceedings at law or otherwise, or to make any
demand upon us. Any holder of a warrant may, without the consent of
the related warrant agent or the holder of any other warrant,
enforce by appropriate legal action its right to exercise, and
receive the securities purchasable upon exercise of, its
warrants.
Amendments and Supplements to Warrant Agreements
We
and the relevant warrant agent may, with the consent of the holders
of at least a majority in number of the outstanding unexercised
warrants affected, modify or amend the warrant agreement and the
terms of the warrants. However, the warrant agreements may be
amended or supplementedwithout the consent of the holders of the
warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the warrants and that do not
adversely affect the interests of the holders of the warrants.
Notwithstanding the foregoing, no such modification or amendment
may, without the consent of the holders of each warrant
affected:
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reduce the amount
receivable upon exercise, cancellation or expiration;
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shorten the period
of time during which the warrants may be exercised;
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otherwise
materially and adversely affect the exercise rights of the
beneficial owners of the warrants; or
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reduce the
percentage of outstanding warrants whose holders must consent to
modification or amendment of the applicable warrant agreement or
the terms of the warrants.
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Anti-dilution and Other Adjustments
Unless
otherwise indicated in the applicable prospectus supplement, the
exercise price of, and the number of shares of common stock covered
by a warrant, are subject to adjustment in certain events,
including:
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the issuance of
common stock as a dividend or distribution on the common
stock;
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subdivisions and
combinations of the common stock (or as applicable to warrants to
purchase preferred stock and the preferred stock);
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the issuance to all
holders of common stock of capital stock rights entitling them to
subscribe for or purchase common stock within 45 days after
the date fixed for the determination of the stockholders entitled
to receive such capital stock rights, at less than the current
market price; and
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the distribution to
all holders of common stock of evidence of our indebtedness or
assets (excluding certain cash dividends and distributions
described below) or rights or warrants (excluding those referred to
above).
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We
may, in lieu of making any adjustment in the exercise price of, and
the number of shares of common stock covered by, a warrant, make
proper provision so that each holder of such warrant who exercises
such warrant (or any portion thereof):
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before the record
date for such distribution of separate certificates, shall be
entitled to receive upon such exercise, shares of common stock
issued with capital stock rights; and
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after such record
date and prior to the expiration, redemption or termination of such
capital stock rights, shall be entitled to receive upon such
exercise, in addition to the shares of common stock issuable upon
such exercise, the same number of such capital stock rights as
would a holder of the number of shares of common stock that such
warrants so exercised would have entitled the holder thereof to
acquire in accordance with the terms and provisions applicable to
the capital stock rights if such warrant was exercised immediately
prior to the record date for such distribution.
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Common
stock owned by or held for our account or for the account of any of
our majority owned subsidiaries will not be deemed outstanding for
the purpose of any adjustment.
No
adjustment in the exercise price of, and the number of shares of
common stock covered by, a warrant will be made for regular
quarterly or other periodic or recurring cash dividends or
distributions of cash dividends or distributions to the extent paid
from retained earnings. Except as stated above, the exercise price
of, and the number of shares of common stock covered by, a warrant
will not be adjusted for the issuance of common stock or any
securities convertible into or exchangeable for common stock, or
securities carrying the right to purchase any of the
foregoing.
In
the case of a reclassification or change of the common stock, a
consolidation or merger involving us or sale or conveyance to
another corporation of our property and assets as an entirety or
substantially as an entirety, in each case as a result of which
holders of our common stock shall be entitled to receive stock,
securities, other property or assets (including cash) with respect
to or in exchange for such common stock, the holders of the
warrants then outstanding will be entitled thereafterto convert
such warrants into the kind and number of shares of stock and
amount of other securities or property which they would have
received upon such reclassification, change, consolidation, merger,
sale or conveyance had such warrants been exercised immediately
prior to such reclassification, change, consolidation, merger, sale
or conveyance.
Governing Law
Unless
we provide otherwise in the applicable prospectus supplement, the
warrants and warrant agreements will be governed by and construed
in accordance with the laws of the State of Florida.
DESCRIPTION OF UNITS
We
may issue, in one more series, units consisting of common stock,
preferred stock, debt securities and/or warrants for the purchase
of common stock, preferred stock and/or debt securities in any
combination in such amounts and in such numerous distinct series as
we determine. While the terms we have summarized below will apply
generally to any units that we may offer under this prospectus, we
will describe the particular terms of any series of units in more
detail in the applicable prospectus supplement. The terms of any
units offered under a prospectus supplement may differ from the
terms described below.
We
will file as exhibits to the registration statement of which this
prospectus is a part, or will incorporate by reference from reports
that we file with the SEC, the form of unit agreement that
describes the terms of the series of units we are offering, and any
supplemental agreements, before the issuance of the related series
of units. The following summaries of material terms and provisions
of the units are subject to, and qualified in their entirety by
reference to, all the provisions of the unit agreement and any
supplemental agreements applicable to a particular series of units.
We urge you to read the applicable prospectus supplements related
to the particular series of units that we may offer under this
prospectus, as well as any related free writing prospectuses and
the complete unit agreement and any supplemental agreements that
contain the terms of the units.
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.
We
will describe in the applicable prospectus supplement the terms of
the series of units being offered, including:
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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;
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any provisions of
the governing unit agreement that differ from those described
below; and
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any provisions for
the issuance, payment, settlement, transfer or exchange of the
units or of the securities comprising the units.
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The provisions described in this section, as well
as those described under “Description of Capital
Stock,”
“Description of Debt
Securities” and
“Description of
Warrants” will apply to
each unit and to any common stock, preferred stock, debt security,
or warrant included in each unit, respectively.
Each
unit agent will act solely as our agent under the applicable unit
agreement and will not assume any obligation or relationship of
agency or trust with any holder of any unit. A single bank or trust
company may act as unit agent for more than one series of units. A
unit agent will have no duty or responsibility in case of any
default by us under the applicable unit agreement or unit,
including any duty or responsibility to initiate any proceedings at
law or otherwise, or to make any demand upon us. Any holder of a
unit may, without the consent of the related unit agent or the
holder of any other unit, enforce by appropriate legal action its
rights as holder under any security included in the
unit.
We,
and any unit agent and any of their agents, may treat the
registered holder of any unit certificate as an absolute owner of
the units evidenced by that certificate for any purpose and as the
person entitled to exercise the rights attaching to the units so
requested, despite any notice to the contrary.
Issuance in Series
We
may issue units in such amounts and in as many distinct series as
we wish. This section summarizes terms of the units that apply
generally to all series. Most of the financial and other specific
terms of a particular series will be described in the prospectus
supplement.
Governing Law
Unless
we provide otherwise in the applicable prospectus supplement, the
units and unit agreements will be governed by and construed in
accordance with the laws of the State of Florida.
LEGAL OWNERSHIP OF SECURITIES
We can issue securities in registered form or in
the form of one or more global securities. We describe global
securities in greater detail below. We refer to those persons who
have securities registered in their own names on the books that we
or any applicable trustee, depositary or warrant agent maintain for
this purpose as the “holders”
of those securities. These persons are the legal holders of the
securities. We refer to those persons who, indirectly through
others, own beneficial interests in securities that are not
registered in their own names, as “indirect
holders” of those
securities. As we discuss below, indirect holders are not legal
holders, and investors in securities issued in book-entry form or
in street name will be indirect holders.
Book-Entry Holders
We
may issue securities in book-entry form only, as we will specify in
the applicable prospectus supplement. This means securities may be
represented by one or more global securities registered in the name
of a financial institution that holds them as depositary on behalf
of other financial institutions that participate in the
depositary’s book-entry system. These participating
institutions, which are referred to as participants, in turn, hold
beneficial interests in the securities on behalf of themselves or
their customers.
Only
the person in whose name a security is registered is recognized as
the holder of that security. Securities issued in global form will
be registered in the name of the depositary or its participants.
Consequently, for securities issued in global form, we will
recognize only the depositary as the holder of the securities, and
we will make all payments on the securities to the depositary. The
depositary passes along the payments it receives to its
participants, which in turn pass the payments along to their
customers who are the beneficial owners. The depositary and its
participants do so under agreements they have made with one another
or with their customers; they are not obligated to do so under the
terms of the securities.
As
a result, investors in a book-entry security will not own
securities directly. Instead, they will own beneficial interests in
a global security, through a bank, broker or other financial
institution that participates in the depositary’s book-entry
system or holds an interest through a participant. As long as the
securities are issued in global form, investors will be indirect
holders, and not holders, of the securities.
Street Name Holders
We may terminate a global security or issue
securities in non-global form. In these cases, investors may choose
to hold their securities in their own names or in
“street
name.” Securities held by
an investor in street name would be registered in the name of a
bank, broker or other financial institution that the investor
chooses, and the investor would hold only a beneficial interest in
those securities through an account he or she maintains at that
institution.
For
securities held in street name, we will recognize only the
intermediary banks, brokers and other financial institutions in
whose names the securities are registered as the holders of those
securities, and we will make all payments on those securities to
them. These institutions pass along the payments they receive to
their customers who are the beneficial owners, but only because
they agree to do so in their customer agreements or because they
are legally required to do so. Investors who hold securities in
street name will be indirect holders, not holders, of those
securities.
Legal Holders
Our
obligations, as well as the obligations of any applicable trustee
and of any third parties employed by us or a trustee, run only to
the legal holders of the securities. We do not have obligations to
investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the case
whether an investor chooses to be an indirect holder of a security
or has no choice because we are issuing the securities only in
global form.
For
example, once we make a payment or give a notice to the holder, we
have no further responsibility for the payment or notice even if
that holder is required, under agreements with depositary
participants or customers or by law, to pass it along to the
indirect holders but does not do so. Similarly, we may want to
obtain the approval of the holders to amend an indenture, to
relieve us of the consequences of a default or of our obligation to
comply with a particular provision of the indenture or for other
purposes. In such an event, we would seek approval only from the
holders, and not the indirect holders, of the securities. Whether
and how the holders contact the indirect holders is up to the
holders.
Special Considerations For Indirect Holders
If
you hold securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you
should check with your own institution to find out:
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the performance of
third party service providers;
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how it handles
securities payments and notices;
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whether it imposes
fees or charges;
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how it would handle
a request for the holders’ consent, if ever
required;
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whether and how you
can instruct it to send you securities registered in your own name
so you can be a holder, if that is permitted in the
future;
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how it would
exercise rights under the securities if there were a default or
other event triggering the need for holders to act to protect their
interests; and
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if the securities
are in book-entry form, how the depositary’s rules and
procedures will affect these matters.
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Global Securities
A
global security is a security that represents one or any other
number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have
the same terms.
Each
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, DTC will be the depositary for all
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, its
nominee or a successor depositary, unless special termination
situations arise. We describe those situations below under the
section entitled “Special Situations
When a Global Security Will Be Terminated” in this prospectus. As a result of these
arrangements, the depositary, or its nominee, will be the sole
registered owner and holder of all 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 does. Thus, an investor
whose security is represented by a global security will not be a
holder of the security, but only an indirect holder of a beneficial
interest in the global security.
If
the prospectus supplement for a particular security indicates that
the security will be issued in global form only, then the security
will be represented by a global security at all times unless and
until the global security is terminated. If termination occurs, we
may issue the securities through another book-entry clearing system
or decide that the securities may no longer be held through any
book-entry clearing system.
Special Considerations For Global Securities
The
rights of an indirect holder 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. We do not recognize an indirect holder as
a holder of securities and instead deal only with the depositary
that holds the global security.
If
securities are issued only in the form of a global security, an
investor should be aware of the following:
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an investor cannot
cause the securities to be registered in his or her name, and
cannot obtain non-global certificates for his or her interest in
the securities, except in the special situations we describe
below;
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an investor will be
an indirect holder and must look to his or her own bank or broker
for payments on the securities and protection of his or her legal
rights relating to the securities, as we describe
above;
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an investor may not
be able to sell interests in the securities to some insurance
companies and to other institutions that are required by law to own
their securities in non-book-entry form;
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an investor may not
be able to pledge his or her interest in a global security in
circumstances where certificates representing the securities must
be delivered to the lender or other beneficiary of the pledge in
order for the pledge to be effective;
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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;
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we and any
applicable trustee have no responsibility for any aspect of the
depositary’s actions or for its records of ownership
interests in a global security, nor do we or any applicable trustee
supervise the depositary in any way;
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the depositary may,
and we understand that DTC will, require that those who purchase
and sell interests in a global security within its book-entry
system use immediately available funds, and your broker or bank may
require you to do so as well;
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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 securities;
and
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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.
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Special Situations When a Global Security Will Be
Terminated
In
a few special situations described below, the global security will
terminate and interests in it will be exchanged for physical
certificates representing those interests. After that exchange, the
choice of whether to hold securities directly or in street name
will be up to the investor. Investors must consult their own banks
or brokers to find out how to have their interests in securities
transferred to their own name, so that they will be direct holders.
We have described the rights of holders and street name investors
above.
Unless
we provide otherwise in the applicable prospectus supplement, the
global security will terminate when the following special
situations occur:
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if the depositary
notifies us that it is unwilling, unable or no longer qualified to
continue as depositary for that global security and we do not
appoint another institution to act as depositary within
90 days;
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if we notify any
applicable trustee that we wish to terminate that global security;
or
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if an event of
default has occurred with regard to securities represented by that
global security and has not been cured or waived.
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The
applicable prospectus supplement may also list additional
situations for terminating a global security that would apply only
to the particular series of securities covered by the applicable
prospectus supplement. When a global security terminates, the
depositary, and not we or any applicable trustee, is responsible
for deciding the names of the institutions that will be the initial
direct holders.
PLAN OF DISTRIBUTION
We
may sell the securities offered by this prospectus in any one or
more of the following ways from time to time:
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directly to
investors, including through a specific bidding, auction or other
process or in privately negotiated transactions;
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to investors
through agents;
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directly to
agents;
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to or through
brokers or dealers;
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to the public
through underwriting syndicates led by one or more managing
underwriters;
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to one or more
underwriters acting alone for resale to investors or to the
public;
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through a block
trade in which the broker or dealer engaged to handle the block
trade will attempt to sell the securities as agent, but may
position and resell a portion of the block as principal to
facilitate the transaction;
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through agents on a
best-efforts basis; and
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through a
combination of any such methods of sale.
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We may also sell the securities offered by this
prospectus in “at the market
offerings” within the
meaning of Rule 415(a)(4) of the Securities
Act.
Sales
may be affected in transactions:
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on any national
securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale, including the Nasdaq
Capital Market in the case of shares of our common
stock;
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in the
over-the-counter market;
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in transactions
otherwise than on such exchanges or services or in the
over-the-counter market;
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through the writing
of options; or
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through the
settlement of short sales.
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We
will provide in the applicable prospectus supplement the terms of
the offering and the method of distribution and will identify any
firms acting as underwriters, dealers or agents in connection with
the offering, including:
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the name or names
of any underwriters, dealers or agents;
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the amount of
securities underwritten;
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the purchase price
of the securities and the proceeds to us from the
sale;
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any over-allotment
options under which underwriters may purchase additional securities
from us;
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any underwriting
discounts and other items constituting compensation to
underwriters, dealers or agents;
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any public offering
price;
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any discounts or
concessions allowed or reallowed or paid to dealers;
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any material
relationships between the underwriters and the Company;
and
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any securities
exchange or market on which the securities offered in the
prospectus supplement may be listed.
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In
connection with the sale of the securities, we or the purchasers of
securities for whom the underwriter may act as agent, may
compensate the underwriter in the form of underwriting discounts or
commissions.
Any
underwritten offering may be on a best efforts or a firm commitment
basis. Underwriters, dealers and agents participating in the
securities distribution may be deemed to be underwriters, and any
discounts and commissions they receive and any profit they realize
on the resale of the securities may be deemed to be underwriting
discounts and commissions under the Securities Act. Underwriters
and their controlling persons, dealers and agents may be entitled,
under agreements entered into with us, to indemnification against
and contribution toward specific civil liabilities, including
liabilities under the Securities Act.
The
distribution of the securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be
changed, at varying prices determined at the time of sale, or at
prices determined as the applicable prospectus supplement
specifies.
In
connection with the sale of the securities, underwriters, dealers
or agents may be deemed to have received compensation from us in
the form of underwriting discounts or commissions and also may
receive commissions from securities purchasers for whom they may
act as agent. Underwriters may sell the securities to or through
dealers, and the dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they may act as
agent.
Unless
otherwise specified in the related prospectus supplement, each
series of securities will be a new issue with no established
trading market, other than shares of common stock of the Company,
which are listed on the Nasdaq Capital Market. Any common stock
sold pursuant toa prospectus supplement will be listed on the
Nasdaq Capital Market, subject to official notice of issuance and
where applicable, subject to the requirements of the Nasdaq Capital
Market (which generally require shareholder approval for any
transactions which would result in the issuance of more than 20% of
our then outstanding shares of common stock or voting rights
representing over 20% of our then outstanding shares of stock). We
may elect to list any series of debt securities or preferred stock,
on an exchange, but we are not obligated to do so. It is possible
that one or more underwriters may make a market in the securities,
but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of, or the trading
market for, any offered securities.
In
connection with an offering, the underwriters may purchase and sell
securities in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by the
underwriters of a greater number of securities than they are
required to purchase in an offering. Stabilizing transactions
consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the securities while an
offering is in progress. The underwriters also may impose a penalty
bid. This occurs when a particular underwriter repays to the
underwriters a portion of the underwriting discount received by it
because the underwriters have repurchased securities sold by or for
the account of that underwriter in stabilizing or short-covering
transactions. These activities by the underwriters may stabilize,
maintain or otherwise affect the market price of the securities. As
a result, the price of the securities may be higher than the price
that otherwise might exist in the open market. If these activities
are commenced, they may be discontinued by the underwriters at any
time. Underwriters may engage in overallotment. If any underwriters
create a short position in the securities in an offering in which
they sell more securities than are set forth on the cover page of
the applicable prospectus supplement, the underwriters may reduce
that short position by purchasing the securities in the open
market.
Underwriters,
dealers or agents that participate in the offer of securities, or
their affiliates or associates, may have engaged or engage in
transactions with and perform services for, us or our affiliates in
the ordinary course of business for which they may have received or
receive customary fees and reimbursement of expenses.
We
may enter into derivative transactions with third parties, or sell
securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus
supplement so indicates, in connection with any derivative
transaction, the third parties may sell securities covered by this
prospectus and the applicable prospectus supplement, including in
short sale transactions. If so, the third party may use securities
pledged by us or borrowed from us or others to settle those sales
or to close out any related open borrowings of stock, and may use
securities received from us insettlement of those derivatives to
close out any related open borrowings of stock. The third party in
such sale transactions will be an underwriter and, if not
identified in this prospectus, will be identified in the applicable
prospectus supplement or a post-effective amendment to the
registration statement of which this prospectus is a part. In
addition, we may otherwise loan or pledge securities to a financial
institution or other third party that in turn may sell the
securities short using this prospectus. Such financial institution
or other third party may transfer its economic short position to
investors in our securities or in connection with a concurrent
offering of other securities.
The
specific terms of any lock-up provisions in respect of any given
offering will be described in the applicable prospectus
supplement.
The
underwriters, dealers and agents may engage in transactions with
us, or perform services for us, in the ordinary course of business
for which they receive compensation.
PROSPECTUS SUPPLEMENTS
This prospectus provides you with a general
description of the proposed offering of our securities. Each time
that we sell securities under this prospectus, we will provide a
prospectus supplement that will contain specific information about
the terms of that offering. The prospectus supplement may add to,
update, or change information contained in this prospectus and
should be read as superseding this prospectus. You should read both
this prospectus, any prospectus supplement and any free writing
prospectus, together with additional information described under
the heading “Where You Can Find
More Information.”
The
prospectus supplement will describe the terms of any offering of
securities, including the offering price to the public in that
offering, the purchase price and net proceeds of that offering, and
the other specific terms related to that offering of
securities.
LEGAL MATTERS
The
validity of the securities offered by this prospectus has been
passed upon for us by The Loev Law Firm, PC. Additional legal
matters may be passed upon for us, any underwriters, dealers or
agents, by counsel that we will name in the applicable prospectus
supplement.
EXPERTS
The
consolidated balance sheets of the Company as of
February 28, 2018 and February 28, 2017, and
the related consolidated statements of operations,
stockholders’ deficit, and cash flows for the years then
ended, appearing in the Company’s Annual Report on Form 10-K
for the year ended February 28, 2018, have been audited
by LBB & Associates Ltd., LLP, as set forth in their report
thereon, and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such reports given on the authority of such firms as
experts in accounting and auditing.
No
expert or counsel named in this prospectus as having prepared or
certified any part of this prospectus or having given an opinion
upon the validity of the securities being registered or upon other
legal matters in connection with the registration or offering of
the securities was employed on a contingency basis, or had, or is
to receive, any interest, directly or indirectly, in our Company or
any of our parents or subsidiaries, nor was any such person
connected with us or any of our parents or subsidiaries, if any, as
a promoter, managing or principal underwriter, voting trustee,
director, officer, or employee.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports,
proxy statements and other information with the Securities and
Exchange Commission (“SEC”). Our SEC filings are available to the
public over the Internet at the SEC’s web site
at www.sec.gov and
on the “Stock
Info” page of our website
at www.monakergroup.com.
Information on our web site is not part of this prospectus, and we
do not desire to incorporate by reference such information herein.
You may also read and copy any document we file with the SEC at the
SEC’s Public Reference Room at 100 F Street N.E., Washington,
D.C. 20549. You can also obtain copies of the documents upon the
payment of a duplicating fee to the SEC. Please call the SEC at
1–800-SEC-0330 for further information on the operation of
the Public Reference Room. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC
like us. Our SEC filings are also available to the public from the
SEC’s website at http://www.sec.gov.
This
prospectus is part of the registration statement and does not
contain all of the information included in the registration
statement. Whenever a reference is made in this prospectus to any
of our contracts or other documents, the reference may not be
complete and, for a copy of the contract or document, you should
refer to the exhibits that are a part of the registration
statement.
This
prospectus omits some information contained in the registration
statement in accordance with SEC rules and regulations. You should
review the information and exhibits included in the registration
statement for further information about us and the securities we
are offering. Statements in this prospectus concerning any document
we filed as an exhibit to the registration statement or that we
otherwise filed with the SEC are not intended to be comprehensive
and are qualified by reference to these filings and documents. You
should review the complete document to evaluate these
statements.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us
to “incorporate by
reference” into this
prospectus the information we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is considered
to be part of this prospectus from the date on which we file that
document. Any reports filed by us with the SEC (i) on or after the
date of filing of the registration statement and (ii) on or after
the date of this prospectus and before the termination of the
offering of the securities by means of this prospectus will
automatically update and, where applicable, supersede information
contained in this prospectus or incorporated by reference into this
prospectus.
We
incorporate by reference the documents listed below, all filings
filed by us pursuant to the Exchange Act after the date of the
registration statement of which this prospectus forms a part prior
to effectiveness of such registration statement, and any future
filings we make with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended, prior to the time that all securities covered
by this prospectus have been sold; provided, however, that we are
not incorporating any information furnished under either
Item 2.02 or Item 7.01 of any current report on Form
8-K:
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Our Annual Report
on Form 10-K for the fiscal year ended February 28, 2018,
filed with the SEC on
June 13, 2018;
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Our Definitive
Information Statement on Schedule 14C relating to a Written Consent
in Lieu of the 2017 Annual Meeting of Stockholders, filed with the
SEC on
September 14, 2017;
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Our Quarterly
Reports on Form 10-Q for the quarterly periods ended
May 31, 2017, August 31, 2017 and
November 30, 2017, filed with the SEC on
July 14, 2017,
October 23, 2017 and
January 18, 2018;
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Our Current Reports
on Form 8-K and Form 8-K/A (other than information furnished rather
than filed) filed with the SEC on
August 1, 2017,
August 14, 2017,
September 5, 2017,
September 21, 2017,
September 25, 2017,
November 17, 2017,
November 27, 2017,
January 5, 2018,
January 16, 2018,
February 5, 2018,
February 12, 2018,
February 22, 2018,
March 5, 2018,
June 6, 2018, and
June 22, 2018; and
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The description of
our common stock contained in our Registration Statement on Form
8-A, filed with the SEC on
February 21, 2018 (File No. 001–38402) pursuant
to Section 12(b) of the Exchange Act, including any amendment or
report filed for the purpose of updating such
description.
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These
documents contain important information about us, our business and
our financial condition. Copies of documents incorporated by
reference, excluding exhibits except to the extent such exhibits
are specifically incorporated by reference, are available from us
without charge, upon oral or written request to:
Monaker
Group, Inc.
2893
Executive Park Drive, Suite 201
Weston,
Florida 33331
Attn:
Omar Jimenez, Secretary
Phone:
(954) 888-9779
Fax:
(954) 888-9082
All
documents filed by us pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, excluding
any information in those documents that are deemed by the rules of
the SEC to be furnished but not filed, after the date of the filing
of this prospectus and before the termination of this offering
shall be deemed to be incorporatedin this prospectus and to be a
part hereof from the date of the filing of such document. Any
statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for all purposes to
the extent that a statement contained in this prospectus, or in any
other subsequently filed document which is also incorporated or
deemed to be incorporated by reference, modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this prospectus. You will be deemed to have notice of all
information incorporated by reference in this prospectus as if that
information was included in this prospectus.
Statements
made in this prospectus or in any document incorporated by
reference in this prospectus as to the contents of any contract or
other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the
documents incorporated by reference, each such statement being
qualified in all material respects by such reference.
We
maintain an Internet website at www.monakergroup.com where the
incorporated reports listed above can be accessed. Neither this
website nor the information on this website is included or
incorporated in, or is a part of, this prospectus.
3,230,000
Shares of Common Stock
PRELIMINARY
PROSPECTUS SUPPLEMENT
Kingswood
Capital Markets
division of
Benchmark Investments, Inc.
May
13, 2021
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