Filed
pursuant to Rule 424(b)(5)
Registration
No. 333-222850
PROSPECTUS SUPPLEMENT
(to Prospectus dated February 9, 2018)
1,000,000
Shares
SharpSpring,
Inc.
Common
Stock
We are
offering 1,000,000
shares of our common stock. Our common stock is listed on The
Nasdaq Capital Market under the symbol “SHSP.” On
December 15, 2020, the last reported sale price for our common
stock on The Nasdaq Capital Market was $15.88 per
share.
Investing
in our common stock involves risks. See “Risk Factors”
beginning on page S-3 of this prospectus
supplement.
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|
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Public Offering
Price
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$15.00
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$15,000,000
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Underwriting
Discount(1)
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$0.90
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$900,000
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Proceeds, Before
Expenses, to us
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$14.10
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$14,100,000
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(1)
See “Underwriting” for additional information regarding
underwriting compensation.
The
selling stockholder identified in this prospectus supplement has
granted the underwriters the right to purchase up to 150,000
additional shares of our common stock at the public offering price,
less the underwriting discount, for 30 days after the date of this
prospectus supplement. We will not receive any of the proceeds from
the sale of shares by the selling stockholder.
The
Securities and Exchange Commission and state securities regulators
have not approved or disapproved of these securities or determined
if this prospectus supplement or the accompanying prospectus is
truthful or complete. It is illegal for any person to tell you
otherwise.
We
anticipate that delivery of the shares of common stock will be made
on or about December 18, 2020.
Joint Book-Running Managers
Needham
& Company
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Lake
Street
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The date of this prospectus supplement is December 16,
2020.
TABLE OF CONTENTS
Prospectus Supplement
About This Prospectus Supplement
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S-ii
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Prospectus Supplement Summary
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S-1
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Risk Factors
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S-3
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Note On Forward-Looking Statements
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S-5
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Use Of Proceeds
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S-6
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Selling
Stockholder
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S-7
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Material U.S. Federal Income Tax Consequences For Non-U.S. Holders
of Common Stock
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S-8
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Underwriting
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S-12
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Legal Matters
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S-19
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Experts
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S-19
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Where You Can Find More Information
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S-19
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Information Incorporated By Reference
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S-20
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Prospectus
About
This Prospectus
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1
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Prospectus
Summary
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2
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Information
Concerning Forward-Looking Statements
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3
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Risk
Factors
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4
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Use Of
Proceeds
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4
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Description
Of Securities To Be Registered
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5
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Selling
Security Holders
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14
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Plan
Of Distribution
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15
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Legal
Matters
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18
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Experts
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18
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Where
You Can Find More Information
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18
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Information
Incorporated By Reference
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19
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______________________________
Neither
we, the underwriters, nor the selling stockholder have authorized
anyone to provide any information or to make any representations
other than those contained in this prospectus supplement or the
accompanying prospectus. Neither we, the underwriters, nor the
selling stockholder takes any responsibility for, or provides any
assurance as to the reliability of, any other information that
others may give you. Neither we, the underwriters, nor the selling
stockholder are making an offer of these securities in any state or
jurisdiction where the offer is not permitted.
ABOUT THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus are part of a
registration statement on Form S-3 (Registration No. 333-222850)
that we filed with the SEC using a “shelf” registration
process. Under this “shelf” registration process, we
may, from time to time, sell or issue any of the combination of
securities described in the accompanying prospectus in one or more
offerings with a maximum aggregate offering price of up to $50.0
million. Additionally, the selling stockholder may, from time to
time, sell the common stock described in the accompanying
prospectus in one or more offerings in the maximum amount of
539,828 shares of common stock.
The
accompanying prospectus provides you with a general description of
us and the securities we and the selling stockholder may offer,
some of which do not apply to this offering. Each time we or the
selling stockholder sell securities under the registration
statement, we provide a prospectus supplement that contains
specific information about the terms of that offering. A prospectus
supplement may also add, update, or change information contained in
the accompanying prospectus.
This
prospectus supplement provides specific details regarding this
offering of shares of common stock by us and the selling
stockholder, including the purchase price per share. This
prospectus supplement, the accompanying prospectus, and the
documents we incorporate by reference herein and therein include
important information about us and our common stock and other
information you should know before investing. In case of a conflict
or inconsistency between information contained in this prospectus
supplement and information incorporated by reference into this
prospectus supplement, you should rely on the information contained
in the document that was filed with the SEC later. You should read
both this prospectus supplement and the accompanying prospectus,
together with the additional information described below under the
heading “Where You Can Find More
Information.”
You
should not assume that the information appearing in this prospectus
supplement or the accompanying prospectus is accurate as of any
date other than the date on the front cover of the respective
documents. You should not assume that the information contained in
the documents incorporated by reference in this prospectus
supplement or the accompanying prospectus is accurate as of any
date other than the respective dates of those documents. Our
business, financial condition, results of operations, and prospects
may have changed since the date set forth on the respective
documents.
Unless
otherwise indicated or unless the context otherwise requires,
references in this prospectus supplement to
“SharpSpring,” the “Company,”
“we,” “our” or “us” and other
similar terms means SharpSpring, Inc., a Delaware corporation, and
its subsidiaries.
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PROSPECTUS SUPPLEMENT SUMMARY
This summary contains basic information about us and our business
but does not contain all of the information that is important to
your investment decision. You should carefully read this summary
together with the more detailed information contained elsewhere in
this prospectus supplement and the accompanying prospectus and the
documents incorporated herein and therein by reference before
making an investment decision. Investors should carefully consider
the information set forth under the caption “Risk
Factors” appearing elsewhere in this prospectus supplement,
including those described in documents incorporated by reference
herein.
Our Company
SharpSpring is a
leading provider of an all-in-one cloud-based sales and marketing
technology platform. Our full suite of solutions improves the way
businesses communicate and interact with their prospects and
customers, ultimately leading to increased sales.
SharpSpring’s extensive product portfolio includes marketing
and sales automation tools such as web tracking, lead scoring,
customer relationship management (CRM), landing pages, email,
social, chatbots, ads, analytics, forms and workflows. We offer our
customers a combination of a robust feature set, ease of use, open
architecture and low total cost of ownership. Our solutions are
designed to enable our customers to deliver the right message at
the right time to the right person in a cost effective
way.
Our
software-as-a-service, or SaaS, solutions are sold to both digital
sales and marketing agencies for use with their end customers as
well as direct to businesses across the globe. We and our agency
partners focus on selling to small and medium sized
businesses and mid-market
enterprises with up to 2,000 employees. As of September 30, 2020,
we had approximately 2,000 agency customers, 500 direct customers
and more than 10,000 total businesses using our software. Our
agency partners are considered thought leaders in the industry and
enable us to reach a wide audience of end customers who are our
core target market. We sell fixed subscriptions to both agencies
and direct to businesses, with additional subscription charges as
agencies onboard more new end users and additional fees charged if
specified volume limits are exceeded by our customers.
Since
our founding, we have experienced consistent year over year revenue
growth. Our revenues were $13.4 million, $18.7 million, and $22.7
million for the fiscal years ended December 31, 2017, 2018 and
2019, respectively, and our revenues were $16.6 million and $21.6
million for the nine months ended September 30, 2019 and 2020,
respectively. In 2019, we acquired the Perfect Audience platform,
which allowed us to expand into the display retargeting space. As
of September 30, 2020, we had approximately 250 full-time
employees.
Corporate Information
Our
corporate headquarters is located at 5001 Celebration Pointe
Avenue, Suite 410, Gainesville, FL 32608. Our telephone number is
352-448-0967. Our corporate website is www.sharpspring.com. The
information on our website is not incorporated herein by reference
and is not part of this prospectus supplement or the accompanying
prospectus.
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The
Offering
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Common
stock offered by us
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1,000,000
shares of common stock
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Common
stock to be outstanding immediately after
this
offering
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12,596,441
shares of common stock
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Underwriters’
option to purchase additional shares of
common
stock
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The
selling stockholder identified in the section entitled
“Selling Stockholder” has granted the underwriters a
30-day option to purchase up to 150,000 shares of our common stock
at the public offering price, less the underwriting
discount.
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Use of
proceeds
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We
intend to use the net proceeds from the sale of common stock in
this offering, together with existing cash and cash equivalents,
for general corporate purposes, including to fund ongoing
operations, to fund growth initiatives and for working capital
purposes. We may use the net proceeds to fund all or a portion of
the cost of acquisitions, although we have no agreements or
understanding with respect to any acquisition at this time. See the
section entitled “Use of Proceeds” on page S-7.
We will not receive any proceeds from
the sale of shares, if any, by the selling
stockholder.
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Nasdaq
Capital Market symbol
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SHSP
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Risk
Factors
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See the
section entitled “Risk Factors” beginning on page S-3
for a discussion of factors you should consider carefully before
deciding to invest in our common stock.
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The
number of shares of our common stock to be outstanding immediately
after this offering is based on 11,596,441 shares of common stock
outstanding as of November 13, 2020. Unless otherwise indicated,
the number of shares of our common stock outstanding before and
after this offering excludes, as of such date:
●
1,596,397 shares of
our common stock issuable upon exercise of stock options
outstanding at a weighted average exercise price of
$7.31;
●
23,220 shares of
our common stock issuable upon vesting of outstanding restricted
stock units; and
●
644,986 shares of our common stock reserved
for issuance or future grant under our 2019 Equity Incentive Plan,
as amended
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RISK FACTORS
An investment in the shares of our common stock involves a high
degree of risk. In addition to the other information contained in
this prospectus supplement, the accompanying prospectus and the
documents that we incorporate by reference, you should consider
carefully the risks factors described below and in Part I, Item IA,
Risk Factors, in our Annual Report on Form 10-K for the year ended
December 31, 2019, as amended, as updated by our subsequently filed
Quarterly Report on Form 10-Q for the quarter ended September 30,
2020 before you make a decision to invest in our common stock. If
any of the following events actually occur, our business, operating
results, prospects or financial condition could be materially and
adversely affected. This could cause the trading price of our
common stock to decline and you may lose all or part of your
investment. The risks factors described in our SEC filings and
below are not the only ones that we face. Additional risks not
presently known to us or that we currently deem immaterial may also
significantly impair our business operations and could result in a
complete loss of your investment.
Risk Relating to the Company
In connection with the preparation of our financial statements, we
identified a material weakness in our internal control over
financial reporting. Any failure to maintain effective internal
control over our financial reporting could materially adversely
affect us.
We
concluded that due to material weaknesses in our internal control
over financial reporting, our disclosure controls and procedures
were not effective as of December 31, 2019, based on the following
deficiencies:
●
Ineffective
internal control over financial reporting and dependent business
process control (automated and manual) related to information
technology general controls (ITGCs) around (i) the design and
implementation of program change-management over certain
information technology systems that support the Company’s
financial reporting processes and related to ineffective ITGCs
around design and (ii) implementation of effective user access
controls over SaaS and internally hosted applications that support
the Company’s financial reporting processes to ensure
appropriate segregation of duties and to adequately restrict user
and privileged access to appropriate SharpSpring
personnel.
●
During the
extensive review we undertook in connection with the implementation
of Section 404(b) of the Sarbanes-Oxley Act of 2002, we identified
control deficiencies in financial reporting during our
implementation related to: (i) certain entity level controls; (ii)
inadequate segregation of duties; and (iii) compliance and review
related to certain policies and procedures. These deficiencies
aggregate into an additional material weakness.
Management has been
implementing and continues to implement measures designed to ensure
that control deficiencies contributing to the material weaknesses
are remediated, and believes that these controls are currently
designed, implemented, and operating effectively. The material
weaknesses will not be considered remediated, however, until the
applicable controls operate for a sufficient period of time and
management has concluded, through testing, that these controls are
operating effectively. We expect that the remediation of this
material weakness will be completed prior to the end of fiscal year
2020.
If the
remedial measures we are implementing are insufficient, or if
additional material weaknesses or significant deficiencies in our
internal control over financial reporting or in our disclosure
controls occur in the future, our future consolidated financial
statements or other information filed with the SEC may contain
material misstatements. Failure to maintain effective controls or
to timely implement any necessary improvement of our internal and
disclosure controls could, among other things, result in losses
from errors, harm our reputation, or cause investors to lose
confidence in the reported financial information, all of which
could have a material adverse effect on our business, results of
operations and financial condition.
Risks Related to the Offering
Our management will have broad discretion over the use of the net
proceeds from this offering. You may not agree with how we use the
proceeds and the proceeds may not be invested
successfully.
Our
management will have broad discretion as to the use of the net
proceeds from this offering and could use them for purposes other
than those contemplated at the time of this offering. Accordingly,
you will be relying on the judgment of our management with regard
to the use of these net proceeds, and you will not have the
opportunity as part of your investment decision to assess whether
the proceeds are being used appropriately. It is possible that the
proceeds will be invested in a way that does not yield a favorable,
or any, return for SharpSpring.
We may issue additional shares of capital stock in the future,
which would increase the number of shares eligible for future
resale in the public market and may result in dilution to our
stockholders.
As of
November 13, 2020, we had 1,596,397 shares of common stock subject
to outstanding stock options and 23,220 shares of common stock
subject to outstanding unvested restricted stock units. In
addition, we are not restricted from issuing additional shares of
our common stock or securities convertible into or exchangeable for
our common stock, except as described in the section entitled
“Underwriting.” Because we may need to raise additional
capital in the future to continue to expand our business, among
other things, we may conduct additional equity offerings. To the
extent our common stock purchase options are exercised, or we
conduct additional equity offerings, we will issue additional
shares of our common stock, which will increase the number of
shares eligible for resale in the public market and result in
dilution to our stockholders. Sales of substantial numbers of such
shares in the public market could adversely affect the market price
of such shares.
We did not distribute any cash dividends in 2017, 2018, 2019, and
year-to-date 2020, and we do not anticipate paying cash dividends
in the foreseeable future.
SharpSpring did not
distribute any cash dividends in 2017, 2018, 2019, and year-to-date
2020. Presently, we do not have any intentions to pay a dividend
and our credit agreement with Western Alliance Bank restricts our
ability to pay cash dividends on our common stock, and it will
continue to do so for the foreseeable future. As a result, capital
appreciation, if any, of our common stock will be our
stockholders’ sole source of potential gain for the
foreseeable future.
Our common stock is equity and is subordinate to our existing and
future indebtedness.
Our
common stock is equity interest in the Company and does not
constitute indebtedness. As such, claims of holders of common stock
will rank junior to all of our indebtedness and other non-equity
claims against us and our assets available to satisfy claims
against us, including in the event of our liquidation. In addition,
common stock will effectively be subordinated to all existing and
future liabilities and obligations of our subsidiaries as our right
to participate in any distribution of assets of any of our
subsidiaries, including upon the subsidiary’s liquidation,
will be subject to the prior claims of creditors of that
subsidiary, except to the extent that any of our claims as a
creditor of such subsidiary may be recognized. Further, common
stock places no restrictions on the ability of our subsidiaries to
incur additional indebtedness.
Additionally,
unlike indebtedness, where principal and interest would customarily
be payable on specified due dates, in the case of common stock
(i) dividends are payable only if declared by our board of
directors or a duly authorized committee of our board and
(ii) as a corporation, we are subject to restrictions on
payments of dividends and redemption price out of lawfully
available funds.
Further,
common stock places no restrictions on our business or operations
or on our ability to incur indebtedness or engage in any
transactions.
NOTE ON FORWARD-LOOKING STATEMENTS
Some of
the statements contained in this prospectus supplement, the
accompanying prospectus and the documents incorporated by reference
may include “forward-looking statements” within the
meaning of the U.S. federal securities laws, including the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks and uncertainties, such as statements
about our plans, objectives, expectations, assumptions or future
events. In some cases, you can identify forward-looking statements
by terminology such as “anticipate,”
“estimate,” “plan,” “project,”
“continuing,” “ongoing,”
“expect,” “we believe,” “we
intend,” “may,” “should,”
“will,” “could” and similar expressions
denoting uncertainty or an action that may, will or is expected to
occur in the future. These statements involve estimates,
assumptions, known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from
any future results, performances or achievements expressed or
implied by the forward-looking statements.
Examples of
forward-looking statements include, but are not limited
to:
●
the timing of the
development of future products;
●
projections of
costs, revenue, earnings, capital structure and other financial
items;
●
statements of our
plans and objectives;
●
statements
regarding the capabilities of our business operations;
●
statements of
expected future economic performance;
●
statements
regarding competition in our market; and
●
assumptions
underlying statements regarding us or our business.
Forward-looking
statements are neither historical facts nor assurances of future
performance. Instead, they are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict and many of which are outside of our
control. Our actual results and financial condition may differ
materially from those indicated in the forward-looking statements.
Therefore, you should not rely on any of these forward-looking
statements. Important factors that could cause our actual results
and financial condition to differ materially from those indicated
in the forward-looking statements include, among others, the
following:
●
strategic actions,
including acquisitions and dispositions and our success in
integrating acquired businesses;
●
the ability of our
agency partners to resell the SharpSpring platform to their
clients;
●
security breaches,
cybersecurity attacks and other significant disruptions in our
information technology systems;
●
changes in customer
demand;
●
the extent to which
we are successful in gaining new long-term relationships with
customers or retaining existing ones and the level of service
failures that could lead customers to use competitors’
services;
●
developments and
changes in laws and regulations, including increased regulation of
our industry through legislative action and revised rules and
standards;
●
the occurrence of
hostilities, political instability or catastrophic
events;
●
the novel
coronavirus (COVID-19) and its potential impact on our business;
and
●
natural events such
as severe weather, fires, floods and earthquakes, or man-made or
other disruptions of our operating systems, structures or
equipment.
The
ultimate correctness of these forward-looking statements depends
upon a number of known and unknown risks and events. We discuss our
known material risks in the section entitled “Risk
Factors” in this prospectus supplement beginning on page S-3
and in our annual report on Form 10-K for the year ended December
31, 2019, as amended, and in our quarterly report on Form 10-Q for
the quarter ended September 30, 2020. Many factors could cause our
actual results to differ materially from the forward-looking
statements. In addition, we cannot assess the impact of each factor
on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from
those contained in any forward-looking statements.
The
forward-looking statements speak only as of the date on which they
are made, and, except as required by law, we undertake no
obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is
made or to reflect the occurrence of unanticipated
events.
USE OF PROCEEDS
We
estimate that the net proceeds to us from this offering will be
approximately $13.9 million, after deducting the underwriting
discount and estimated
offering expenses payable by us. We intend to use the net
proceeds from the sale of common stock in this offering, together
with existing cash and cash equivalents, for general corporate
purposes, including to fund ongoing operations, to fund growth
initiatives and for working capital purposes. We may use the net
proceeds to fund all or a portion of the cost of acquisitions,
although we have no agreements or understanding with respect to any
acquisition at this time. The timing and amount of our actual
expenditures will be based on many factors, including cash flows
from operations and the anticipated growth of our business. As a
result, our management will have broad discretion to allocate the
net proceeds from this offering. Pending their ultimate use, we
intend to invest the net proceeds in short-term, interest-bearing
instruments or U.S. government securities.
We will
not receive any proceeds from the sale of common stock, if any, by
the selling stockholder.
SELLING STOCKHOLDER
The
following table sets forth certain information regarding the
beneficial ownership of shares of our common stock and the number
of shares of our common stock being registered for sale by the
selling stockholder named below pursuant to the 30-day option
granted by the selling stockholder to the underwriters to purchase
up to 150,000 shares of our common stock owned by the selling
stockholder. We will pay the fees and expenses of the registration
of the shares of the selling stockholder (other than the
underwriting discount).
The
table below assumes that underwriters will exercise in full their
option to purchase up to 150,000 shares of common stock from the
selling stockholder.
Name
of Selling Stockholder
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Number
of Shares of Common Stock Beneficially Owned Prior to the Offering
(2)
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Number
of Shares of Common Stock Offered
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Number
of Shares of Common Stock Beneficially Owned After the
Offering
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Richard A. Carlson
(1)
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940,758
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7.8%
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150,000
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790,758
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6.5%
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(1)
Mr. Carlson serves
as our Chief Executive Officer and President.
(2)
Beneficial
ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to
securities. Includes 484,321 shares underlying vested options,
4,946 shares underlying options that vest within 60 days of
November 13, 2020 and 1,883 shares underlying restricted stock
units that vest within 60 days of November 13, 2020.
(3)
Percentage ownership is based on 11,596,441
shares of common stock outstanding as
of November 13, 2020.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES FOR NON-U.S. HOLDERS
OF COMMON STOCK
The
following is a discussion of material U.S. federal income and
estate tax considerations relating to the ownership and disposition
of our common stock by a non-U.S. holder. For purposes of
this discussion, the term “non-U.S. holder”
means a beneficial owner (other than a partnership or other
pass-through entity) of our common stock that is not, for U.S.
federal income tax purposes:
●
an individual who
is a citizen or resident of the United States;
●
a corporation, or
other entity treated as a corporation for U.S. federal income tax
purposes, created or organized in or under the laws of the United
States or any state thereof or the District of
Columbia;
●
an estate the
income of which is subject to U.S. federal income taxation
regardless of its source; or
●
a trust, if a U.S.
court is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have
authority to control all substantial decisions of the trust or if
the trust has a valid election to be treated as a U.S. person under
applicable U.S. Treasury Regulations.
This
discussion is based on current provisions of the U.S. Internal
Revenue Code of 1986, as amended, which we refer to as the Code,
existing and proposed U.S. Treasury Regulations promulgated
thereunder, current administrative rulings and judicial decisions,
all as in effect as of the date of this prospectus supplement and
all of which are subject to change or to differing interpretation,
possibly with retroactive effect. Any change or differing
interpretation could alter the tax consequences
to non-U.S. holders described in this prospectus
supplement. In addition, the Internal Revenue Service, or the IRS,
could challenge one or more of the tax consequences described in
this prospectus supplement.
We
assume in this discussion that each non-U.S. holder holds
shares of our common stock as a capital asset (generally, as
property held for investment). This discussion does not address all
aspects of U.S. federal income and estate taxation that may be
relevant to a particular non-U.S. holder in light of
that non-U.S. holder’s individual circumstances nor
does it address the alternative minimum tax, the Medicare tax on
net investment income, any election to apply Section 1400Z-2 of the
Code to gains recognized with respect to shares of our common
stock, or any aspects of U.S. state, local
or non-U.S. taxes. This discussion also does not consider
any specific facts or circumstances that may apply to
a non-U.S. holder and does not address the special tax
rules applicable to particular non-U.S. holders, such
as:
●
tax-exempt or
governmental organizations;
●
financial
institutions;
●
brokers or dealers
in securities;
●
regulated
investment companies;
●
pension plans,
qualified foreign pension funds, or entities wholly owned by
qualified foreign pension funds;
●
controlled foreign
corporations;
●
passive foreign
investment companies;
●
owners that hold
our common stock as part of a straddle, hedge, conversion
transaction, synthetic security or other integrated
investment;
●
holders that have a
functional currency other than the U.S. dollar;
●
holders deemed to
sell our common stock under the constructive sale provisions of the
Code;
●
holders who hold or
receive our common stock pursuant to the exercise of any employee
stock option or otherwise as compensation;
●
holders that are
subject to the special tax accounting rules of Section 451(b)
of the Code; and certain U.S.
expatriates.
In addition, this discussion does not address the
tax treatment of partnerships or other entities that are
pass-through entities for U.S. federal income tax purposes or
persons who hold their common stock through partnerships or other
pass-through entities. A partner in a partnership or other
pass-through entity that will hold our common stock should consult
his, her or its own tax advisor regarding the tax consequences of
the acquisition, ownership and disposition of our common stock
through a partnership or other pass-through entity, as
applicable.
Prospective non-U.S. holders should consult their own tax
advisors regarding the U.S. federal, state, local
and non-U.S. income and other tax considerations of the
acquisition, ownership and disposition of our common
stock.
Distributions on our common stock
We
do not expect to make cash dividends to holders of our common stock
in the foreseeable future. If we pay distributions on our common
stock, those distributions generally will constitute dividends for
U.S. federal income tax purposes to the extent paid from our
then-current or accumulated earnings and profits, as determined
under U.S. federal income tax principles. If a distribution exceeds
our then-current and accumulated earnings and profits, the excess
will be treated as a tax-free return of
the non-U.S. holder’s investment, up to the amount
of such holder’s tax basis in the common stock. Any remaining
excess will be treated as capital gain, subject to the tax
treatment described below under the heading “Gain on
disposition of common stock.” Any distributions will also be
subject to the discussions below under the headings
“Information reporting and backup withholding” and
“FATCA.”
Dividends
paid to a non-U.S. holder generally will be subject to
U.S. federal withholding tax at a 30% rate or such lower rate as
may be specified by an applicable income tax treaty between the
United States and such holder’s country of
residence.
Dividends
that are treated as effectively connected with a trade or business
conducted by a non-U.S. holder within the United States,
and, if an applicable income tax treaty so provides, that are
attributable to a permanent establishment or a fixed base
maintained by the non-U.S. holder within the United
States, are generally exempt from the 30% withholding tax if
the non-U.S. holder satisfies applicable certification
and disclosure requirements (generally including provision of a
valid IRS Form W-8ECI (or applicable successor form)
certifying that the dividends are effectively connected with
the non-U.S. holder’s conduct of a trade or
business within the United States). However, such U.S.
effectively connected income, net of specified deductions and
credits, is taxed at the same graduated U.S. federal income tax
rates applicable to United States persons (as defined in the Code;
hereinafter, “U.S. persons”). Any U.S. effectively
connected income received by a non-U.S. holder that is
classified as a corporation for U.S. federal income tax purposes
may also, under certain circumstances, be subject to an additional
“branch profits tax” at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty between the
United States and such holder’s country of
residence.
A non-U.S. holder
who claims the benefit of an applicable income tax treaty between
the United States and such holder’s country of residence
generally will be required to provide a properly executed IRS
Form W-8BEN or W-8BEN-E (or successor form) and
satisfy applicable certification and other
requirements. Non-U.S. holders are urged to consult their
own tax advisors regarding their entitlement to benefits under a
relevant income tax treaty and the specific methods available to
them to satisfy these requirements.
A non-U.S. holder
that is eligible for a reduced rate of U.S. withholding tax under
an income tax treaty may obtain a refund or credit of any excess
amounts withheld by timely filing an appropriate claim with the
IRS.
Gain on disposition of common stock
In
general (subject to the discussion below under the headings
“Information reporting and backup withholding” and
“FATCA”), a non-U.S. holder will not be
subject to U.S. federal income tax or withholding tax on gain
realized upon such holder’s sale, exchange or other
disposition of shares of our common stock unless:
●
the gain is
effectively connected with the non-U.S. holder’s
conduct of a trade or business in the United States, and if an
applicable income tax treaty so provides, the gain is attributable
to a permanent establishment or fixed base maintained by
the non-U.S. holder in the United States; in these cases,
the non-U.S. holder will be taxed on a net income basis
at the regular graduated rates applicable to U.S. persons, and if
the non-U.S. holder is a foreign corporation, the branch
profits tax described above under the heading “Distributions
on our common stock” also may apply;
●
the non-U.S. holder
is a non-resident alien present in the United States for
183 days or more in the taxable year of the disposition and certain
other requirements are met, in which case
the non-U.S. holder will be subject to a 30% tax (or such
lower rate as may be specified by an applicable income tax treaty)
on the net gain derived from the disposition, which may be offset
by U.S.-source capital losses of the non-U.S. holder, if
any, provided that the non-U.S. holder has timely filed U.S.
federal income tax returns with respect to such losses;
or
●
we are or have
been, at any time during the five-year period preceding such
disposition (or the non-U.S. holder’s holding
period, if shorter) a “U.S. real property holding
corporation” unless our common stock is regularly traded on
an established securities market and the non-U.S. holder
held no more than 5% of our outstanding common stock, directly,
indirectly or constructively, during the shorter of
the 5-year period ending on the date of the disposition
or the period that the non-U.S. holder held our common
stock. Generally, a corporation is a “U.S. real property
holding corporation” if the fair market value of its
“U.S. real property interests” equals or exceeds 50% of
the sum of the fair market value of its worldwide real property
interests plus its other assets used or held for use in a trade or
business. Although there can be no assurance, we believe that we
are not currently, and we do not anticipate becoming, a “U.S.
real property holding corporation” for U.S. federal income
tax purposes. No assurance can be provided that our common stock
will be regularly traded on an established securities market for
purposes of the rule described above.
Information reporting and backup withholding
The
gross amount of the distributions on our common stock paid to
each non-U.S. holder and the tax withheld, if any, with
respect to such distributions must be reported annually to the IRS
and to each non-U.S. holder. Non-U.S. holders
generally will have to comply with specific certification
procedures to establish that the holder is not a U.S. person (as
defined in the Code) in order to avoid backup withholding at the
applicable rate with respect to dividends on our common stock.
Generally, a non-U.S. holder will comply with such
procedures if it provides a properly executed IRS
Form W-8BEN or W-8BEN-E (or other applicable
Form W-8) or otherwise meets documentary evidence
requirements for establishing that it is
a non-U.S. holder, or otherwise establishes an exemption.
Dividends paid to non-U.S. holders subject to withholding
of U.S. federal income tax, as described above under the heading
“Distributions on our common stock,” will generally be
exempt from U.S. backup withholding.
Information
reporting and backup withholding generally will apply to the
proceeds of a disposition of our common stock by
a non-U.S. holder effected by or through the U.S. office
of any broker, U.S. or foreign, unless the holder certifies its
status as a non-U.S. holder and satisfies certain other
requirements, or otherwise establishes an exemption. Generally,
information reporting and backup withholding will not apply to a
payment of disposition proceeds to a non-U.S. holder
where the transaction is effected outside the United States through
a non-U.S. office of a broker. However, for information
reporting purposes, dispositions effected through
a non-U.S. office of a broker with substantial U.S.
ownership or operations generally will be treated in a manner
similar to dispositions effected through a U.S. office of a
broker. Non-U.S. holders should consult their own tax
advisors regarding the application of the information reporting and
backup withholding rules to them.
Copies
of information returns may be made available to the tax authorities
of the country in which the non-U.S. holder resides or is
incorporated under the provisions of a specific treaty or
agreement.
Backup
withholding is not an additional tax. Rather, any amounts withheld
under the backup withholding rules from a payment to
a non-U.S. holder can be refunded or credited against
the non-U.S. holder’s U.S. federal income tax
liability, if any, provided that an appropriate claim is timely
filed with the IRS.
FATCA
Provisions
of the Code commonly known as the Foreign Account Tax Compliance
Act, or FATCA, generally impose a U.S. federal withholding tax at a
rate of 30% on payments of dividends on, or gross proceeds from the
sale or other disposition of, our common stock paid to a foreign
entity unless: (i) if the foreign entity is a “foreign
financial institution,” the foreign entity undertakes certain
due diligence, reporting, withholding, and certification
obligations, (ii) if the foreign entity is not a
“foreign financial institution,” the foreign entity
identifies certain of its U.S. investors, if any, or (iii) the
foreign entity is otherwise exempt under FATCA.
Withholding
under FATCA generally applies to payments of dividends on our
common stock. While withholding under FATCA may apply to payments
of gross proceeds from a sale or other disposition of our common
stock, under proposed U.S. Treasury Regulations, withholding on
payments of gross proceeds is not required. Although such
regulations are not final, applicable withholding agents may rely
on the proposed regulations until final regulations are
issued.
If
withholding under FATCA is required on any payment related to our
common stock, a non-U.S. holder that is not otherwise
subject to withholding (or that otherwise would be entitled to a
reduced rate of withholding) may be eligible for refunds or credits
of the tax. An intergovernmental agreement between the United
States and an applicable foreign country may modify the
requirements described in this section. Non-U.S. holders
should consult their own tax advisors regarding the possible
implications of FATCA on their investment in our common stock and
the entities through which they hold our common stock.
U.S. federal estate tax
Shares of our common stock that are owned or
treated as owned by an individual who is
a non-U.S. holder (as specially defined for U.S. federal
estate tax purposes) at the time of death are considered
U.S. situs assets and will be included in the
individual’s gross estate for U.S. federal estate tax
purposes. Such shares, therefore, may be subject to U.S. federal
estate tax, unless an applicable estate tax or other treaty
provides otherwise.
The preceding discussion of material U.S. federal tax
considerations is for information only. It is not legal or tax
advice. Prospective investors should consult their own tax advisors
regarding the particular U.S. federal, state, local
and non-U.S. tax consequences of the acquisition,
ownership and disposition of our common stock, including the
consequences of any proposed changes in applicable
laws.
UNDERWRITING
We and
the selling stockholder have entered into an underwriting agreement
with the underwriters named below. Needham & Company, LLC and
Lake Street Capital Markets, LLC are acting as representatives of
the underwriters. The underwriters’ obligations are several,
which means that each underwriter is required to purchase a
specific number of shares, but is not responsible for the
commitment of any other underwriter to purchase shares. Subject to
the terms and conditions of the underwriting agreement, each
underwriter has severally agreed to purchase from us the number of
shares of common stock set forth opposite its name
below.
|
|
Needham & Company,
LLC
|
750,000
|
Lake Street Capital Markets,
LLC
|
250,000
|
Total
|
1,000,000
|
The
underwriting agreement provides that the underwriters are obligated
to purchase all the shares of common stock in the offering if any
are purchased, other than those shares covered by the option
described below.
The
underwriting agreement provides that we and the selling stockholder
will indemnify the underwriters against certain liabilities that
may be incurred in connection with this offering, including
liabilities under the Securities Act of 1933, as amended, or the
Securities Act, or to contribute payments that the underwriters may
be required to make in respect thereof.
The
selling stockholder has granted an option to the underwriters to
purchase up to 150,000 additional shares of common stock at the
public offering price per share, less the underwriting discount,
set forth on the cover page of this prospectus supplement. This
option is exercisable during the 30-day period after the date of
this prospectus supplement. If this option is exercised, each of
the underwriters will purchase approximately the same percentage of
the additional shares as the number of shares of common stock to be
purchased by that underwriter, as shown in the table above, bears
to the total shown.
The
representatives have advised us and the selling stockholder that
the underwriters propose to offer the shares of common stock to the
public at the public offering price per share set forth on the
cover page of this prospectus supplement. The underwriters may
offer shares to securities dealers, who may include the
underwriters, at that public offering price less a concession of up
to $0.54 per share. After the offering to the public, the offering
price and other selling terms may be changed by the
representatives.
The
following table shows the per share and total underwriting discount
to be paid to the underwriters by us and the selling stockholder.
These amounts are shown assuming both no exercise and full exercise
of the underwriters’ option to purchase additional
shares.
|
|
|
|
|
|
Paid by
us
|
$0.90
|
$900,000
|
$900,000
|
Paid by selling
stockholder
|
0.90
|
—
|
135,000
|
We have
agreed to pay the expenses of the offering on behalf of the selling
stockholder, excluding the underwriting discount. We estimate that
the total expenses of the offering to be paid by us, excluding the
underwriting discount, will be approximately $80,000. We have also
agreed to reimburse the underwriters for up to $75,000 of fees and
expenses incurred by them in connection with this
offering.
We have
agreed not to (1) offer, sell, contract to sell, pledge, grant
options, warrants or rights to purchase, or otherwise dispose of
any equity securities of the Company or any other securities
convertible into or exchangeable for its Common Stock or other
equity security or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of shares of Common
Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, for a period of 90 days after the
date of this prospectus supplement without the prior written
consent of Needham & Company, LLC. This agreement does not
apply to (a) the shares of our common stock to be sold hereunder,
(b) any options, restricted stock units and other awards granted
under our existing stock incentive plans, and (c) any shares of our
common stock issued upon the exercise of options or vesting and
settlement of other awards granted under our existing stock
incentive plans.
Our
directors and officers, including the selling stockholder, have
agreed, subject to certain exceptions, for a period of 90 days
after the date of this prospectus supplement not to, without the
prior written consent of Needham & Company, LLC, directly or
indirectly (1) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of any shares of our common stock or
any securities convertible into or exercisable or exchangeable for
our common Stock (such shares of our common stock and such other
securities collectively, the “Securities”), (2) enter
into any hedging, swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of
ownership of the Securities, whether any such transaction described
in above is to be settled by delivery of Securities, in cash or
otherwise, (3) make any demand for or exercise any right with
respect to the registration of any Securities, or (4) publicly
disclose the intention to do any of the foregoing. The restrictions
described above are subject to limited exceptions,
including:
●
the sale of common
stock pursuant to the underwriting agreement;
●
transfers (i) to
the spouse, domestic partner, parent, sibling, child or grandchild
of such person or other person with whom such person has a
relationship by blood, marriage or adoption not more remote than
first cousin (each, an “immediate family member”) or to
a trust, or other entity formed for estate planning purposes,
formed for the direct or indirect benefit of the undersigned or of
an immediate family member of the undersigned; (ii) by bona fide
gift, will or intestacy; (iii) for business entities, (A) to
another corporation, partnership, limited liability company or
other business entity that controls, is controlled by or is under
common control with such entity or (B) as part of a disposition,
transfer or distribution by such entity to its members, limited
partners or equity holders; or (iv) for trusts, to a trustor or
beneficiary of the trust, subject, in each case, to specified
conditions;
●
the receipt by them
from us of shares of common stock upon the vesting of restricted
stock awards or exercise of options to purchase our securities
issued pursuant to our equity incentive plans or the transfer of
shares of common stock or any securities convertible into common
stock to us upon a vesting event of our securities or upon the
exercise of options or warrants to purchase our securities, in each
case on a “cashless” or “net exercise”
basis or to cover tax obligations of the undersigned in connection
with such vesting or exercise, subject to specified
conditions;
●
the establishment
of a trading plan pursuant to Rule 10b5-1 under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, for the
transfer of shares of common stock, subject to specified
conditions; or
●
transfers of shares
of common stock or any security convertible into or exercisable or
exchangeable for common stock that occurs by operation of law
including pursuant to a qualified domestic order or in connection
with a divorce settlement, provided that the transferee signs and
delivers a lock-up agreement for the balance of the lock-up
period.
In
connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price
of our common stock. Specifically, the underwriters may sell more
shares than are set forth on the cover page of this prospectus
supplement. This creates a short position in our common stock for
their own account. The short position may be either a covered short
position or a naked short position. In a covered short position,
the number of shares sold by the underwriters is not greater than
the number of shares that they may purchase pursuant to their
option to purchase additional shares described above. In a naked
short position, the number of shares involved is greater than the
number of shares in that option. To close out a short position or
to stabilize the price of our common stock, the underwriters may
bid for, and purchase, common stock in the open market. The
underwriters may also elect to reduce any short position by
exercising all or part of their option to purchase additional
shares. In determining the source of shares to close out the short
position, the underwriters will consider, among other things, the
price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through
their option to purchase additional shares. If the underwriters
sell more shares than could be covered by their option, a naked
short position, the position can only be closed out by buying
shares in the open market. A naked short position is more likely to
be created if the underwriters are concerned that there could be
downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase in
the offering.
The
underwriters may also impose a penalty bid. This occurs when a
particular underwriter or dealer repays selling concessions allowed
to it for distributing our common stock in this offering because
the underwriters repurchase that stock in stabilizing or short
covering transactions.
Finally, the
underwriters may bid for, and purchase, shares of our common stock
in market making transactions.
These
activities may stabilize or maintain the market price of our common
stock 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 effected on The Nasdaq Capital Market, in the over-the-counter
market, or
otherwise.
Selling Restrictions
Notice to Prospective Investors in Canada
The
shares of our common stock being offered hereby may be sold only to
purchasers purchasing, or deemed to be purchasing, as principal
that are accredited investors, as defined in National Instrument
45-106 Prospectus
Exemptions or subsection 73.3(1) of the Securities Act
(Ontario), and are permitted clients, as defined in National
Instrument 31-103 Registration
Requirements, Exemptions and Ongoing Registrant Obligations.
Any resale of the shares of our common stock must be made in
accordance with an exemption from, or in a transaction not subject
to, the prospectus requirements of applicable securities
laws.
Securities
legislation in certain provinces or territories of Canada may
provide a purchaser with remedies for rescission or damages if this
prospectus supplement or the accompanying prospectus (including any
amendment thereto) contains a misrepresentation, provided that the
remedies for rescission or damages are exercised by the purchaser
within the time limit prescribed by the securities legislation of
the purchaser’s province or territory. The purchaser should
refer to any applicable provisions of the securities legislation of
the purchaser’s province or territory for particulars of
these rights or consult with a legal advisor.
Pursuant to section
3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the
underwriters are not required to comply with the disclosure
requirements of NI 33-105 regarding underwriter conflicts of
interest in connection with this offering.
Notice to Prospective Investors in the European Economic Area and
the United Kingdom
In
relation to each Member State of the European Economic Area and the
United Kingdom (each, a “Relevant State”), no shares
have been offered or will be offered pursuant to the offering to
the public in that Relevant State prior to the publication of a
prospectus in relation to the securities which has been approved by
the competent authority in that Relevant State or, where
appropriate, approved in another Relevant State and notified to the
competent authority in that Relevant State, all in accordance with
the Prospectus Regulation, except that offers to shares may be made
to the public in that Relevant State of any securities at any time
under the following exemptions under the Prospectus
Regulation:
●
to any legal entity
which is a qualified investor as defined in the Prospectus
Regulation;
●
to fewer than 150
natural or legal persons (other than qualified investors as defined
in the Prospectus Regulation), as permitted under the Prospectus
Regulation, subject to obtaining the prior consent of the
representatives for any such offer; or
●
in any other
circumstances falling within Article 3(2) of the Prospectus
Regulation,
provided
that no such offer of shares of our common stock shall require us
or any underwriter to publish a prospectus pursuant to Article 3 of
the Prospectus Regulation or supplement a prospectus pursuant to
Article 23 of the Prospectus Regulation.
For the
purposes of this provision, the expression “an offer to the
public” in relation to any shares in any Relevant State means
the communication in any form and by any means of sufficient
information on the terms of the offer and any shares to be offered
so as to enable an investor to decide to purchase or subscribe for
any shares, and the expression “Prospectus Regulation”
means Regulation (EU) 2017/1129.
Notice to Prospective Investors in the United Kingdom
In
addition, in the United Kingdom, this prospectus supplement and the
accompanying prospectus are being distributed only to, and is
directed only at, and any offer subsequently made may only be
directed at persons who are “qualified investors” (as
defined in the Prospectus Regulation) (i) who have
professional experience in matters relating to investments falling
within Article 19 (5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as amended (the
“Order”) and/or (ii) who are high net worth
companies (or persons to whom it may otherwise be lawfully
communicated) falling within Article 49(2)(a) to (d) of the
Order (all such persons together being referred to as
“relevant persons”). This prospectus supplement and the
accompanying prospectus must not be acted on or relied on in the
United Kingdom by persons who are not relevant persons. In the
United Kingdom, any investment or investment activity to which this
document relates is only available to, and will be engaged in with,
relevant persons.
Notice to Prospective Investors in Israel
In the
State of Israel this prospectus supplement and the accompanying
prospectus shall not be regarded as an offer to the public to
purchase securities under the Israeli Securities Law, 5728 —
1968, or the Israeli Securities Law, which requires a prospectus to
be published and authorized by the Israel Securities Authority, if
it complies with certain provisions of Section 15 of the Israeli
Securities Law, including, inter alia, if: (i) the offer is made,
distributed or directed to not more than 35 investors, subject to
certain conditions, or the Addressed Investors; or (ii) the offer
is made, distributed or directed to certain qualified investors
defined in the First Addendum of the Israeli Securities Law,
subject to certain conditions, or the Qualified Investors. The
Qualified Investors shall not be taken into account in the count of
the Addressed Investors and may be offered to purchase securities
in addition to the 35 Addressed Investors. Our company has not and
will not take any action that would require it to publish a
prospectus in accordance with and subject to the Israeli Securities
Law. We have not and will not distribute this prospectus supplement
or the accompanying prospectus or make, distribute or direct an
offer to subscribe for our securities to any person within the
State of Israel, other than to Qualified Investors and up to 35
Addressed Investors.
Qualified Investors
may have to submit written evidence that they meet the definitions
set out in of the First Addendum to the Israeli Securities Law. In
particular, we may request, as a condition to be offered
securities, that Qualified Investors will each represent, warrant
and certify to us or to anyone acting on our behalf: (i) that it is
an investor falling within one of the categories listed in the
First Addendum to the Israeli Securities Law; (ii) which of the
categories listed in the First Addendum to the Israeli Securities
Law regarding Qualified Investors is applicable to it; (iii) that
it will abide by all provisions set forth in the Israeli Securities
Law and the regulations promulgated thereunder in connection with
the offer to be issued securities; (iv) that the securities that it
will be issued are, subject to exemptions available under the
Israeli Securities Law: (a) for its own account; (b) for investment
purposes only; and (c) not issued with a view to resale within the
State of Israel, other than in accordance with the provisions of
the Israeli Securities Law; and (v) that it is willing to provide
further evidence of its Qualified Investor status. Addressed
Investors may have to submit written evidence in respect of their
identity and may have to sign and submit a declaration containing,
inter alia, the Addressed Investor’s name, address and
passport number or Israeli identification number.
Notice to prospective investors in Switzerland
The
shares of our common stock offered hereby may not be publicly
offered in Switzerland and will not be listed on the SIX Swiss
Exchange, or SIX, or on any other stock exchange or regulated
trading facility in Switzerland. This document does not constitute
a prospectus within the meaning of, and has been prepared without
regard to the disclosure standards for issuance prospectuses under,
art. 652a or art. 1156 of the Swiss Code of Obligations or the
disclosure standards for listing prospectuses under art. 27 ff. of
the SIX Listing Rules or the listing rules of any other stock
exchange or regulated trading facility in Switzerland. Neither this
document nor any other offering or marketing material relating to
the shares or the offering may be publicly distributed or otherwise
made publicly available in Switzerland.
Neither
this document nor any other offering or marketing material relating
to the offering, the Company or the shares has been or will be
filed with or approved by any Swiss regulatory authority. In
particular, this document will not be filed with, and the offer of
shares will not be supervised by, the Swiss Financial Market
Supervisory Authority FINMA, or FINMA, and the offer of shares has
not been and will not be authorized under the Swiss Federal Act on
Collective Investment Schemes, or CISA. The investor protection
afforded to acquirers of interests in collective investment schemes
under the CISA does not extend to acquirers of shares.
Notice to Prospective Investors in Australia
No
prospectus or other disclosure document, as defined in the
Corporations Act 2001 (Cth) of Australia, or the Corporations Act,
in relation to our shares has been or will be lodged with the
Australian Securities & Investments Commission, or the
ASIC. This prospectus supplement and the accompanying prospectus
have not been lodged with ASIC and are only directed to certain
categories of exempt persons. Accordingly, if you receive this
prospectus supplement and the accompanying prospectus in
Australia:
(a) you
confirm and warrant that you are either:
(i) a
“sophisticated investor” under section 708(8)(a) or
(b) of the Corporations Act;
(ii) a
“sophisticated investor” under section 708(8)(c) or
(d) of the Corporations Act and that you have provided an
accountant’s certificate to us which complies with the
requirements of section 708(8)(c)(i) or (ii) of the
Corporations Act and related regulations before the offer has been
made;
(iii) a
person associated with us under section 708(12) of the Corporations
Act; or
(iv) a
“professional investor” within the meaning of section
708(11)(a) or (b) of the Corporations Act, and to the extent
that you are unable to confirm or warrant that you are an exempt
sophisticated investor, associated person or professional investor
under the Corporations Act, any offer made to you under this
document is void and incapable of acceptance; and
(b) you
warrant and agree that you will not offer any of our shares for
resale in Australia within 12 months of that security being issued
unless any such resale offer is exempt from the requirement to
issue a disclosure document under section 708 of the Corporations
Act.
Notice to Prospective Investors in Hong Kong
The
shares of our common stock offered hereby may not be offered or
sold in Hong Kong by means of any document other than (i) in
circumstances which do not constitute an offer to the public within
the meaning of the Companies Ordinance (Cap. 32, Laws of Hong
Kong), (ii) to “professional investors” within the
meaning of the Securities and Futures Ordinance (Cap. 571, Laws of
Hong Kong) and any rules made thereunder or (iii) in other
circumstances which do not result in the document being a
“prospectus” within the meaning of the Companies
Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement,
invitation or document relating to the shares may be issued or may
be in the possession of any person for the purpose of issue (in
each case whether in Hong Kong or elsewhere), which is directed at,
or the contents of which are likely to be accessed or read by, the
public in Hong Kong (except if permitted to do so under the laws of
Hong Kong) other than with respect to shares which are or are
intended to be disposed of only to persons outside Hong Kong or
only to “professional investors” within the meaning of
the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong)
and any rules made thereunder.
Notice to Prospective Investors in Japan
The
shares of our common stock offered hereby have not been and will
not be registered under the Financial Instruments and Exchange Law
of Japan. The shares have not been offered or sold and will not be
offered or sold, directly or indirectly, in Japan or to or for the
account of any resident of Japan (including any corporation or
other entity organized under the laws of Japan), except
(i) pursuant to an exemption from the registration
requirements of the Financial Instruments and Exchange Law and
(ii) in compliance with any other applicable requirements of
Japanese law.
Notice to Prospective Investors in Singapore
This
prospectus supplement and the accompanying prospectus have not been
registered as a prospectus with the Monetary Authority of
Singapore. Accordingly, this prospectus supplement and the
accompanying prospectus and any other document or material in
connection with the offer or sale, or invitation for subscription
or purchase, of the shares may not be circulated or distributed,
nor may the shares be offered or sold, or be made the subject of an
invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (i) to an
institutional investor under Section 274 of the Securities and
Futures Act, Chapter 289 of Singapore (the “SFA”), (ii)
to a relevant person pursuant to Section 275(1), or any person
pursuant to Section 275(1A), and in accordance with the conditions
specified in Section 275 of the SFA, or (iii) otherwise pursuant
to, and in accordance with the conditions of, any other applicable
provision of the SFA.
Where
the shares are subscribed or purchased under Section 275 of the SFA
by a relevant person which is: (a) a corporation (which is not an
accredited investor (as defined in Section 4A of the SFA)) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of whom
is an accredited investor; or (b) a trust (where the trustee is not
an accredited investor) whose sole purpose is to hold investments
and each beneficiary of the trust is an individual who is an
accredited investor, securities (as defined in Section 239(1) of
the SFA) of that corporation or the beneficiaries’ rights and
interest (howsoever described) in that trust shall not be
transferred within six months after that corporation or that trust
has acquired the shares pursuant to an offer made under Section 275
of the SFA except:
●
to an institutional
investor or to a relevant person defined in Section 275(2) of the
SFA, or to any person arising from an offer referred to in Section
275(1A) or Section 276(4)(i)(B) of the SFA;
●
where no
consideration is or will be given for the transfer;
●
where the transfer
is by operation of law;
●
as specified in
Section 276(7) of the SFA; or
●
as specified in
Regulation 32 of the Securities and Futures (Offers of Investments)
(Shares and Debentures) Regulations 2005 of Singapore.
Notice to prospective investors in the Dubai international
financial centre, or DIFC
This
prospectus supplement and the accompanying prospectus relate to an
Exempt Offer in accordance with the Markets Rules 2012 of the Dubai
Financial Services Authority, or DFSA. This prospectus supplement
and the accompanying prospectus are intended for distribution only
to persons of a type specified in the Markets Rules 2012 of the
DFSA. It must not be delivered to, or relied on by, any other
person. The DFSA has no responsibility for reviewing or verifying
any documents in connection with Exempt Offers. The DFSA has not
approved this prospectus supplement and the accompanying prospectus
nor taken steps to verify the information set forth herein and has
no responsibility for this prospectus supplement and the
accompanying prospectus. The securities to which this prospectus
supplement and the accompanying prospectus relate may be illiquid
and/or subject to restrictions on their resale. Prospective
purchasers of the securities offered should conduct their own due
diligence on the securities. If you do not understand the contents
of this prospectus supplement and the accompanying prospectus you
should consult an authorized financial advisor.
In
relation to its use in the DIFC, this prospectus supplement and the
accompanying prospectus are strictly private and confidential and
is being distributed to a limited number of investors and must not
be provided to any person other than the original recipient, and
may not be reproduced or used for any other purpose. The interests
in the securities may not be offered or sold directly or indirectly
to the public in the DIFC.
Notice to prospective investors in the United Arab
Emirates
The
shares of our common stock offered hereby have not been, and are
not being, publicly offered, sold, promoted or advertised in the
United Arab Emirates (including the Dubai International Financial
Centre) other than in compliance with the laws of the United Arab
Emirates (and the Dubai International Financial Centre) governing
the issue, offering and sale of securities. Further, this
prospectus supplement and the accompanying prospectus do not
constitute a public offer of securities in the United Arab Emirates
(including the Dubai International Financial Centre) and is not
intended to be a public offer. This this prospectus supplement and
the accompanying prospectus have not been approved by or filed with
the Central Bank of the United Arab Emirates, the Securities and
Commodities Authority or the Dubai Financial Services
Authority.
LEGAL MATTERS
The
validity of the securities offered will be passed upon for us by
Godfrey & Kahn, S.C., Milwaukee, Wisconsin. Pillsbury Winthrop Shaw Pittman
LLP is acting as
counsel for the underwriters in connection with certain legal
matters relating to the shares of common stock offered by this
prospectus supplement.
EXPERTS
The consolidated
balance sheets the Company as of December 31, 2019 and 2018, and
the related consolidated statements of operations and comprehensive
loss, stockholders’ equity, and cash flows for each of the
years in the two-year period ended December 31, 2019, and the
effectiveness of the Company’s internal control over
financial reporting have been audited by Cherry Bekaert LLP, an
independent registered public accounting firm. Such financial
statements and the effectiveness of the Company’s internal
control over financial reporting, have been incorporated herein by
reference to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2019, and have been so incorporated in
reliance on the reports (which contain an adverse opinion on the
effectiveness of the Company’s internal control over
financial reporting because of material weaknesses) of such firm
given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
This
prospectus supplement is only part of a registration statement on
Form S-3 that we have filed with the SEC under the Securities Act
and therefore omits certain information contained in the
registration statement. We have also filed exhibits and schedules
with the registration statement that are excluded from this
prospectus, and you should refer to the applicable exhibit or
schedule for a complete description of any statement referring to
any contract or other document. You may view a copy of the
registration statement, including the exhibits and schedules,
without charge, at the SEC’s web site at
http://www.sec.gov.
We are
subject to the reporting requirements of the Exchange Act, and file
annual, quarterly and current reports, proxy statements and other
information with the SEC. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the
SEC, including our SEC filings, at http://www.sec.gov.
We also
maintain a website at www.sharpspring.com, through which you can
access our SEC filings. The information set forth on, or accessible
from, our website is not part of this prospectus supplement or the
accompanying prospectus.
You may
request a copy of our SEC filings and any documents incorporated by
reference in this prospectus supplement and the accompanying
prospectus (including any exhibits specifically incorporated by
reference in such documents) at no cost by writing or telephoning
us at the following address or phone number:
SharpSpring,
Inc.
5001
Celebration Pointe Avenue, Suite 410
Gainesville, FL
32608
Attention: Chief
Fianncial Officer
352-448-0967
INFORMATION INCORPORATED BY REFERENCE
The SEC
allows us to “incorporate by reference” the information
we have filed with it, which means that we can disclose important
information to you by referring you to another document that we
have filed separately with the SEC. You should read the information
incorporated by reference because it is an important part of this
prospectus supplement and the accompanying prospectus. Any
statement in a document we incorporate by reference into this
prospectus supplement and the accompanying prospectus will be
considered to be modified or superseded to the extent a statement
contained in this prospectus supplement or any other subsequently
filed document that is incorporated by reference into this
prospectus supplement and the accompanying prospectus modifies or
supersedes that statement. The modified or superseded statement
will not be considered to be a part of this prospectus supplement
and the accompanying prospectus, except as modified or superseded.
We incorporate by reference the following information or documents
that we have filed with the SEC (excluding those portions of any
document that are “furnished” and not
“filed” in accordance with SEC rules):
●
Our Annual Report
on Form 10-K for the year ended December 31, 2019 (filed with the
SEC on March 16, 2020), as amended on April 30, 2020;
●
Our Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2020 (filed
with the SEC on May 15, 2020), June 30, 2020 (filed with the SEC on
August 14, 2020), and September 30, 2020 (filed with the SEC on
November 16, 2020);
●
Our Current Reports
on Form 8-K filed with the SEC on February 3, 2020, as amended on
April 16, 2020; April 28, 2020; July 14, 2020; July 21, 2020, as
amended on July 23, 2020; August 19, 2020; November 12, 2020;
December 10, 2020; and December 15, 2020; and
●
The description of
our common stock set forth in our Registration Statement on Form
8-A filed with the SEC on January 27, 2014, including any
amendments or reports filed for the purpose of updating such
description.
We also
incorporate by reference all documents filed by us pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this prospectus supplement and prior to the
termination of this offering (excluding those portions of any
document that are “furnished” and not
“filed” in accordance with SEC rules).
Statements made in
this prospectus supplement or the accompanying prospectus or in any
document incorporated by reference in this prospectus supplement
and the accompanying 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.
PROSPECTUS
SHARPSPRING, INC.
$50,000,000 Shares of Common Stock / Preferred
Stock / Debt Securities / Warrants / Units
746,288 Shares of Common
Stock Offered by Selling Security
Holders
This prospectus
relates to (i) common stock, preferred stock, debt securities,
warrants and units that SharpSpring, Inc. may sell from time to
time in one or more offerings up to a total public offering price
of $50,000,000 on terms to be determined at the time of sale, which
securities may be sold either individually or in units, and (ii)
the proposed resale or other disposition from time to time of up to
746,288 shares of SharpSpring, Inc. common stock, $0.001 par value
per share, by the selling security holders identified in this
prospectus. We will not receive any of the proceeds from the sale
or other disposition of common stock by the selling security
holders. We and the selling security holders may offer securities
at the same time or in separate transactions.
Each time we sell
securities hereunder, we will provide specific terms of these
securities in supplements to this prospectus. You should read this
prospectus and any supplement carefully before you invest. This
prospectus may not be used to offer and sell securities unless
accompanied by a prospectus supplement for those
securities.
These securities
may be offered and sold in the same offering or in separate
offerings, directly to purchasers, through dealers or agents
designated from time to time, to or through underwriters or through
a combination of these methods. See “Plan of
Distribution” in this prospectus. We may also describe the
plan of distribution for any particular offering of these
securities in any applicable prospectus supplement. If any agents,
underwriters or dealers are involved in the sale of any securities
in respect of which this prospectus is being delivered, we will
disclose their names and the nature of our or the selling security
holders’ arrangements with them in a prospectus supplement.
The net proceeds we expect to receive from any sale of securities
offered by us will also be included in a prospectus
supplement.
The selling
security holders may offer and sell or otherwise dispose of the
shares of common stock described in this prospectus from time to
time through public or private transactions at prevailing market
prices, at prices related to prevailing market prices or at
privately negotiated prices. The selling security holders will bear
all commissions and discounts, if any, attributable to the sales of
shares. We will bear all other costs, expenses and fees in
connection with the registration of the shares. See "Plan of
Distribution" beginning on page 17 for more information about how
the selling security holders may sell or dispose of their shares of
common stock.
Our voting common
stock is listed on the NASDAQ Capital Market, under the symbol
"SHSP." On February 1, 2018, the last reported sale price of our
voting common stock on the NASDAQ Capital Market was $4.78 per
share.
As of February 1,
2018, the aggregate market value of our common stock held by our
non-affiliates, computed by reference to the price at which the
common equity was last sold or the average bid and asked price of
such common equity on that date, was approximately $36,511,600,
based on 8,445,016 shares of outstanding common stock, of which
7,638,410 were held by non-affiliates. Pursuant to General
Instruction I.B.6 of Form S-3, in no event will we sell
securities in a public primary offering with a value exceeding more
than one-third of our public float (the market value of our common
stock held by our non-affiliates) in any 12-month period so long as
our public float remains below $75 million. We have not
offered any securities pursuant to General Instruction I.B.6
of Form S-3 during the 12 calendar months prior to and
including the date of this prospectus.
Investing in our common stock involves a high
degree of risk. Before deciding whether to invest in our
securities, you should consider carefully the risks that we have
described on page 5 of this prospectus under the caption
“Risk Factors” and in the documents incorporated by
reference into this prospectus.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of
these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this
prospectus is February 9, 2018.
Table of
Contents
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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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INFORMATION CONCERNING FORWARD-LOOKING
STATEMENTS
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3
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RISK FACTORS
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4
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USE OF PROCEEDS
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4
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DESCRIPTION OF SECURITIES TO BE
REGISTERED
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5
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SELLING SECURITY HOLDERS
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14
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PLAN OF DISTRIBUTION
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15
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LEGAL MATTERS
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18
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EXPERTS
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18
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WHERE YOU CAN FIND MORE
INFORMATION
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18
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INFORMATION INCORPORATED BY
REFERENCE
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19
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This prospectus is
part of a registration statement on Form S-3 that we filed with the
United States Securities and Exchange Commission (the
“SEC”), using a “shelf” registration
process. Under this shelf process, we may, from time to time, offer
or sell any combination of the securities described in this
prospectus in one or more offerings up to a total amount of
$50,000,000. The selling security holders may use this prospectus
to sell an aggregate of 746,288 shares of our common stock that
were previously issued to the selling security
holders.
This prospectus
provides you with a general description of the securities we or the
selling security holders may offer. Each time we or the selling
security holders sell securities, we will provide a prospectus
supplement that will contain specific information about the terms
of that offering. The prospectus supplement may also add to, update
or change information contained in the prospectus and, accordingly,
to the extent inconsistent, information in this prospectus is
superseded by the information in the prospectus
supplement.
The prospectus
supplement to be attached to the front of this prospectus may
describe, as applicable: the terms of the securities offered; the
initial public offering price; the price paid for the securities;
net proceeds; and the other specific terms related to the offering
of the securities.
You should rely
only on the information contained or incorporated by reference in
this prospectus and any prospectus supplement or issuer free
writing prospectus relating to a particular offering. No one has
been authorized to provide you with information that is different
from that contained or incorporated by reference in this
prospectus, any accompanying prospectus supplement and any related
issuer free writing prospectus in connection with the offering
described herein and therein, and, if given or made, such
information or representations must not be relied upon as having
been authorized by us. Neither this prospectus nor any prospectus
supplement nor any related issuer free writing prospectus shall
constitute an offer to sell or a solicitation of an offer to buy
offered securities in any jurisdiction in which it is unlawful for
such person to make such an offering or solicitation. This
prospectus does not contain all of the information included in the
registration statement. For a more complete understanding of the
offering of the securities, you should refer to the registration
statement, including its exhibits.
You should read the
entire prospectus and any prospectus supplement and any related
issuer free writing prospectus, as well as the documents
incorporated by reference into this prospectus or any prospectus
supplement or any related issuer free writing prospectus, before
making an investment decision. Neither the delivery of this
prospectus or any prospectus supplement or any issuer free writing
prospectus nor any sale made hereunder shall under any
circumstances imply that the information contained or incorporated
by reference herein or in any prospectus supplement or issuer free
writing prospectus is correct as of any date subsequent to the date
hereof or of such prospectus supplement or issuer free writing
prospectus, as applicable. You should assume that the information
appearing in this prospectus, any prospectus supplement or any
document incorporated by reference is accurate only as of the date
of the applicable documents, regardless of the time of delivery of
this prospectus or any sale of securities. Our business, financial
condition, results of operations and prospects may have changed
since that date.
Unless the context
otherwise requires, references in this prospectus to
“SharpSpring” “Company,” “we,”
“our” or “us” and other similar terms means
SharpSpring, Inc., a Delaware corporation, and all
subsidiaries.
PROSPECTUS SUMMARY
This summary description about us and our
business highlights selected information contained elsewhere in
this prospectus or incorporated herein by reference. This summary
is not complete and does not contain all of the information that
you should consider before deciding to invest in our securities. We
urge you to carefully read this entire prospectus and any
applicable prospectus supplement, including each of the documents
incorporated herein or therein by reference, including the
“Risk Factors” section.
Business
Overview
We provide SaaS
based marketing technologies to customers around the world. Our
focus is on marketing automation tools that enable customers to
interact with a lead from an early stage and nurture that potential
customer using advanced features until it becomes a qualified sales
lead or customer. We primarily offer our premium SharpSpring
marketing automation solution, but also have customers on the
SharpSpring Mail+ product, which is a subset of the full suite
solution.
We believe our
recent growth has been driven by the strong demand for marketing
automation technology solutions, particularly in the digital
marketing agency vertical for the small and mid-size business
market. Our products are offered at competitive prices with
unlimited multi-lingual customer support. We employ a
subscription-based revenue model. We also earn revenues from
additional usage charges that may come into effect when a customer
exceeds a transactional limit, or when ancillary products and
services are purchased.
During 2016, we
discontinued our GraphicMail email marketing product and migrated
those customers to our SharpSpring Mail+ product, which is a subset
of the full suite solution that is focused on more traditional
email marketing while also including some of the advanced
functionality available in our premium offering. On June 27, 2016,
we sold our SMTP email relay service which provided customers with
the ability to increase the deliverability of email with less time,
cost and complexity than handling it themselves.
Our Corporate
Organization
We were
incorporated in Massachusetts in October 1998 as EMUmail, Inc.
During 2010, we changed our name to SMTP.com, then later
reincorporated in the State of Delaware and changed our name to
SMTP, Inc. In December 2015, we changed our name to SharpSpring,
Inc. and changed the name of our SharpSpring product U.S. operating
subsidiary from SharpSpring, Inc. to SharpSpring Technologies,
Inc.
Our wholly owned
subsidiaries consist of (i) SharpSpring Technologies, Inc., a
Delaware corporation; (ii) InterInbox SA, a Swiss corporation;
(iii) ERNEPH 2012A (Pty) Ltd. dba ISMS, a South African limited
company; (iv) ERNEPH 2012B (Pty) Ltd. dba GraphicMail South Africa,
a South African limited company; (v) Quattro Hosting LLC, a
Delaware limited liability company; (vi) SMTP Holdings S.a.r.l., a
Luxembourg S.a.r.l.; and (vii) InterCloud Ltd, a Gibraltar Limited
Company.
Additional
Information
Our corporate
headquarters is located at 550 SW 2nd Avenue, Gainesville, FL
32601. Our telephone number is 888-428-9605. Our corporate website
is www.sharpspring.com. The
information on our website is not a part of, and should not be
construed as being incorporated by reference into, this
prospectus.
The
Offering
We may offer up to
$50,000,000 of common stock, preferred stock, debt securities,
warrants or units in one or more offerings and in any combination.
In addition, the selling security holders may offer up to 746,288
shares of common stock in one or more offerings. See “Selling
Security Holders” on page 16 for more information on the
selling security holders. We will not receive any proceeds from the
sale of the securities by the selling security
holders.
This prospectus
provides you with a general description of the securities we or the
selling security holders may offer. A prospectus supplement, which
we will provide each time we or the selling security holders offer
securities, will describe the specific amounts, prices and terms of
the securities we or the selling security holders determine to
offer.
We or the selling
security holders may sell the securities to or through
underwriters, dealers or agents or directly to purchasers or as
otherwise set forth below under “Plan of Distribution.”
We, the selling security holders, as well as any agents acting on
our behalf, reserve the sole right to accept and to reject in whole
or in part any proposed purchase of securities. Each prospectus
supplement will set forth the names of any underwriters, dealers,
agents or other entities involved in the sale of securities
described in that prospectus supplement and any applicable fee,
commission or discount arrangements with them.
INFORMATION
CONCERNING FORWARD-LOOKING STATEMENTS
This prospectus,
including the documents incorporated by reference herein, contains
statements that do not directly or exclusively relate to historical
facts. Such statements are “forward-looking
statements.” You can typically identify forward-looking
statements by the use of forward-looking words, such as
“may,” “will,” “could,”
“project,” “believe,”
“anticipate,” “expect,”
“estimate,” “continue,”
“potential,” “plan,” “forecast”
and other similar words. These include, but are not limited to,
statements relating to our future financial and operating results,
plans, objectives, expectations and intentions and other statements
that are not historical facts. These statements represent our
intentions, plans, expectations, assumptions and beliefs about
future events and are subject to risks, uncertainties and other
factors. Many of these factors are outside of our control and could
cause actual results to differ materially from the results
expressed or implied by these forward-looking statements. In
addition to the risk factors described under Risk Factors beginning
on page 5 of this prospectus, these factors include:
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strategic actions,
including acquisitions and dispositions and our success in
integrating acquired businesses;
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changes in customer
demand;
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the extent to which
we are successful in gaining new long-term relationships with
customers or retaining existing ones and the level of service
failures that could lead customers to use competitors’
services;
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the occurrence of
hostilities, political instability or catastrophic
events;
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developments and
changes in laws and regulations, including increased regulation of
our industry through legislative action and revised rules and
standards; and
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disruptions to our
technology network including computer systems and software, as well
as natural events such as severe weather, fires, floods and
earthquakes or man-made or other disruptions of our operating
systems, structures or equipment.
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Forward-looking
statements are based on our current expectations about future
events. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, these expectations may
not be achieved. The forward-looking statements speak only as of
the date on which they are made, and, except as required by law, we
are under no duty to update any of the forward-looking statements
after the date of this prospectus to conform those statements to
actual results or to reflect the occurrence of unanticipated
events. In evaluating these statements, you should consider various
factors, including the risks outlined in the section entitled
“Risk Factors” beginning on page 5 of this
prospectus.
An investment in
our securities involves a high degree of risk. Before making an
investment decision, you should consider carefully the risks
discussed below, together with the risks under the heading
“Risk Factors” in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2016, our Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and
September 30, 2017, and any subsequent Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, which are incorporated by
reference into this prospectus, as well as the other information
included or incorporated by reference in this prospectus. Our
business, prospects, financial condition, or operating results
could be harmed by any of these risks, as well as other risks not
currently known to us or that we currently consider immaterial. The
trading price of our securities could decline due to any of these
risks, and, as a result, you may lose all or part of your
investment. The prospectus supplement applicable to each offering
of securities will contain additional information about risks
applicable to an investment in us and the applicable
securities.
Unless otherwise
indicated in the prospectus supplement, we will use the net
proceeds from the sale of securities offered by this prospectus
primarily for general corporate purposes, including working
capital, sales and marketing activities, general and administrative
matters, repayment of indebtedness, and capital expenditures. We
may also use a portion of the proceeds to acquire or invest in
complementary products or businesses, although we have no current
plans for any specific acquisitions or investments at this
time.
We have not yet
determined the amount of net proceeds to be used specifically for
any of the foregoing purposes. Accordingly, our management will
have broad discretion over the uses of such proceeds. The specific
allocations of the proceeds we receive from the sale of our
securities will be described in the applicable prospectus
supplement.
Unless otherwise
indicated in the prospectus, we will not receive any proceeds from
the sale of securities by selling security holders. The selling
security holders will receive all of the proceeds from such sale.
The selling security holders will pay any underwriting discounts
and commissions and expenses incurred by the selling security
holders for brokerage, accounting, tax or legal services or any
other expenses incurred by the selling security holders in
disposing of the shares held by him. We will bear all other costs,
fees and expenses incurred in effecting the registration of the
shares covered by this prospectus, including, without limitation,
all registration and filing fees, fees and expenses of our counsel
and our independent registered public accountants.
DESCRIPTION OF
SECURITIES TO BE REGISTERED
The following
information describes our capital stock and other securities we may
offer pursuant to the registration statement of which this
prospectus forms a part, as well as provisions of our amended
certificate of incorporation and bylaws. This description is only a
summary. You should also refer to our amended certificate of
incorporation and bylaws both as filed with the SEC as exhibits to
our registration statement, of which this prospectus forms a
part.
General
Our authorized
capital stock consists of 50,000,000 shares of common stock, par
value $0.001 per share and 5,000,000 shares of preferred stock, par
value $0.001 per share. The following description of our capital
stock is intended as a summary only and is qualified in its
entirety by reference to our amended certificate of incorporation
and bylaws, which have been filed previously with the SEC, and
applicable provisions of Delaware law.
We, directly or
through agents, dealers or underwriters designated from time to
time, may offer, issue and sell, together or separately, up to
$50,000,000 in the aggregate of:
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common
stock;
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preferred
stock;
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secured or
unsecured debt securities consisting of notes, debentures or other
evidences of indebtedness which may be senior debt securities,
senior subordinated debt securities or subordinated debt
securities, each of which may be convertible into equity
securities;
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warrants to
purchase our securities;
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units comprised of,
or other combinations of, the foregoing securities.
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We may issue the
debt securities as exchangeable for or convertible into shares of
common stock, preferred stock or other securities. The preferred
stock may also be exchangeable for and/or convertible into shares
of common stock, another series of preferred stock or other
securities. When a particular series of securities is offered, a
supplement to this prospectus will be delivered with this
prospectus, which will set forth the terms of the offering and sale
of the offered securities.
Common Stock
As of February 2,
2018, approximately 8,445,016 shares of common stock were
outstanding. All outstanding shares of our common stock are fully
paid and non-assessable.
Holders of our
common stock are entitled to one vote for each share held of record
on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with
the result that directors will be elected by a plurality of the
votes cast. Our stockholders have no conversion, preemptive or
other subscription rights and there are no sinking fund or
redemption provisions applicable to the common stock.
Holders of our
common stock are entitled to receive dividends when, as and if
declared by our board of directors out of funds legally available
for this purpose. In the event of our liquidation, dissolution or
winding up, holders of our common stock are entitled to receive on
a proportional basis any assets remaining available for
distribution after payment of our liabilities.
Preferred Stock
As of February 2,
2018, no shares of preferred stock are currently
outstanding.
The following
description of preferred stock and the description of the terms of
any particular series of preferred stock that we choose to issue
hereunder and that will be set forth in the related prospectus
supplement are not complete. These descriptions are qualified in
their entirety by reference to our certificate of incorporation and
any amendments thereto relating to any series of preferred stock.
The rights, preferences, privileges and restrictions of the
preferred stock of each series will be fixed by the certificate of
designation relating to that series. The prospectus supplement also
will contain a description of certain United States federal income
tax consequences relating to the purchase and ownership of the
series of preferred stock that is described in the prospectus
supplement.
Our amended
certificate of incorporation provides that our board of directors
may, by resolution, establish one or more classes or series of
preferred stock having the number of shares and relative voting
rights, designations, dividend rates, liquidation, and other
rights, preferences, and limitations as may be fixed by them
without further stockholder approval. The holders of our preferred
stock may be entitled to preferences over common stockholders with
respect to dividends, liquidation, dissolution, or our winding up
in such amounts as are established by the resolutions of our board
of directors approving the issuance of such shares.
The prospectus
supplement for a series of preferred stock will
specify:
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the maximum number
of shares;
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the offering price
of the shares;
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the designation of
the shares;
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the annual dividend
rate, if any, whether the dividend rate is fixed or variable, the
date or dates on which dividends will accrue, the dividend payment
dates, and whether dividends will be cumulative;
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the price and the
terms and conditions for redemption, if any, including redemption
at our option or at the option of the holders, including the time
period for redemption, and any accumulated dividends or
premiums;
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the liquidation
preference, if any, and any accumulated dividends upon the
liquidation, dissolution or winding up of our affairs;
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any sinking fund or
similar provision, and, if so, the terms and provisions relating to
the purpose and operation of the fund;
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the terms and
conditions, if any, for conversion or exchange of shares of any
other class or classes of our capital stock or any series of any
other class or classes, or of any other series of the same class,
or any other securities or assets, including the price or the rate
of conversion or exchange and the method, if any, of
adjustment;
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the voting rights;
and
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any or all other
preferences and relative, participating, optional or other special
rights, privileges or qualifications, limitations or
restrictions.
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You should also
refer to the applicable certificate of designation for complete
information about the terms, preferences and rights related to a
particular series of our preferred stock, which we will incorporate
as an exhibit to the registration statement of which this
prospectus is a part. The prospectus supplement will contain a
description of United States federal income tax consequences
relating to the preferred stock, to the extent
applicable.
The issuance of our
preferred stock may have the effect of delaying, deferring or
preventing a change in control of us without further action by the
holders and may adversely affect voting and other rights of holders
of our common stock. In addition, issuance of preferred stock,
while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could make it more
difficult for a third party to acquire a majority of the
outstanding shares of voting stock. The issuance of preferred stock
could have the effect of decreasing the market price of our common
stock.
We have no present
plans to issue any shares of preferred stock nor are any shares of
our preferred stock presently outstanding. Preferred stock will be
fully paid and nonassessable upon issuance.
Debt Securities
As of February 2,
2018, no debt securities are currently outstanding.
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, if we issue debt securities, the
terms of the debt securities will be provided in a prospectus
supplement to this prospectus and the final form of indenture will
be incorporated by reference from a current report that we filed
with the SEC. However, we may elect to issue convertible debt
securities without an indenture. The terms of any debt securities offered
under a prospectus supplement may differ from the terms described
below. Please refer to the prospectus supplement and the
final form of indenture (if we issue debt securities pursuant to an
indenture) for the terms and conditions of the offered debt
securities. 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.
The statements and
descriptions in this prospectus or in any prospectus supplement
regarding provisions of the indenture and debt securities are
summaries thereof, do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the
provisions of the indentures (and any amendments or supplements we
may enter into from time to time which are permitted under each
indenture) and the debt securities, including the definitions
therein of certain terms.
General
Unless otherwise
specified in a prospectus supplement, the debt securities will be
direct secured or unsecured obligations of our company. The senior
debt securities will rank equally with any of our other unsecured
senior and unsubordinated debt. The subordinated debt securities
will be subordinate and junior in right of payment to any senior
indebtedness.
We may issue debt
securities from time to time in one or more series, in each case
with the same or various maturities, at par or at a discount.
Unless indicated in a prospectus supplement, we may issue
additional debt securities of a particular series without the
consent of the holders of the debt securities of such series
outstanding at the time of the issuance. Any such additional debt
securities, together with all other outstanding debt securities of
that series, will constitute a single series of debt securities
under an indenture and will be equal in ranking.
Should an indenture
relate to unsecured indebtedness, in the event of a bankruptcy or
other liquidation event involving a distribution of assets to
satisfy our outstanding indebtedness or an event of default under a
loan agreement relating to secured indebtedness of our company or
its subsidiaries, the holders of such secured indebtedness, if any,
would be entitled to receive payment of principal and interest
prior to payments on the senior unsecured indebtedness issued under
an indenture.
Events of Default Under the
Indenture
Unless we provide
otherwise in the prospectus supplement or free writing prospectus
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
the principal or premium, if any, when due and payable at maturity,
upon redemption or repurchase or otherwise;
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if we fail to pay
interest when due and payable and our failure continues for certain
days;
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if we fail to
observe or perform any other covenant contained in the securities
of a series or in the indenture, and our failure continues for a
certain number of days after we receive written notice from the
trustee or holders of at least a certain percentage in aggregate
principal amount of the outstanding debt securities of the
applicable series;
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if specified events
of bankruptcy, insolvency or reorganization occur; and
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if any other event
of default provided with respect to securities of that series,
which is specified in a board of directors resolution, a
supplemental indenture to the indenture or other documents
described in the indenture.
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The terms and
conditions may or may not include whether or not we must furnish
periodic evidence showing that an event of default does not exist
or that we are in compliance with the terms of the
indenture.
Prospectus Supplement
Each prospectus
supplement will describe the terms relating to the specific series
of debt securities being offered. These terms will include some or
all of the following:
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the title of debt
securities and whether they are subordinated or senior debt
securities;
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any limit on the
aggregate principal amount of debt securities of such
series;
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the percentage of
the principal amount at which the debt securities of any series
will be issued;
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the ability to
issue additional debt securities of the same series;
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the purchase price
for the debt securities and the denominations of the debt
securities;
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the specific
designation of the series of debt securities being
offered;
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the maturity date
or dates of the debt securities and the date or dates upon which
the debt securities are payable and the rate or rates at which the
debt securities of the series shall bear interest, if any, which
may be fixed or variable, or the method by which such rate shall be
determined;
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the basis for
calculating interest if other than 360-day year or twelve 30-day
months;
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the date or dates
from which any interest will accrue or the method by which such
date or dates will be determined;
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the duration of any
deferral period, including the maximum consecutive period during
which interest payment periods may be extended;
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whether the amount
of payments of principal of (and premium, if any) or interest on
the debt securities may be determined with reference to any index,
formula or other method, such as one or more currencies,
commodities, equity indices or other indices, and the manner of
determining the amount of such payments;
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the dates on which
we will pay interest on the debt securities and the regular record
date for determining who is entitled to the interest payable on any
interest payment date;
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the place or places
where the principal of (and premium, if any) and interest on the
debt securities will be payable, where any securities may be
surrendered for registration of transfer, exchange or conversion,
as applicable, and notices and demands may be delivered to or upon
us pursuant to the applicable indenture;
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the rate or rates
of amortization of the debt securities, if any;
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if we possess the
option to do so, the periods within which and the prices at which
we may redeem the debt securities, in whole or in part, pursuant to
optional redemption provisions, and the other terms and conditions
of any such provisions;
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our obligation or
discretion, if any, to redeem, repay or purchase debt securities by
making periodic payments to a sinking fund or through an analogous
provision or at the option of holders of the debt securities, and
the period or periods within which and the price or prices at which
we will redeem, repay or purchase the debt securities, in whole or
in part, pursuant to such obligation, and the other terms and
conditions of such obligation;
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the terms and
conditions, if any, regarding the option or mandatory conversion or
exchange of debt securities;
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the period or
periods within which, the price or prices at which and the terms
and conditions upon which any debt securities of the series may be
redeemed, in whole or in part at our option and, if other than by a
board resolution, the manner in which any election by us to redeem
the debt securities shall be evidenced;
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any restriction or
condition on the transferability of the debt securities of a
particular series;
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the portion, or
methods of determining the portion, of the principal amount of the
debt securities which we must pay upon the acceleration of the
maturity of the debt securities in connection with any event of
default if other than the full principal amount;
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the currency or
currencies in which the debt securities will be denominated and in
which principal, any premium and any interest will or may be
payable or a description of any units based on or relating to a
currency or currencies in which the debt securities will be
denominated;
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provisions, if any,
granting special rights to holders of the debt securities upon the
occurrence of specified events;
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any deletions from,
modifications of or additions to the events of default or our
covenants with respect to the applicable series of debt securities,
and whether or not such events of default or covenants are
consistent with those contained in the applicable
indenture;
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any limitation on
our ability to incur debt, redeem stock, sell our assets or other
restrictions;
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the application, if
any, of the terms of the applicable indenture relating to
defeasance and covenant defeasance (which terms are described
below) to the debt securities;
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what subordination
provisions will apply to the debt securities;
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the terms, if any,
upon which the holders may convert or exchange the debt securities
into or for our common stock, preferred stock or other securities
or property;
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whether we are
issuing the debt securities in whole or in part in global
form;
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any change in the
right of the trustee or the requisite holders of debt securities to
declare the principal amount thereof due and payable because of an
event of default;
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the depositary for
global or certificated debt securities, if any;
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any material
federal income tax consequences applicable to the debt securities,
including any debt securities denominated and made payable, as
described in the prospectus supplements, in foreign currencies, or
units based on or related to foreign currencies;
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any right we may
have to satisfy, discharge and defease our obligations under the
debt securities, or terminate or eliminate restrictive covenants or
events of default in the indentures, by depositing money or U.S.
government obligations with the trustee of the
indentures;
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the names of any
trustees, depositories, authenticating or paying agents, transfer
agents or registrars or other agents with respect to the debt
securities;
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to whom any
interest on any debt security shall be payable, if other than the
person in whose name the security is registered, on the record date
for such interest, the extent to which, or the manner in which, any
interest payable on a temporary global debt security will be paid
if other than in the manner provided in the applicable
indenture;
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if the principal of
or any premium or interest on any debt securities is to be payable
in one or more currencies or currency units other than as stated,
the currency, currencies or currency units in which it shall be
paid and the periods within and terms and conditions upon which
such election is to be made and the amounts payable (or the manner
in which such amount shall be determined);
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the portion of the
principal amount of any debt securities which shall be payable upon
declaration of acceleration of the maturity of the debt securities
pursuant to the applicable indenture if other than the entire
principal amount;
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if the principal
amount payable at the stated maturity of any debt security of the
series will not be determinable as of any one or more dates prior
to the stated maturity, the amount which shall be deemed to be the
principal amount of such debt securities as of any such date for
any purpose, including the principal amount thereof which shall be
due and payable upon any maturity other than the stated maturity or
which shall be deemed to be outstanding as of any date prior to the
stated maturity (or, in any such case, the manner in which such
amount deemed to be the principal amount shall be determined);
and
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any other specific
terms of the debt securities, including any modifications to the
events of default under the debt securities and any other terms
which may be required by or advisable under applicable laws or
regulations.
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Unless otherwise
specified in the applicable prospectus supplement, the debt
securities will not be listed on any securities exchange. Holders
of the debt securities may present registered debt securities for
exchange or transfer in the manner described in the applicable
prospectus supplement. Except as limited by the applicable
indenture, we will provide these services without charge, other
than any tax or other governmental charge payable in connection
with the exchange or transfer.
Debt securities may
bear interest at a fixed rate or a variable rate as specified in
the prospectus supplement. In addition, if specified in the
prospectus supplement, we may sell debt securities bearing no
interest or interest at a rate that at the time of issuance is
below the prevailing market rate, or at a discount below their
stated principal amount. We will describe in the applicable
prospectus supplement any special federal income tax considerations
applicable to these discounted debt securities.
We may issue debt
securities with the principal amount payable on any principal
payment date, or the amount of interest payable on any interest
payment date, to be determined by referring to one or more currency
exchange rates, commodity prices, equity indices or other factors.
Holders of such debt securities may receive a principal amount on
any principal payment date, or interest payments on any interest
payment date, that are greater or less than the amount of principal
or interest otherwise payable on such dates, depending upon the
value on such dates of applicable currency, commodity, equity index
or other factors. The applicable prospectus supplement will contain
information as to how we will determine the amount of principal or
interest payable on any date, as well as the currencies,
commodities, equity indices or other factors to which the amount
payable on that date relates and certain additional tax
considerations.
Warrants
As of February 2,
2018, we had warrants outstanding to purchase an aggregate of
80,000 shares of our common stock at an exercise price of $7.8125
per share, subject to adjustment. The warrants are scheduled to
expire on January 30, 2020, or earlier upon
redemption.
We may offer and
issue warrants to purchase shares of our common stock or preferred
stock or debt securities. The warrants may be issued independently
or as a part of units consisting of shares of our common stock or
preferred stock or debt securities and warrants to purchase
additional shares of our common stock or preferred stock or debt
securities. If the warrants are issued pursuant to warrant
agreements, we will so specify in the prospectus supplement
relating to the warrants being offered pursuant to the prospectus
supplement.
The following
description 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. The
forms of any warrant certificates or warrant agreements evidencing
the warrants that we issue will be filed with the SEC and
incorporated by reference into this prospectus, and you should
carefully review such documents.
The prospectus
supplement will describe the following terms of warrants to
purchase our common stock, preferred stock or debt securities to
the extent applicable:
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the title of the
warrants;
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the common stock
common stock, preferred stock or debt securities for which the
warrants are exercisable;
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the price at which
the warrants will be issued and the exercise price of the
warrants;
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the aggregate
number of warrants offered;
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the number of
shares of common stock or preferred stock or debt securities that
may be purchased upon the exercise of each warrant;
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whether the
warrants are being offered separately or as a part of units
consisting of shares of our common stock or preferred stock or debt
securities and warrants to purchase additional shares of our common
stock or preferred stock or debt securities;
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the terms of any
right by us to redeem the warrants;
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the date on which
the right to exercise the warrants will commence and the date on
which this right will expire;
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the procedures for
exercising the warrants;
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the terms on which
the warrants may be amended;
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the terms of any
adjustments in the warrant exercise price and the number of shares
of common stock or preferred stock or debt securities purchasable
upon the exercise of each warrant to be made in certain events,
including the issuance of a stock dividend to holders of common
stock or preferred stock or a stock split, reverse stock split,
combination, subdivision or reclassification of common
stock;
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the effect on the
warrants of our merger or consolidation with another entity or our
sale of all or substantially all of our assets;
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the maximum or
minimum number of warrants which may be exercised at any time;
and
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the material United
States federal income tax consequences applicable to the warrants
and their exercise.
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Holders of warrants
to purchase common stock or preferred stock will not be entitled,
by virtue of being such holders, to vote, consent, receive
dividends, receive notice as stockholders with respect to any
meeting of stockholders for the election of our directors or any
other matter, or to exercise any rights whatsoever as our
stockholders.
Warrants may be
exercised at any time up to the close of business on the expiration
date set forth in the prospectus supplement relating to the
warrants offered thereby. After the close of business on the
expiration date, unexercised warrants will become void. Upon our
receipt of the exercise price of the warrants upon the due exercise
of the warrants, we will, as soon as practicable, forward the
securities purchasable upon exercise. If less than all of the
warrants represented by such warrant certificate are exercised, a
new warrant certificate will be issued for the remaining
warrants.
Units
As of February 2,
2018, no units are currently outstanding.
We may offer and
issue units that consist of shares of our common stock or preferred
stock, debt securities and warrants to purchase additional shares
of our common stock or preferred stock or debt securities. For
example, we may elect to issue units for a specified price per
unit, with each unit consisting of one share of our common stock or
preferred stock or debt securities and one warrant to purchase an
additional share of our common stock or preferred stock or debt
securities at a specified price. The holder of a unit will also
hold each of the securities that is included in the
unit.
We have provided in
the preceding sections of this prospectus a general description of
our common stock, preferred stock, debt securities and warrants
that we may offer. If we elect to offer units, we will describe the
specific terms of the units in a supplement to this prospectus.
Among other things, the prospectus supplement will describe, to the
extent applicable:
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the price of each
unit;
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the securities
comprising each unit;
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the exercise price
of the warrants comprising part of the units;
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the aggregate
number of units offered;
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the number of
shares of common stock or preferred stock or debt securities that
may be purchased upon the exercise of each warrant comprising part
of a unit;
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the terms of any
right by us to redeem any of the securities comprising the
units;
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the date on which
the right to exercise the warrants forming part of the units will
commence and the date on which this right will expire;
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any transfer
restrictions on the units, including whether the securities
comprising the units may be transferred separately;
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the terms on which
the units or warrants forming part of the units may be
amended;
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with respect to
preferred stock forming part of the units, the other matters listed
above under “Description of Securities to be
Registered—Preferred Stock”;
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with respect to
debt securities forming part of the units, the other matters listed
above under “Description of Securities to be
Registered—Debt Securities”;
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with respect to
warrants forming part of the units, the other matters listed above
under “Description of Securities to be
Registered—Warrants”; and
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the material United
States federal income tax consequences applicable to the
units.
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Limitation of Liability
As permitted by the
General Corporation Law of the State of Delaware, our amended
certificate of incorporation provides that our directors shall not
be personally liable to us or our stockholders for monetary damages
for breach of fiduciary duty as a director, except for
liability:
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for any breach of
the director’s duty of loyalty to us or our
stockholders;
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for acts or
omissions not in good faith or which involve intentional misconduct
or a knowing violation of law;
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under section 174
of the Delaware law, relating to unlawful payment of dividends or
unlawful stock purchases or redemption of stock; or
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for any transaction
from which the director derives an improper personal
benefit
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As a result of this
provision, we and our stockholders may be unable to obtain monetary
damages from a director for breach of his or her duty of
care.
Our amended
certificate of incorporation provides for the indemnification of
our directors and officers, and, to the extent authorized by our
board in its sole and absolute discretion, employees and agents, to
the full extent authorized by, and subject to the conditions set
forth in the Delaware law.
Anti-Takeover Provisions
Certain of our
charter, statutory and contractual provisions could make the
removal of our management and directors more difficult and may
discourage transactions that otherwise could involve payment of a
premium over prevailing market prices for our common stock.
Furthermore, the existence of the foregoing provisions, as well as
the significant common stock beneficially owned by our founder,
executive officers, and certain members of our board of directors,
could lower the price that investors might be willing to pay in the
future for shares of our common stock. They could also deter
potential acquirers of our Company, thereby reducing the likelihood
that you could receive a premium for your common stock in an
acquisition.
Charter and
Bylaw Provisions
In addition to the
board of directors’ ability to issue shares of preferred
stock, our amended certificate of incorporation and bylaws contain
the following provisions that may have the effect of discouraging
unsolicited acquisition proposals:
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prohibit cumulative
voting in the election of directors, which would otherwise allow
less than a majority of stockholders to elect director
candidates;
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empower our board
of directors to fill any vacancy on our board of directors, whether
such vacancy occurs as a result of an increase in the number of
directors or otherwise;
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provide that our
board of directors is expressly authorized to adopt, amend or
repeal our bylaws; and
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provide that our
directors will be elected by a plurality of the votes cast in the
election of directors.
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These provisions
could lower the price that future investors might be willing to pay
for shares of our common stock.
Delaware
Law
Section 203 of the
Delaware General Corporation Law is applicable to takeovers of
certain Delaware corporations, including us. Subject to exceptions
enumerated in Section 203, Section 203 provides that a corporation
shall not engage in any business combination with any
“interested stockholder” for a three-year period
following the date that the stockholder becomes an interested
stockholder unless:
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prior to that date,
the board of directors of the corporation approved either the
business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
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upon consummation
of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time
the transaction commenced, though some shares may be excluded from
the calculation; or
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on or subsequent to
that date, the business combination is approved by the board of
directors of the corporation and by the affirmative votes of
holders of at least two-thirds of the outstanding voting stock that
is not owned by the interested stockholder.
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Except as specified
in Section 203, an interested stockholder is generally defined to
include any person who, together with any affiliates or associates
of that person, beneficially owns, directly or indirectly, 15% or
more of the outstanding voting stock of the corporation, or is an
affiliate or associate of the corporation and was the owner of 15%
or more of the outstanding voting stock of the corporation, any
time within three years immediately prior to the relevant date.
Under certain circumstances, Section 203 makes it more difficult
for an interested stockholder to effect various business
combinations with a corporation for a three-year period, although
the stockholders may elect not to be governed by this section, by
adopting an amendment to the certificate of incorporation or
bylaws, effective 12 months after adoption. Our certificate of
incorporation, as amended, and bylaws do not opt out from the
restrictions imposed under Section 203. We anticipate that the
provisions of Section 203 may encourage companies interested in
acquiring us to negotiate in advance with the board because the
stockholder approval requirement would be avoided if a majority of
the directors then in office excluding an interested stockholder
approve either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder.
These provisions may have the effect of deterring hostile takeovers
or delaying changes in control, which could depress the market
price of our common stock and deprive stockholders of opportunities
to realize a premium on shares of common stock held by
them.
Contractual
Provisions
Our employee stock
option agreements include change-in-control provisions that allow
us to grant options or stock purchase rights that may become vested
immediately upon a change in control. The terms of change of
control provisions contained in certain of our senior executive
employee agreements may also discourage a change in control of our
Company.
Our board of
directors also has the power to adopt a stockholder rights plan
that could delay or prevent a change in control of our Company even
if the change in control is generally beneficial to our
stockholders. These plans, sometimes called “poison
pills,” are oftentimes criticized by institutional investors
or their advisors and could affect our rating by such investors or
advisors. If our board of directors adopts such a plan, it might
have the effect of reducing the price that new investors are
willing to pay for shares of our common stock.
Together, these
charter, statutory and contractual provisions could make the
removal of our management and directors more difficult and may
discourage transactions that otherwise could involve payment of a
premium over prevailing market prices for our common stock.
Furthermore, the existence of the foregoing provisions, as well as
the significant common stock beneficially owned by our founder,
executive officers, and certain members of our board of directors,
could limit the price that investors might be willing to pay in the
future for shares of our common stock. They could also deter
potential acquirers of our Company, thereby reducing the likelihood
that you could receive a premium for your common stock in an
acquisition.
Transfer Agent and
Registrar
The transfer agent
and registrar for our common stock is Interwest Transfer Company,
Inc. The transfer agent and registrar’s address is
1981 E Murray Holladay Rd #
100, Salt Lake City, UT 84117. The transfer agent’s
telephone number is 1-801-272-9294.
Listing
Our voting common
stock is listed on The NASDAQ Capital Market under the symbol
“SHSP.”
The shares of
common stock being offered by the selling security holders were
previously issued to the selling security holders pursuant to the
asset purchase agreement dated August 12, 2014, as amended, between
our Company and RCTW, LLC, a Delaware limited liability company,
f/k/a SharpSpring, LLC. We are registering the shares of common
stock in order to permit the selling security holders to offer the
shares for resale from time to time pursuant to the terms of the
asset purchase agreement. Each of the selling security holders is a
current executive officer of our Company, and a co-founder and
former officer of RCTW, LLC.
The following table
sets forth the number of shares of our common stock being offered
by the selling security holders. The selling security holders are
not making any representation that any shares of our common stock
currently held by the selling security holders will be offered for
sale. The selling security holders reserve the right to accept or
reject, in whole or in part, any proposed sale of any shares of our
common stock currently held by the selling security holders. The
following table assumes that all of the shares of our common stock
currently held by the selling security holders being registered
pursuant to this prospectus will be sold.
Name
of Selling Securityholder
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Number of Shares of Common Stock Beneficially
Owned Prior to the Offering
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Number of shares of Common Stock
Offered
|
Number of Shares of Common Stock Beneficially
Owned After the Offering
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Richard Carlson
(1)(2)
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766,078
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8.8%
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539,828
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226,250
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2.6%
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Travis Whitton
(1)(3)
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245,940
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2.9%
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206,460
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39,480
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0.5%
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(1)
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Percentage
ownership is based on 8,445,016 shares of common stock outstanding
as of February 1, 2018. Beneficial ownership is determined in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and generally includes shares over which the
selling security holder has voting or dispositive power, including
any shares the selling security holder has the right to acquire
within 60 days of February 1, 2018. Mr. Carlson has the right
to acquire 226,250 shares within 60 days of February 1, 2018, while
Mr. Whitton has the right to acquire 39,480 shares within 60 days
of February 1, 2018 pursuant to stock option agreements with the
Company. The shares issuable pursuant to the exercise or conversion
of such securities are deemed outstanding for the purpose of
computing the percentage of ownership of the selling security
holder, but are not treated as outstanding for the purpose of
computing the percentage of ownership of any other person. Unless
otherwise indicated herein, to our knowledge, all persons named in
the table have sole voting and investment power with respect to the
shares of our common stock beneficially owned by them.
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(2)
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Richard Carlson has
been a director and has served as our Company’s Chief
Executive Officer and President since October 1, 2015. From August
1, 2015 to October 1, 2015, he served as President of our Company.
From August 2014 until August 2015, he served as the President of
SharpSpring Technologies, Inc., our wholly owned subsidiary. Mr.
Carlson founded RCTW, LLC in December 2011 and served as its
President until it was acquired by our Company in August
2014.
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(3)
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Travis Whitton has
served as our Chief Technology Officer since August 2014. Mr.
Whitton was a co-founder of RCTW, LLC and served as its Chief
Technology Officer from January 2012 until it was acquired by our
Company in August 2014.
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We and the selling
security holders may sell securities covered by this prospectus in
and outside the United States (i) through underwriters or dealers,
(ii) directly to purchasers, including our affiliates, (iii)
through agents or (iv) through a combination of any of these
methods. The accompanying prospectus supplement will set forth 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 names of any
underwriters, dealers or agents;
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the respective
amounts underwritten;
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the name or names
of any managing underwriter or underwriters;
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the terms of the
offering;
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the purchase price
of the securities and the net proceeds to us from the
sale;
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any underwriting
discounts, commissions 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 re-allowed or paid to dealers;
and
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any commissions
paid to agents.
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Only those
underwriters identified in such prospectus supplement are deemed to
be underwriters in connection with the securities offered in the
prospectus supplement.
Sale Through Underwriters or
Dealers
If underwriters are
used in an offering, the underwriters will acquire securities for
their own account. The underwriters may resell the securities from
time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Underwriters may offer the
securities to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the
underwriters to purchase securities will be subject to certain
conditions, and the underwriters will be obligated to purchase all
the offered securities if they purchase any of them. The
underwriters may change from time to time any offering price and
any discounts or concessions allowed or re-allowed or paid to
dealers.
During and after an
offering through underwriters, the underwriters may purchase and
sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to
cover syndicate short positions created in connection with the
offering.
If dealers are used
in the sale of securities offered through this prospectus, we and
the selling security holders will sell the securities to them as
principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale. The
prospectus supplement will include the names of the dealers and the
terms of the transaction.
At-the-Market Offerings
We and the selling
security holders may engage in at-the-market offerings into an
existing trading market in accordance with Rule 415(a)(4). Any
at-the-market offering will be through an underwriter or
underwriters acting as principal or agent for us or the selling
security holders.
Direct Sales and Sales Through
Agents
We and the selling
security holders may sell the securities offered through this
prospectus directly. In this case, no underwriters or agents would
be involved. Such securities may also be sold through agents
designated from time to time. The prospectus supplement will name
any agent involved in the offer or sale of the offered securities
and will describe any commissions payable to the agent. Unless
otherwise indicated in the prospectus supplement, any agent will
agree to use its reasonable best efforts to solicit purchases for
the period of its appointment.
We and the selling
security holders may sell the securities covered by this prospectus
directly to institutional investors or others who may be deemed to
be underwriters within the meaning of the Securities Act with
respect to any sale of those securities. The terms of any such
sales will be described in the prospectus supplement.
Delayed Delivery Contracts
If the prospectus
supplement indicates, we and the selling security holders may
authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase securities at the public
offering price under delayed delivery contracts. These contracts
would provide for payment and delivery on a specified date in the
future. The contracts would be subject only to those conditions
described in the prospectus supplement. The applicable prospectus
supplement will describe the commission payable for solicitation of
those contracts.
Market Making, Stabilization and Other
Transactions
Unless the
applicable prospectus supplement states otherwise, each series of
offered securities will be a new issue and will have no established
trading market. We may elect to list any series of offered
securities on an exchange. Any underwriters that we and the selling
security holders use in the sale of offered securities may make a
market in such securities, but may discontinue such market making
at any time without notice. Therefore, we cannot assure you that
the securities will have a liquid trading market.
Any underwriter may
also engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Rule 104 under the
Securities Exchange Act. Stabilizing transactions involve bids to
purchase the underlying security in the open market for the purpose
of pegging, fixing or maintaining the price of the securities.
Syndicate covering transactions involve purchases of the securities
in the open market after the distribution has been completed in
order to cover syndicate short positions.
Penalty bids permit
the underwriters to reclaim a selling concession from a syndicate
member when the securities originally sold by the syndicate member
are purchased in a syndicate covering transaction to cover
syndicate short positions. Stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of the
securities to be higher than it would be in the absence of the
transactions. The underwriters may, if they commence these
transactions, discontinue them at any time.
Derivative Transactions and
Hedging
We, the selling
security holders, the underwriters or other agents may engage in
derivative transactions involving the securities. These derivatives
may consist of short sale transactions and other hedging
activities. The underwriters or agents may acquire a long or short
position in the securities, hold or resell securities acquired and
purchase options or futures on the securities and other derivative
instruments with returns linked to or related to changes in the
price of the securities. In order to facilitate these derivative
transactions, we may enter into security lending or repurchase
agreements with the underwriters or agents. The underwriters or
agents may effect the derivative transactions through sales of the
securities to the public, including short sales, or by lending the
securities in order to facilitate short sale transactions by
others. The underwriters or agents may also use the securities
purchased or borrowed from us or others (or, in the case of
derivatives, securities received from us in settlement of those
derivatives) to directly or indirectly settle sales of the
securities or close out any related open borrowings of the
securities.
Electronic Auctions
We and the selling
security holders may also make sales through the Internet or
through other electronic means. Since we and the selling security
holders may from time to time elect to offer securities directly to
the public, with or without the involvement of agents, underwriters
or dealers, utilizing the Internet or other forms of electronic
bidding or ordering systems for the pricing and allocation of such
securities, you will want to pay particular attention to the
description of that system we will provide in a prospectus
supplement.
Such electronic
system may allow bidders to directly participate, through
electronic access to an auction site, by submitting conditional
offers to buy that are subject to acceptance by us or the selling
security holders, and which may directly affect the price or other
terms and conditions at which such securities are sold. These
bidding or ordering systems may present to each bidder, on a
so-called “real-time” basis, relevant information to
assist in making a bid, such as the clearing spread at which the
offering would be sold, based on the bids submitted, and whether a
bidder’s individual bids would be accepted, prorated or
rejected.
Upon completion of
such an electronic auction process, securities will be allocated
based on prices bid, terms of bid or other factors. The final
offering price at which securities would be sold and the allocation
of securities among bidders would be based in whole or in part on
the results of the Internet or other electronic bidding process or
auction.
General Information
Agents,
underwriters, and dealers may be entitled, under agreements entered
into with us and the selling security holders, to indemnification
by us and the selling security holders against certain liabilities,
including liabilities under the Securities Act. Our agents,
underwriters, and dealers, or their affiliates, may be customers
of, engage in transactions with or perform services for us and the
selling security holders, in the ordinary course of
business.
The maximum
consideration or discount to be received by any Financial Industry
Regulatory Authority, or FINRA, member or independent broker dealer
may not exceed 8.0% of the aggregate amount of the securities
offered pursuant to this prospectus and any applicable prospectus
supplement.
Certain legal
matters will be passed upon for us by David M. Bovi, P.A., Palm
Beach Gardens, Florida. Additional legal matters may be passed upon
for us, or any underwriters, dealers or agents, by counsel that we
will name in the applicable prospectus supplement.
Cherry Bekaert LLP,
independent registered public accounting firm, has audited our
consolidated financial statements as of, and for the year ended,
December 31, 2016, included in our Annual Report on Form 10-K for
the year ended December 31, 2016, as set forth in their report,
which is incorporated by reference in this prospectus. Our
consolidated financial statements are incorporated by reference in
reliance on Cherry Bekaert LLP’s report, given on their
authority as experts in accounting and auditing.
McConnell &
Jones, LLP, independent registered public accounting firm, has
audited our consolidated financial statements as of, and for the
year ended, December 31, 2015, included in our Annual Report on
Form 10-K for the year ended December 31, 2016, as set forth in
their report, which is incorporated by reference in this
prospectus. Our consolidated financial statements are incorporated
by reference in reliance on McConnell & Jones, LLP’s
report, given on their authority as experts in accounting and
auditing.
WHERE YOU CAN
FIND MORE INFORMATION
We are subject to
the reporting requirements of the Securities Exchange Act of 1934,
as amended, and file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy these reports, proxy statements and other information at the
SEC’s public reference facilities at 100 F Street, N.E., Room
1580, Washington, D.C. 20549. You can request copies of these
documents by writing to the SEC and paying a fee for the copying
cost. Please call the SEC at 1-800-SEC-0330 for more information
about the operation of the public reference facilities. SEC filings
are also available at the SEC’s web site at
http://www.sec.gov.
This prospectus is
only part of a registration statement on Form S-3 that we have
filed with the SEC under the Securities Act and therefore omits
certain information contained in the registration statement. We
have also filed exhibits and schedules with the registration
statement that are excluded from this prospectus, and you should
refer to the applicable exhibit or schedule for a complete
description of any statement referring to any contract or other
document. You may inspect a copy of the registration statement,
including the exhibits and schedules, without charge, at the public
reference room or obtain a copy from the SEC upon payment of the
fees prescribed by the SEC.
We also maintain a
website at www.sharpspring.com, through
which you can access our SEC filings. The information set forth on,
or accessible from, our website is not part of this
prospectus.
INFORMATION
INCORPORATED BY REFERENCE
The SEC allows us
to “incorporate by reference” the information we have
filed with it, which means that we can disclose important
information to you by referring you to another document that we
have filed separately with the SEC. You should read the information
incorporated by reference because it is an important part of this
prospectus. Any statement in a document we incorporate by reference
into this prospectus will be considered to be modified or
superseded to the extent a statement contained in this prospectus
or any other subsequently filed document that is incorporated by
reference into this prospectus modifies or supersedes that
statement. The modified or superseded statement will not be
considered to be a part of this prospectus, except as modified or
superseded. We incorporate by reference the following information
or documents that we have filed with the SEC (excluding those
portions of any document that are “furnished” and not
“filed” in accordance with SEC rules):
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Our Annual Report
on Form 10-K for the fiscal year ended December 31, 2016, filed
with the SEC on March 31, 2017;
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The information specifically incorporated by reference into our
Annual Report on Form 10-K for the fiscal year ended
December 31, 2016, from our
Definitive Proxy Statement on Schedule 14A relating to our 2017
Annual Meeting of Stockholders, filed with the SEC on May 1,
2017;
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Our Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2017, filed
with the SEC on May 15, 2017, June 30, 2017, filed with the SEC on
August 11, 2017, and September 30, 2017, filed with the SEC on
November 13, 2017;
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Our Current Reports on Form 8-K filed with the SEC on April 5,
2017, May 19, 2017, June 5, 2017, July 3, 2017, August 1, 2017,
October 30, 2017, and November 8, 2017 (Item 8.01
only);
and
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The description of
the Common Stock set forth in our Registration Statement on Form
8-A filed with the SEC on January 27, 2014, including any
amendments or reports filed for the purpose of updating such
description.
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We also incorporate
by reference all documents filed by us pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date on which we
filed the registration statement of which this prospectus is a part
and prior to the termination of this offering (excluding those
portions of any document that are “furnished” and not
“filed” in accordance with SEC rules).
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.
You may obtain a
copy of the foregoing documents from us without charge by writing
or calling us at the following address and telephone
number:
SharpSpring,
Inc.
550 SW 2nd
Avenue
Gainesville, FL
32601
888-428-9605
Attention: Chief
Financial Officer
You should rely only on information contained in, or incorporated
by reference into, this prospectus and any prospectus supplement.
We have not authorized anyone to provide you with information
different from that contained in this prospectus or incorporated by
reference in this prospectus. We are not making offers to sell the
securities in any jurisdiction in which such an offer or
solicitation is not authorized or in which the person making such
offer or solicitation is not qualified to do so or to anyone to
whom it is unlawful to make such offer or
solicitation.
1,000,000
Shares
__________________________
PROSPECTUS
SUPPLEMENT
__________________________
Needham
& Company
Lake
Street
December
16, 2020
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