Registered Direct, ATM and PIPE Transactions

A Registered Direct offering is a negotiated sale by an issuer to one or more investors of securities that have been registered pursuant to an effective shelf registration statement on Form S-3 under Rule 415 of the Securities Act of 1933. Rule 415 permits an issuer to register a specific dollar or share amount of securities without specifying the amount of any particular class or type of security or the timing or method of the offering. The issuer may then sell any or all of the registered securities directly to investors at a later date or dates of its choosing. A Registered Direct is like a PIPE in that securities are typically sold through a placement agent on a “best efforts” basis. Unlike a PIPE transaction, investors in Registered Direct offerings receive free trading shares, and thus the pricing terms are typically more beneficial to the issuer than in a PIPE.

An ATM is the offering of securities by an issuer either directly or through an underwriter, which securities are offered and distributed at the existing trading price. In layman’s terms, an ATM occurs when an already public trading Issuer registers and sells additional securities to the public at the existing trading price, as opposed to a fixed price. Accordingly, the price that shares sell at in an ATM will vary with the market price on any given day, or even throughout the day.

A PIPE is a private investment, either common stock or a convertible instrument, in a public company at a discount to the current market value per share. Within a short period following the investment in the public company, usually 30 to 60 days, the public company is required to file a registration statement and register the shares that were sold in the PIPE. The public company is usually required to have the registration statement declared effective within 90 to 150 days. A PIPE is a type of financing transaction undertaken by a public company, normally with a small number of sophisticated investors. In a typical PIPE, the company relies on an exemption from SEC registration requirements to issue investors common stock or securities convertible into common stock for cash. The company then registers with the SEC the resale of the common stock issued in the private placement, or issued upon conversion of the convertible securities issued in the private placement.